What Happens To Gold And Silver Next? Look Out Below?

I think it is interesting that it is the overnight Silver market that has rebounded the price.

Couple of items-

As I have been saying since it happened, the main focal point is gold and silver holding those Dec 1st overnight lows. That is the line in the sand and I believe, based on the price action, one big clue to what happens with a floor or bottoming action in gold and silver going forward.

Thus far, gold and silver have held that area. This week they both managed to hold the lower end of their range and bounced off it higher. Again, the December 1 overnight futures lows are the line in the sand and are very important. Thats where you keep your eyes.

I have seen this same sort of pattern happen many times over whether it be indices or some commodity, the main action and price point gets set overnight.

I will also say that retracements into that area would be normal, expected and then bouncing from areas not at the December 1st low but not completely breaching it, would give us even more clues. In other words we can some price action where price reverts toward the 1141 low in gold but bounces say 5 bucks higher from 1141, as an example.

Finally two more thoughts-

1- Dollar, in a big up trend as I had mentioned several months ago.

2- Be careful of assuming that because the dollar is strong all commodities stay down. Correlations come and go, rule #300 in trading, no proxy or correlation works exactly the same forever. In other words, dont be surprised that the dollar goes higher and say, silver and gold move higher. Or with oil... which is in its early innings of its downtrend (dont be fooled by the counter trend move it has has lately,you should know by now that reversals happen in a overall larger time frame trend), that one day, oil goes higher with the dollar going higher.

3- FIFO. First In First Out. Many times in trading, the first assets to get hit start a downtrend, continue in their downtrend as an example while other assets move higher. Eventually, other assets in related categories get swept up and sucked into a similar downtrend.But then something else happens, the assets that started first into the overall downtrend, they stop going down while others keep tumbling lower.

This sort of price action happens in either up trends or downtrends. In some ways, again drawing on experience, I see this in oil and gold/silver. Oil couple months ago snapped its trend line and started into its downtrend... along with other commodities. Yet gold and silver had been in it for 3 years now.... in looking at the price action since December 1st, it has me thinking and observing to see if this indeed happens... in other words, gold and silver work out of the downtrend slowly while oil keeps unraveling.

Finally, remember what is happening is the way of the market discounting and re-pricing assets into the future. Financial markets are always dynamic and ever changing, the important thing is to keep up with the clues and change along with the market as it gives you confirmation.

Risk Of Russian Gold Selling? - UBS

http://www.efxnews.com/story/27394/...-selling-ubs

just a simple thought going forward for a short week... ignore and throw away all and any predictions about what gold and silver price targets will be.

the only TRUE guide is price action, not what one bank says the price will be, or a consultant report or what a analyst says. They all are the butt of jokes on the STreet, dont be fooled by what they say.

Again, what price does, the clues it leaves, and what direction it goes, is what will be right.

Once again, no surprise silver and gold bounce. Main focus should be and remains the overnight futures lows of December 1st.

Until those get breached, really nothing else matters for now. Retracements should be expected as this point and so long as they dont breach the Dec 1st overnight lows, no need to really think its breaking down. Why do I say this?

Everything needs confirmation, follow through. So while you might see a pattern that is setting up, it means ZERO without follow through or continuation.

I am looking at silver and gold in this manner: They remain in a downtrend however, experience tells me when important areas in price reverse in the overnight futures market, it sometimes increases the probability of a change or at least floor being put in. For that reason I put importance on the Dec 1st price action and repeat it constantly.

Finally, correlations come and go. IT would be very unwise to assume that oil and gold/silver are correlated,so therefore the correlation will be exact every time. Sorry to say but it doesn't work that way, if it was that easy then correlations would say exactly what happens all the time. Once again, as an experienced trader, throw out correlations when price action is saying other wise.


I also feel that the correlations of gold/silver with oil is being incorrectly applied because, well first of all the general public always gets it wrong and uses it incorrectly. Secondly, gold and silver have been dropping for 3 years now, whereas oil was range bound for a while before gold and silver broke down, in fact it wasn't until this Spring that oil started to break down.

Therefore, oil and gold/silver are not moving together and the use of the oil/gold/silver correlation is being applied incorrectly.

http://srsroccoreport.com/wp-conten...008-2014.png

This shows the last several years--note the huge silver eagle sales in 2013-2014 in the face of deep price drops. Sorry the link in my post before for silver was for the 2013 record, that was exceed this year. Gold sales have gone down to the lowest point for years.

Bas,

You mention you see prices going lower. Based on the jump today, does this move change your analyses? Did it move through any resistance you consider, if any?

Thanks for the interesting post. I just started following a few months ago and have been enjoying reading others analyses, posts, and charts.

I have nibbled on poured odd sized bars and other unique pieces, but have avoided any bigger purchases so far as I don't see much interest in silver and nothing to stop its downtrend. I figure how can I buy right now when lots of people on silver stacking forums are bearish.