ok lets move things along here.. sorry for the delay as it does take a bit of time to import charts and prepare them especially as gold and silver are not on my primary watch lists everyday so I again apologize for the delay folks! I am more than happy to prepare them and look at the PMs tho as I wish to contribute to this forum so as to take the mystery of where price goes and what it does.
Gold
Last we looked at gold on the charts, we left it at 1203.03. We were looking at where would bounce from as it broke previous levels. It caught a bounce at 1190ish and from there was marginally up. As is typical we new range developed. Take a look at the chart now. Look in between the gold lines and we see the new range gold is now locked in.
How this resolves itself we dont know as only the sellers and buyers can establish this. Putting price predictions would be foolish and incorrect as everyone is beholden to the market and what it wants to do, not what we choose for it to do.
On a shorter time frame, a break of the LOD for today could increase the probability of lower prices. The LOD today was 1203.50. Watch that number to see if it is broken lower. At this rate, if gold breaks past 1167.30, much lower prices could be in store. Again we will be paying attention to price to see if this happens. On the upper end nothing has changed as 1307 remains the iron clad upper range for now.
Its pretty simple however by having gold in a range or box currently. There are only 3 options for gold: break higher out of it, breaker lower or continue to chop around. The resolution to this range will come and all we have to do is watch and be patient. Again, no need to predict prices or make guesses that will be wrong.
Silver
I look at this and what sloppy price action. Absolutely no reason to be involved with silver. As with gold, silver has fallen into a small range or box. Same options as with what we said of gold: a break over 16.86 for higher, or a break of 16.04 for lower OR a continued sideways action. Again, a resolution is coming so be patient.
On a longer term time frame, mid 15.50s could be coming up if silver keeps breaking lower. As shown on the chart, 18.50 remains as the upper range and far end is 15.53. For tomorrow on silver, keep an eye to see if the low of today, 16.07 holds. If that doesn't, probabilities increase for lower prices. Conversely, look to see if the HOD for today gets broken, which was 16.59.
The December 1st overnight futures low remain important to me. Should we approach those and breach them, this downtrend in gold and silver will be further strengthened and much lower prices are in store. Whether we get there or not, who knows; only the market knows for sure.
From my stand point, what a boring area of the market. Two assets stuck in a downtrend that have tried to get out of them, which then get knocked back down. It is so sloppy that making any real money out of them is really a waste of time as there are bigger targets on the market.
Based on price action, I think the combination of overhead supply in terms of price AND previous levels from when gold and silver were rising makes for a market where it just is in no mans land, an ugly choppy market that needs a lot of TIME to resolve itself. Only by the element of time will this downtrend be broken.
Yes, thats exactly it. Price action gets my attention and for me, has been a guiding light. Sure there are fundamentals to all sorts of assets but these always manifest themselves AFTER the moves of importance.
That is why paying attention to price action is key. The reason "why" or "how" something happened comes later. If I acted on the "why" or "how" for work as a trader, I would have either blown up my account a long time ago OR make nothing in terms of gains in the market.
Thanks for posting these charts, as they represent an interesting glimpse of silver and gold price action. In this context, the why and how are largely irrelevant.
For those who collect physical silver and gold as a hobby or stacker, the why and how become important, but on a different timeframe.
While I collect as a hobby, I do think it is interesting to consider where silver will be in 5, 10, and 20 years. Will these blobs of silver ever be worth anything? Obviously nobody knows, or as you say, the market will ultimately decide. However, I think the market will decide this based on industry demand, alternatives to silver (i.e., in solar panels), and overhead.
If demand is intermittent, than there are hundreds of millions of silver on the sidelines to move in at various price points. I think the only pathway to long term higher silver prices is a technology that uses silver which has not yet been invented.
Your charts are interesting because they reflect a micro-level, short term glimpse of price action. They help address the question regarding should I buy my Kookaburra today, or wait for lower prices. In some ways though, the difference between $12, $16, and $20 isn't as big of deal for someone planning on holding for $20 years.
As much as I would love to believe my hobby of collecting poured bars would be a money maker some day, I don't really see it as a sound investment. I do agree it can be a money maker with paper trading, but that is wisely not a buy and hold strategy. It just seem to me that industry looks for more efficient, quicker, and cheaper options are always needed. Because of this, I see companies like solar finding less expensive alternatives to be cost effective.
on gold, we are breaching the low end...1167.30... and silver we havent breached the low end which is 15.51 essentially both now are way at the ends of a new range...
question is and we will have to wait for it next week, does gold and silver bounce hard from here or do these give in for much lower prices, even coming into the December 1st overnight lows...
only the market can answer that next week. pretty interesting action tho and i'll have charts up this weekend
Lets get right into the charts. As I always say, only price action matters. If anyone tells you to ignore price, obviously they will be wrong and are totally clueless as to what markets want to do. We know that only price action is truth and so lets get right down to what the tape or price action is saying.
Gold
Last time we looked at gold last week we said a resolution was coming. Sure enough, we got resolution in a form of a break from the range, to the down side. This is where it gets VERY interesting. How so?
Please take a look at the chart and a story develops. First of all look at the yellow arrow on the far right of the chart. Here we see the drop in price from Friday. Now take a look at the far left of the cart at the green arrow. The green arrow is from 1/12 and gold on that day dipped as low as 1167.30. notice the low on Friday? 1162.90. First thing that should come to your mind seeing this is "price has memory."
It should be no surprise at ALL that on Friday gold bounced from the LOD there as it had an area of support. Lets look closer tho at this picture.
Sitting at my desk, along with thousands of traders all over the world, the first thing we are getting is a sell signal for gold with the action Friday. How so? The area to sell short would be a breach of 1167.30 from the 1/2/15 date. Textbook stuff, especially if you were operating on a shorter time frame (shorter time frame as in the duration of the trade or length of time NOT just selling it short), you would have scalped a quick and easy 5 pts. However, we can see gold bounced from its low, which again is no surprise as price has memory, that is an area it has bounced from in the past.
In this case, longer time frame traders such as myself know that trying to sell short at that price point after gold has been down 5 days in a row is just not worth it, the risk to reward ratio doesn't make it a great trade.
In fact, after the action on Friday, its clear as of now, gold is at the lower end of a new range or box. Take a look at the blue arrows to see evidence of this. So what happens from here? There are only two scenarios that stand out-
1- Gold continues its momentum down, which while its possible this happens, it would be the least of strongest outcomes seeing that this sort of selling is going to lead to a bounce first..
2- we bounce higher from the Friday close.
You are probably saying, "well how do we know if a bounce happes, that this bounce is going to hold or not?"
The key number for lower prices in gold now are going to be a breach of 1162.90. If a bounce happens, and then falters, traders will be zeroing on on that price point to take new positions to sell short. So keep that number in mind, as its important going forward. A typical pattern for that to happen would be a few days of bounce up and then falling back and slicing past 1162.90. That would be a proper point to take a line short.
Silver
Silver also broke the range Friday, moving lower. Unlike gold tho, it didnt move to the farther lower end of the range. The question then becomes does silver move lower from here OR does it bounce? That question, as always, will be answered by the market. From a trading stand point, a break of 15.51 would be a spot to sell short and increases the probabilities of lower prices for silver. So for tomorrow, the number to key in on and watch is if silver breaks 15.51.
IF that happens then it remains to be seen if silver runs lower below that or finds support in that area and bounces. Again, pay attention to the reaction of silver if it breaks 15.51. Please take a look at the chart on the far left where the green arrow points upwards. What remains to be seen is does this area give support and then a bounce?
At this point it is unclear if we slice past these areas of support or get a bounce. Also, the December 1st overnight futures lows are important. Breaching these levels now on the charts brings us closer to that area (the December 1st overnight futures lows) and should silver and gold proceed lower from here, the probabilities are increased greatly that the December lows could be cracked, bringing fresh yearly lows in both silver and gold further strengthening the downtrend and its momentum.
As always, remain patient and the follow price action, as it is the ONLY metric that speaks truth and matters. Everything else discussed outside of price action is a matter of opinion and those are always wrong when we talk about markets.
heads up... gold is breaking the Friday LOD... in the overnight futures session.
It will be interesting to see how much selling happens, as gold has been down already 6 days in a row. The more this gets stretched the riskier it gets selling short at these levels.
meanwhile, silver has to break 15.50 yet.... keep an eye on that area.
YUP,I appreciate the charts and comments as I learn more about how to interpret them from you. Is there a handy basic guide with all the lingo you can refer? Now, why do you have the red/green graphs of 50 day volume moving average but seldom ever comment on what they mean? It's a big part of your chart but so little comment if you know what I mean.
Does/did all the hype about gold and silver supplies dwindling way down w/o the possibility of being replenished have any basis for justification?
With Apple consuming unsurpassed amounts of Ag(silver) for their iPhone circuit boards, for instance, wouldn't it be interesting if technologies void of PMs actually took off?
case in point: enter in graphene, the winner of the Nobel prize in physics
If one is interested in knowing just the Cliff Notes version of graphene, go to the 4 minute point of a very informative 6 min YouTube video:
EX8ClPVkD1g
Allegedly, only a limited supply of gold and silver remains to be mined...
The question I have would be the centered around the "economical" development or not of these alternate technologies that currently meet AND exceed the highly sought-out properties of 'most' precious metals: unsurpassed conductivity with negligible oxidation.
Could/would the market pricing of PMs vs graphene eventually behave in a manner analogous to the current crude oil vs fracking scenario: OPEC countries lowballing their oil price to make the research and production costs of oil fracking more difficult to validate?
Or are graphene-like alternatives an inevitability because of their extraordinary 22nd century properties?
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Posted 03/02/2015 10:40 am
