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

Gold and silver had been up the last few days.....

Gold did the same thing back in April. Big drop, followed by a recovery of $100 or so and then the slide continued. It is way too early to think that prices have stabilized.

Ok lets pick up from Friday, been super busy on this end so I apologize for the lags here

As we had left off, Big Ben's comments in the after hours last week sent all assets up, and that included gold and silver. We saw our first gap filled even from 6/26. Lets key to Friday and what happened there

FRIDAY-

After the gap up that happened on 7/10, gold managed to hold its gains from Thursday as well as silver. A look at our proxies for Friday

GLD- lower high, lower low- still holding in the gap

SLV- lower high, lower low- still in the gap

Today, we can see gold and silver are still holding in the gap We also see a narrow range developed in terms of price.

SLV- higher high, higher low- still in the gap

GLD- higher high, higher low, still in the gap.

So is this all going to hold? Does this mean gold and silver are going straight back up?

Again let me repeat myself- this will be a long process. There will be retracements. There will be dips. There will be a narrow range. What is happening is the market is deciding what happens next to gold and silver and it is doing it through time.

A lot of serious damage has been done to the price of gold and silver, and it has been done on heavy volume. That heavy volume was financial institutions that held silver and gold selling, making their exits. Without them, gold and silver will do nothing.

At this stage I expect more range bound trading for gold and silver. Notice the volume for gold and silver, its anemic and not typical of strong buying. In fact at this stage we have traders who are just trading this narrow range as it develops.

So remember, gold and silver remain in a very strong downtrend. Nothing has changed. Gold and silver have a ton of work to prove they are ready to reverse the downtrend. It is on gold and silver to prove that the selling is finally done. Until then, they remain broken assets that are in serious downtrends.

Well, theres many sides to a trade and the markets. This price action we are seeing in gold and silver in regards to their rise in prices is common and very typical.

Silver and gold have been pummeled. So you have an odd assortment of dip buyers coming in, you have those who continue to be short of gold and silver and you have those playing a range.

Retracements occur this way, and also remember, PRICE has memory. It is attracted to points where there were buyers, either on the way down or up. The problem with a retracement is that it can give false signals and trap those who feel it means the worst is over.

Another thing to keep in mind with commodities is you are not going to get buyers who are looking for "value" as with stocks where there are various metrics that can be used to put a price or value on a company stock. SO you have yet another group that isn't present to help the price stabilize.

I'll repeat myself- this is going to be a long process to find where gold and silver finally find their footing. Retracements in price are all part of this.

Be careful what you wish for. Silver has far more memories of $5-$10 per ounce than $30-40 per ounce.

What can we say about gold and silver lately? To me, its been rather boring, lackluster and run of the mill price action. For me, what would REALLY get my interest going forward is getting those big gaps filled, holding them and chopping for a while above them and then moving out slowly. That would give me more clarity that at least some sort of floor was being attempted.

At this stage, we have the same ole, same ole action. The volume is pathetic on the buy side. Nothing indicates that this trend is going to change overnight or soon.

Lets look closer by looking at the price action for today using our proxies.

GLD- higher high, higher low, will it now attempt to fill the 6/20 gap?

SLV- higher high, higher low. Also coming in again on the 6/20 gap.

I know I repeat myself and I will again do so. Finding where gold and silver are headed to and finally try to find some stable support is going to take TIME. Anyone who thinks that you cant get clues or have no idea where this is headed ultimately is WRONG.

In fact, every single day that passes, gives us clues as to what is happening. We will be able get clues as to what is going on with gold and silver and I intend to do that as we go forward.

And... as Ben speaks today, gold has a strong reversal JUST as it was attempted to go into the 6/20 gap. First attempt rejected just like that. Sellers in control in the short term time frame.

question going forward, how low will gold be driven down.

watch, wait and be patient.

Big Ben spoke today and guess what. Gold failed and got smacked down as it attempted to enter the 6/20 gap. Mere coincidence? I think not.

My take- actions taken by the Federal Reserve going forward are not and will not accommodate gold and silver going forward. There is a good reason they remain in a strong downtrend and after this retracement finishes and we get chop and a narrow range, I think we will eventually go back to lower prices than where we are at. As I always state, no matter what I think, you think tho, we must let the market be our guide because markets are NEVER wrong.

Lets look at what the price is telling us with our proxies, remember PRICE is always truth and means more than anything else out there.

GLD- higher high, lower low, reversal and failure to fill the 6/20 gap. First attempt.

SLV- higher high, lower low, reversal and failure to get into the gap.

I am not saying this means now we are going straight to the bottom. What I am saying is that perhaps now we see this retracement closer to its low and chop around and perhaps once again bounce off of it.

Again, the key take away is that the Federal Reserve action is not in the favor of gold and silver. The big spike we say last week in gold and silver was no doubt nothing but mere short covering which is all part of the process.

Anyone who continues to insist about how the printing of money, or debt, or talks about QE from the Fed will boost gold and silver is wrong and is solely talking their book.

Finally, don't get caught into a lull and false sense of security that because the price hasn't dropped anymore and it has had two major drops that its all clear. A floor and getting a stable price into the picture doesn't happen this way. You have been warned, so please exercise caution, patience and give this time to sort itself before you drop any major cash into gold and silver.... which I would hope you wouldn't do, but if you are the type that is itching to buy, just be patient and continue to wait.