Saturday 28 June 2014
Despite a decent rally in both gold and silver over the past 7 trading days, [TDs], both remain
in bear market conditions, overall. This should hold true for however many more months,
or years that the war-breathing, fiat-issuing federal United States government can retain
its control. Despite the fact that the numbers of people who recognize the utterly corrupt
nature of Western governments, led by the US and willingly abetted by the UK and Germany,
those in control still remain in control.
Little has been accomplished by Westerners to hold their out-of-control politicians, [we refrain
from calling them leaders], accountable. In fact, the mounting pressure on the West has come
externally, from opposing Eastern nations more interested in genuine growth and fed up with
the Fed’s fiat free-riding, inflationary exporting ways. Those days are in the process of ending
and at a faster pace with each passing month.
When will gold and silver rally, and likely not look back at the current depressed but bargain
prices? No one knows, and anyone who says otherwise has already been proven wrong. If such
a rally comes as a result of the US succeeding in finally provoking a wider spread war, it could
be a hollow victory for those who have been widely “stacking,” as it were. While much higher
prices will have helped preserve purchasing power, conditions of war would mitigate any
satisfaction from such a long-awaited event, at least for those in the West. The big winners
would be China, Russia, and India, along with several other countries aligned with the growing
power of the Eastern nations.
This week, with the end of the month charts printing on Monday, our focus will be more on
the technical perspective of what the charts are saying about those engaged in the gold and
silver tug-o-war, East v West, physical v paper/derivatives, and those of us smaller fry who
are converting worth-less-and-less fiat in exchange for 5,000 years of proven history on the
side of both precious metals.
It has obviously not been a one way street over 5,000 years of history for gold, holding as the
most viable constant of value as a measure, and having world-wide recognition, from main
streets to back streets, even to areas with no streets. An ounce of gold is accepted as an
ounce of gold, no matter where in the world.
The month of June ended well, [Monday’s activity not yet occurred], but there is no
defined indication of ongoing strength. The close did not close above April’s small range
high. One would not think it a big deal, but that small range was a failure of the buyers
to maintain a rally, and an inability to rise above that mark, given a second opportunity,
is not the best showing for buyer’s ability to prove their worth.
Mention of bearish spacing has appeared often in our charts, of late. It occurs when the
last swing high fails to reach the low of the last swing low, leaving behind a space. It is
considered bearish because sellers were confident enough that lower prices would come
without having to see how the last low would be retested.
Last week’s inordinately small range is a potential red flag. Buyers were unable to show any
upside follow through after the previous week’s strong rally. At the same time, sellers were
also unable to take advantage and move price lower. This is less problematic because sellers
have already proven themselves in a down trend, and the onus is on buyers to demonstrate
change. That did not happen.
While the monthly chart had more of a positive look, it is tempered by the weekly, for reasons
just explained. This brings the daily next to see if it can be an arbiter in favor of one over the
The daily has the potential for buyers absorbing sellers at an area of resistance. The overall
read of the last several TDs has the appearance of a weak correction, after the large gains of
the 7th TD from the end. There are a few possibilities, from what we see, but it would take
more time to explain without reaching a clear conclusion upon which to make an informed
buy/sell decision. It is for this reason why one should always let the market lead, and then
follow, as opposed to “guessing,” however well-reasoned, in which direction price might go.
The trend is not clearly up, and not up at all in the higher time frames, so caution is preferred
when viewed from the long side.
So far, silver has not sustained any upside rally, evidenced by its current location relative to
the 2011 highs and current lows. A monthly chart is more for context and less for making an
informed buy or sell decision, so we are left knowing silver remains bearish.
Silver has the same troubling small range for the week. In addition, there are two recent failed
swings, and above that, bearish spacing. This relates how the prospects for a sustained rally
are dimmed by these factors. It could change, next week, next month, but next week/month
has not yet happened, so all decisions have to be based on what is, as it currently exists, and
not what may or may not occur.
In a bull market, when price rallies, you often see the progressive lows at the upper end of
the preceding trading day. This is so because buyers are in control and can move price
higher more readily. The last 6 TDs overlap, and that is an example of a more balanced
struggle between buyers and sellers, neither having clear control.
Regardless of how it plays out next week, after such a seemingly strong rally, what will be
just as important is how the next correction develops. If the ranges on the next decline
are relatively small and volume dries up, it will indicate selling pressure is not there, and
another rally is likely to ensue. If price declines with ease and on increased volume, it
will be a sure sign that silver, and gold have not found the bottom so may anticipate.
Patience is warranted. Ongoing buying of physical gold and silver is warranted. Keeping
one’s focus on the larger picture is warranted, and will ultimately prove rewarding, in
many ways. Stay the course.