Guest Post from EdgeTraderPlus

This was emailed to me last weekend. It's well-written with lots of pretty charts.

The web address for the author is: http://edgetraderplus.com/

Gold And Silver – Current Decline Not Over. Watch Market Activity For Turnaround.
Posted on February 16, 2013

We often make a distinction between buyers of physical precious metals, [PMs] and
buyers of futures, exhorting the former to buy with impunity, and some may see that
as cavalier, given how the price for both gold and silver have been in recent decline.

The point for buyers of PMs is for both protection and creation of wealth.  Protection
against insidious central bankers destroying currency-purchasing power, over time,
and wealth creation as evidenced by those buying PMs over the past decade and seeing
the intrinsic value grow dramatically.

Buyers of the physical are less price sensitive and view current declines as opportunity
to add more.  As an example, we still hold physical silver purchased when price was in
the mid-40s.   Has the relative value declined?  Absolutely.  Concerned?  Absolutely not.
It remains a matter of time when the price of PMs will go dramatically higher, and the
concern will not be how much one paid, $1800 or $1600 the ounce for gold, or $45 or
$30 the ounce for silver.  The concern will be over having any at all.

If gold is to go to $3,000, $4,000 $5,000, or wherever, and silver go to $100, $150, or
$250, there will be many who will be glad to have paid $2,500 the ounce for gold, and
$75  the ounce for silver.  How does that compare to $1,800 and /or $45 purchases for
physical PMs, at this point?  One cannot always time the market, which is why consistent
buying over time is strongly recommended, but one can determine whether to be an
owner of PMs, or not.

The problem moving forward is fear of central bankers changing the rules and precluding
the purchase of any PMs by the public, at any price.  Death and taxes are touted as the
two things one cannot escape, [not always true for the latter], but the certainty of lies and
deception by central bankers/planners runs an immediate third place.

The handwriting is on the wall, as most in PMs know only too well.  We mention this for
those on the fence, those waiting for “bargains,” [misplaced values, there], and those who
have not yet purchased any PMs.  Do not wait, do not wait, do not wait!

For futures, while most everyone is of the mind that manipulation is showing a steady
hand in PMs markets, that “hand” is losing its grip.  It is the charts that show what the
market has to say about what those who are participating are saying about their decisions.
A not so simple statement, but one that says, watch developing market activity to know
what is going on.

That is always our purpose.

While ongoing efforts are being made to suppress the price of PMs and discourage their
purchase, mostly in futures markets, the “Discouragees,” [central bankers,]  have been net
buyers of gold for a few years now, after having been sellers for so long, so do not go by what central bankers say, [often voiced through the puppetmeisters on daily financial
"news" programs], go by what they do, only in this area.  Ignore them, otherwise.

The larger picture for gold is as bullish as ever.  We provide two strong facts to confirm
why, on the monthly chart.  Bullish spacing is referenced as such  because it shows the
degree of eagerness of buyers in a market.  It is measured by noting the last swing high
and the last swing low.  Typically, markets retest previous swing highs.  When buyers
are so intent on being long in a market, they do not wait to see if a retest of the last swing
high will be successful.  Instead, they, [and by "they" we mean smart money participants,
or controlling forces], just keep buying breaks, creating a space that is bullish.

Another and related measure is the extent of a break, or market “give-back,” in a reaction
after a rally.  Monthly charts are more controlling than the lower time frames, so the
information you can glean from them is more reliable and more pertinent.   You can see
how the current break since the September 2011 high has been relatively shallow when
compared to from where the rally began.

Despite the “daily grind lower,” recently, the larger focus is very strong.  Very strong.

A trading range is where smart money operates to accumulate or distribute their positions.
Controlling market forces require time to acquire positions so as not to disrupt their
attempted “sleight of hand” buys/sells during the process,  and the TRs are also used to
discourage participants from following them.

We said last week that $1600 was a possible target, and it was reached on Friday.  Will
that area hold?  “NMT.”  Need More Time to know that answer.

Points 1 and 2 form an upper supply channel line, and a further line down is marked by
dashes to show how it extends into the future, well ahead of price activity.  Point 3 is the
low is between points 1 and 2, and it is from there that a horizontal line, a demand line,
is extended lower.  It is also dashed to show that it extends into the future well ahead of
developing price activity, to be used as a guide to gauge potential support when touched
by yet to develop market declines.

You can see how the dashed line held the December lows, and now February is retesting
it, again.  There is no evidence yet of a turnaround, and it does take time for a market to
turn.

The most interesting aspect of the daily chart happens to be the last bar, Friday’s activity.
It is a wide range bar lower, a sign of EDM, [Ease of Downward Movement], indicating
sellers are in control.  The sharply higher volume is a red flag, a point in time for which
one needs to pay close attention, moving forward.

Remember, sharp volume increases are usually smart money either pushing a market even
more, or starting to take the other side in a transfer of risk.  Subsequent developing market
activity usually indicates which.  This volume day prompted a look at intra day behavior to
see if any clues can be gleaned.

We say smart money always tries to hide their intent, but volume is something they need
in order to move or accumulate positions, and they cannot hide that.  If smart money sells
highs and buys lows, where is the highest volume in this chart?  We ask, the chart answers.

The position of the close tells us buyers are more than matching the effort of sellers to
cause a rally off the low under such heavy selling pressure.  The two preceding bars of
increased volume may “look” like selling, but it is quite possible that smart money has
been buying on the way down, taking everything offered by weak-handed longs selling
out and new shorts getting in.

If Benjamin Franklin had been a trader, he would surely have said, “Never a bottom-
picker be.”

Bullish spacing exists in silver, just not as strongly.  We do point out how the past five
months of selling effort has not been impressive, relative to the two month rally prior.
It is like an Ali “Rope-A-Dope,” taking all the punches from his opponent, but protecting
himself so not much damage is inflicted, despite the effort against him.  Eventually, he
comes out stronger to defeat his now-weakened opposition.

We show the same intra-TR channel down, just like in gold.  Unlike gold, however, silver’s
low has held the lows of last December, a small show of relative strength within a negative
trading environment.  Still, no apparent end is at hand in the decline of futures.

The best way to trade a TR?  Not to trade it at all, instead, wait for a price breakout and
go with it.  Why does that work?  As mentioned, TRs are how smart money accumulates
positions.  Once they are done, they then begin the mark-up or mark-down phase, and it
will last for some time, once it gets underway.

Just as a dashed line in a channel projects into the future for support/resistance, you can
see where the failed probe lower, at the end of December/beginning of January acted as
support.  From there, a horizontal line is drawn.  We made it dashed to show that is was
extended into the future much earlier than when current price activity has returned to it.

Will price hold current lows?  No one knows, and anyone who says otherwise is showing
an unwise ego trying to be “right,” as opposed to being in harmony with the market.  Any
bottom requires time in order to turn around, and any potential turnaround always needs
to be confirmed by price behavior.

The increased volume on Friday is a red flag, as it was for gold, but a red flag means a sign
of caution, to take note and see how price responds to it.  That takes time.   Futures players
have time, or at least the smart ones are exercising it.


 

387 Comments

Bugzy's picture

@gbend

Yes - very odd indeed re Sprott

There again KWN keeps getting hit.

Turd site was down yesterday.

Seems to me that those (who think they are) in "charge" are frightened of something. You do not kick a dead dog.

Bugzy

ancientmoney's picture

fraud bubbles everywhere . . .

Remember MfingG?  JPM had bankruptcy laws overturned so they could be first in line to collect COMEX silver that belonged to the clients of MFG, and lots of other people's monies as well. 

Remember Libya?  They had not only oil, but gold.  Not anymore. 

How about the $17,000,000,000,000 given to the TBTF banks so far?  Any of that used in the markets?  Nahhhhhh.  That amount is enough to have paid off every American's home mortgage.  But, no.  The bankers got that payoff already, and STILL the people must pay their mortgage to the bankers and their taxes to the government to repay the loans to China for the money to pay the banksters.

Now, COMEX.  A fraudulent entity, regulated by nobody.  The CFTC is less than a joke.  450,000,000 oz short by one entity, and that's not fraudulent?

I could obviously go on for pages, if I wanted to hit upon 1% of the fraud played out in the last two years in front of our faces.

As Tmosley said, paper silver and gold are going to ZERO.  But, you WILL NOT be able to buy at ZERO.  For awhile, if you're smart, you'll buy physical on the way toward ZERO.  But once trading is halted, prices will skyrocket.  Everyone will then realize that silver prices based on 450,000,000 available oz. is a bit light when the actual amount available is ZERO.

What does this mean, "go to ZERO?"  It means that anyone holding paper representations for silver and gold will be paid out at the last day of trading before trading is HALTED.  All paper holders, including SLV shareholders, will ride pricews down, until they sell out.

Why in the hell do you think, of all people, JPM is custodian for SLV?  Custodians sweep, don't they?  They will sweep up any physical left in SLV when the plug is pulled on paper trading. 

All machinations you see on COMEX are manipulative.  COMEX silver is being traded down toward ZERO.  Many people think this means silver is a bad investment.  Nothing is further from the truth.

Today, silver is priced as though JPM's 450,000,000 oz. they "sold" actually exist.  They don't.  450,000 oz. are, maybe.

When COMEX stops trading, and 450,000,000 oz of silver go POOF!, the value of all those missing ounces will flow into the real, physical remaining.

Silver (real) is one of the last, best investments on earth reachable by the common people.  But JPM will NEVER tell you that.

Zoltan's picture

Return of The Trolls

Hopefully a sign that the bottom is near.  One of the most offensive ever here has returned after a three month absence.

Z

PS Kitco silver lease rates were sharply negative earlier today (except one year) but are now positive again with no evidence on the "change" of their spike).

Turd Ferguson's picture

Important to note that

MODERATOR

Gold is still above Friday's lows and $1600. Silver would look to be very close to a bottom.

Mad5Hatter's picture

Greg Hunter & Eric

Greg Hunter & Eric Sprott

24 hours later and access to www.usawatchdog.com is still strictly forbidden.  What could Sprott have said that caused this interview to be censured outright.  If anyone has any clues I'd like to hear them. ====

I was listening to Eric Sprott at watchdog. No one had posted a comment yet, SO I JUMPED on it, proposing a SHOOT FEDERAL JUDGES video game, (for trashing the US constitution) .... and then site crashed. I swear, I first thought that I was just a bit to radical for Greg.  Now Im sure it was not me, but I was right there, with the rebellion stuff, when it went down.

Beastly Stack's picture

@SRSrocco

I watched something similar but it was not Dr. Phil, with my wife this weekend. I think she grabbed it off Netflix, bottom line REAL MEN EAT PLANTS! I think I'm in the mood you are in today!

I have my days where I get tired of all the BS. I just want to get in the car and go for a long drive!

Fred Hayek's picture

@SRSRocco -- I wonder what you think of thorium

Because all nuclear power methods and materials are not the same.  I've been fascinated by Kirk Sorensen's online presentations and by Richard Martin's book.   It (LFTR's) seems like such a tremendous untapped technology and so much better than the pressurized technology used now.

Silver_investor's picture

Sprott Interview & Sinclair

I watched the interview yesterday, and I was encouraged by what Sprott had to say. I certainly wasn't expecting what we're seeing today.

Sinclair says that this takedown is just like what happened in the late 1970s before gold and silver took off and reached their all-time highs. He has said recently that gold and silver will have taken off by his next birthday, which is next month. I like Sinclair, but I fear that his prediction won't come to pass.

The Green Manalishi's picture

The Torture never stops

...............But we can take it

proton777's picture

ohhhh. jpm is like a

ohhhh. jpm is like a cornered cat now. the sharks are circling for the kill. it won't be long. no. not long at all. the charts say it. the fundamentals say. king says it. btfd. fkucing worthless losers

fast mover's picture

FOMC meeting minutes release tomorrow at 2pm EST

Don't forget these "news" events usually impact the markets.

FM

Mad5Hatter's picture

1600/30

30 silver should hold. 1/2 days sub 30, is non confirming.

I like Terd post above. the retest of 30.

And thus, I believe that a 1600/30 floor is being nailed down tight.

Now if we can only get 30 drones to strike at 1600 .....

old tradesman's picture

(No subject)

Pining 4 the Fjords's picture

Good news and bad news

The Bad News: No matter where you bought in the last six months, no matter which dip you chose or how carefully you eased into your position, you are now underwater. No exceptions.

The good news: There is no fucking good news.

Turd Ferguson's picture

Excelent from ZH

MODERATOR
binzer's picture

@ Jasper

My thoughts on the Silver price at the end of 2012 were for it to be at the very best 33 dollars by year end 2013.  At that time of course it was considered an extremely negative prediction when such outrageous quotes are thrown around.

I see no major rise on the horizon when we have had the very environment in place which should propel the metals higher for a long time, and there has only been sideways or downwards movement.

My barbed comments here are often aimed at the lack of open-mindedness in the PM community; those that say they are willing to question the system we have in place but are unwilling to question those who are supposedly on our side.  

rl999's picture

LCS report

Stopped by my LCS at noon today. I asked to buy the crappy coins they had trouble selling as I was going to send them in for more SBSS medallions. What a bunch of crap it was - some firefighter coins, beat to hell ounza coins, some weird holiday stuff, etc.

$35/ounce. Yup. WTH over? His words "We bought these at the wrong time and can't go any lower."

I can still get all the halves I want tho, and they were $24/face today.

So don't feel bad about mistiming your purchases or being underwater, it seems to happen to everyone.

Silverman's picture

Silver weekly

Weekly MACD is below zero level. Weekly slow stochastics will travel further downside. It has long way to go to become oversold. My silver target remains 27.50 at least. Also monthly MACD and Slow stochastics still falling.

ancientmoney's picture

@proton777 . . . JPM cornered?

No way, Jose!  JPM controls the strings; they are not cornered. They have the full faith and strength of the CFTC behind them.  They will come out just fine.  Only those people who have not accumulated physical silver and gold will be cornered.

Will you be cornered?

Bollocks's picture

"Looks like they are watering down olive oil "

A couple of days ago I noticed something unusual. I've been buying a particular polish vodka for about the last 20 years, now and then. It always foes in the freezer, so it's dead cold. It never freezes because it's so pure and is very high alcohol content.

The most-recent bottle I bought, a couple of weeks ago, has some partly-frozen white solid pieces in it. This can only be water which has separated-out from the alcohol.

First time I've ever seen this.

Just as with the horse-meat scandal in the UK, and now across Europe, (to also be revealed in the US soon, I bet), this is being done to mask the effects of inflation / collapsing currencies.

Mammoth's picture

On the bright side...

...just keep in mind this happy thought:

Those of you who own 'Junk Silver' may rest assured that your coins will NEVER drop below their face value.

Sorry, but that is all the good news for today.

Groaner's picture

I can't believe I quit drinking yesterday.

I have just enough left to buy a  Two Buck Chuck at Trader Joes.. 

gbend's picture

thanks

Thanks for the info on the Hunter/Sprott situation.  Greg mentioned last week that his site and sgtreport.com and kingworldnews.com have to spend funds for extra protection because they are so often targeted with these bugs. 

opticsguy's picture

$xau/gold now below Oct 2008 low

which was when GG hit $15 and EXK was a buck and change

SlobberingBull's picture

Wrong Week

dropout's picture

Stand Strong & Long

Gentleman Jim has always put "it" right out there. No shades of gray. What you see is what you get. Sometimes his rambling thought process can be frustrating. But on the whole, his basic premise shines through.

Holding gold and/or silver, expecting to make a paper profit is playing with fire. You most likely will end up holding a fist full of quickly burning paper and be left with nothing. Gold and silver are nothing more than a wealth insurance against those who destroy wealth, by destroying currencies.

All this hand wringing about the latest PM cartel shenanigans, is what it is. Fear. The next most powerful human emotion, right up there with greed. Standing strong and long, through thick and thin, will see you through. All the rest is just smoke and mirrors.     

Turd Ferguson's picture

I'm sorry but it has to be said

MODERATOR

I'm trying to take a little away time with MrsF but she has allowed me a few moments to check the site.

<rant on>

Even though I clearly warned everyone that silver could fall toward $29.20 today, it doesn't seem to matter. The amount of hand-wringing and teeth-grinding here is pathetic. Who gives a damn if silver is $29.xx? Why does it matter? Do you really have that little faith in your convictions? Sheesh, we make fun of the "sheeple" all the time but, we get a couple of down days in a row as JPM et al attempt to rig paper lower, and some of you get suicidal. Grow up! Who ever said this was going to be easy?

And then there are those of you who insist on taking umbrage with the paid trolls and disinfo agents who always crawl out from under their bridges on days like these. Ignore them! They're useless and were only sent here to coerce you into self-doubt. Do me a favor, please. Go back through this thread, find the offending avatars and put them on your Ignore List! NOW!

If silver goes to $10, then you can be distraught and apoplectic. Until then, turn off your computer and go shine your stack. It remains your one and only protection against future events which are, most assuredly, still coming.

<rant off>

ancientmoney's picture

@groaner . . . re: TJ's

Last time I bought some at my local TJ's, it was Three Buck Chuck  ;-)

ctob's picture

Underestimating the manipulation

Let's assume that you are correct in the trend of prices going to zero (in the abstract). 

Then I would expect that eventually at some price point physical sellers would be charging a lot more money on the premiums (like 100% spot) or even stop pricing in spot entirely.  I mean there is no reason any sane gold dealer or jeweler is going to give you an ounce of gold for 50$.

So the question is, if you are right, at what point will these two realms diverge so completely that its obvious to everyone and what will be the consequence?  Or is that the real "floor" of the manipulators; is it based entirely on not allowing these things to diverge?  That all of this action is merely a management of expectations and they kill it when they see confidence polls go up.

I suspect the Fed in conjunction with various other actors could decimate the price of metals if they so desired.  But I think there is some question of divergence.  Right now the divergence is hidden behind many years of neglect and manipulation and indirect things like leasing.  Killing gold down to the $800 price is perhaps plausible, but killing it to $400 seems to be a stretch to far given its current price and context of inflation that would be enough to make most normal people think something weird is going on.

I mean in the end at some point the various sellers of gold must say to themselves "this spot price is insane I might as well hold my physical".  Now when we consider that these gold sellers have a better idea of the supply and goings on in the gold "markets" than the average person the idea that they would be selling physical at lower than $800 seems unlikely to me.  At least not without very large tacked on fees. 

Probably paper price can be pushed just about anywhere the Fed wants and I doubt anyone can obtain information to prove the fed was doing it.  But I think a very good question is at what point would actual physical sellers stop correlating to spot price? 

A follow up question is; are the manipulators doing price targets of raids based on that analysis?  I think the answer to the second must be Yes because once there is significant behavioral divergence from physical sellers and the paper markets the game will be up.  Once spot is rejected as meaningful for physical then the breakout people expect would seem to me to have begun.

Another question is how cautious are these raiders being?  If they are cautious enough perhaps they will not spook what they are hunting.  If they become desparate and spook the phys sellers then those sellers may reject spot at a higher price/earlier time frame.

Anyway I don't really know enough about the whole system to get into too many scenarios.  But I would suggest that:

  • the physical sellers simply cannot play along with a prices to zero equation and must openly reject spot at some point
  • This point would spell the end of the paper markets.  This end may not be a crash but rather a year long ridicule to dismissal/rejection.

There are already examples of silver mining companies who purposely hoard inventory on the short term precisely because of this sort of thing.  They see a raid they just wait a month or two to sell.  If this got bad enough or volatile enough they would probably simply start setting their own prices.

So there are two scenarios I guess:

  1. Fed and other manipulators push metals down and down and down some more trying to get as low as they can.  Paper sellers hit their inflection point and reject spot prices.  Metals price trends begin to adjust to expected trend as people realize a $5 spot price on silver only buys you $20/oz and that spikes in spot do not correlate to what phys sellers are doing.  In a metal like silver this will be readily apparent very quickly.
  2. Fed and other manipulators tinker with the price but allow it to slowly achieve its natural state as they readjust paper market and occasionally do raids of various sorts for short term policy goals.   I guess this would be mostly to control gold due to its correlation to interest rates and its perception as indicative of inflation and to buy time to sort out supply issues/hoard as much as they can.

Really there is a third scenario they are nuts and they just randomly do stuff to put out fires as they show up (my experience with government is that this is most likely).  But that scenario is not that useful for thinking about the effect of phys sellers rejecting spot price.  It is probably the implied and assumed scenario most people on these boards are working off of.  Its a pretty likely one.

Silver_investor's picture

Here's the quote

"Those who think the Goldmans or Morgans are stupid and clumsy are the ones demonstrating those traits. I see and know the same things these greatest of all time manipulators of price see and know. This is 1979 in the gold market right before the greatest price appreciation took place over the shortest period of time then. The most money over the shortest period of time in the gold bull market of the 70s was not made by the gold crowd but rather by the mega powers of Establishment Wall Street after doing the same things they are now doing.

The gold price can be pushed around like any market can be, but the purpose is to take away yours, increase theirs and then do exactly what is being done now on the upside.

In years to come you will dismiss all my efforts based on my $3500 and beyond number. The reason for this is that number will have only been a start in the gold price towards the new era of industrial expansion based on sound money and major nation's balance sheets having been balanced by gold."

 

Jim Sinclair, February 17, 2013

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