by Michael Noonan, Edge Trader Plus:
Lye – [noun] a strongly alkaline solution, esp. of potassium hydroxide, used for washing or cleansing.
There has indeed been an ongoing cleansing in the precious metals market since the spike highs five years ago. Remember, there have been calls for a massive turnaround in prices for both gold and silver since 2013…2014…again, even more so in 2015. 2016 has just freshly passed, and both metals continue to flirt with their lows from a year ago. A few years ago, all the rage was for the man and woman on the street to be buying gold and silver coins, long lines, especially in China, forming for blocks to make purchases for the inevitable rally “sure” to soon follow.
During that time, we mentioned that individuals, small traders, et al, rarely, if ever, get in at the bottom or get out at the top of market turns. Both gold and silver were much higher, a few years ago, but the moneychangers continue to prevail as the “cleansing process” is still ongoing, tiring out the masses who had been certain that gold and silver would soar to $5,000+ in gold, $200-$300 in silver.
Gold closed the year at 1158; silver at 15.98. The lies by the elites’ central banks continue: gold is useless. The favorite add-on line was that gold did not yield any interest. Having stripped their phony fiat paper money of all interest, in fact now charging negative rates, now paper fiat no longer yields any returns. Now, the drive is to eliminate, first, higher denominated fiat currencies, [it will happen in the US, count on it], and then followed by a total removal of all cash. The globalists are corralling everyone into their digitalized banking system where no one will have any financial freedom, none!
The Golden Lye is the result of the globalists’ Big Lie. While they are in the process of destroying all physical “currencies,” [debt, disguised as money], the globalists have also been accumulating as much physical gold as they can. “Do as we say, not as we do.” Sadly, people follow their dictates.
Charts can be confusing, at times, but they never lie. It is for that reason why we reference them to the exclusion of what people say. The charts show what people actually do. At the close of the year, we are including abbreviated Annual and Quarterly charts drawn onto the monthly chart for gold and silver.
Most people concentrate on the daily and even intra day charts, getting caught up in the “noise.” Smart money follows the longer term charts, starting with the monthly. They are not concerned with the day-to-day price fluctuations like most traders are. Even holders of physical gold and silver grow impatient with each passing week, month, year, disappointed with current price levels. This is not true of the central bankers, and it is certainly not true of the largest gold accumulators, China, Russia, even India.
Charts are most reliable when there is synchrony with the various time frames, and we see this in the three time frames: Annual, Quarterly, and Monthly. The position of the price of gold remains near recent lows and well under the 50% retracement level. The half-way mark is a general guide to measure the “health” of a market. For Bears, price being well under the 50% level means Bears are comfortable with their positions. For Bulls, being so far under that level indicates weakness with no signs of a turnaround.
That last statement can be qualified by saying the 2015 lows could be the end of the decline from the 2011 highs, but there needs to be a confirming retest that those lows will hold. We mention that potential because price closed at the lows on the Annual chart in 2015 and rallied sharply during 2016, leaving those who sold lower in trouble, and those who liquidated their positions are now out of the market and will pay higher to get back in, if they can still afford it.
The Quarterly chart shows small ranges going into the low, a sign that sellers could not extend the range lower, implying buyers were supporting the market. The 1st Qtr of 2016 was a strong rally and close to mark a change of behavior from all of 2015. The 4th Qtr ending in 2016 was a large range down, closing at the low [which can sometimes be exhaustion selling and a trap, yet to be determined], but the wide range with a close in the lower half was still above above the 1st Qtr lows, even almost at the 50% range of that bar.
The same assessment can be made on the monthly chart. Note how wide the range was to the downside for November, on record volume, followed by a very small range for December. Any time you see exceptional volume levels, it almost always marks a change from weak hands into strong. While it appears to be negative, the volume more than likely means strong hands were buying everything weak hands were selling.
The small December range indicates sellers were held in check by buyers who prevented the range from extending lower. This also implies support, even though the apparent price structure “appears” to still be weak, and it supports the November volume assessment that smart money is buying and positioning themselves for an eventual higher price level. The operative word is “eventual.” Globalists/central bankers are never in a hurry.
The takeaway message from the longer term timeframes is that gold remains weak; whether it is bottomed or not lacks confirmation, so one should not expect an immediate rally to the upside. An economic shock of some kind could cause price to rally sharply, but that would be an anomaly, at least as to timing. Under so-called normal market conditions, it appears that the bottoming process for a turnaround could last a few more years and the same commensurate time frames for Quarterly and monthly activity.
The globalist’s lies continue as does the central banker cleansing of longs and some holders of physical gold and silver. Smart people are willing to hold whatever physical metals they have already purchased, and they are also willing to add at these bargain price levels. The globalists may be able to make fiat “cash” disappear, replaced by imaginary digital blips in one’s bank account, but they cannot make gold disappear [except by buying it, which is what they are doing].
Gold has no third-party counter risk, and it has history on its side as the ultimate wealth preserver. The globalists are doing everything they can to divest gold from people. Do not fall for their lies.
The argument for a weak gold market is a given. The weekly chart is just as weak as the higher time frames. What becomes more interesting for the weekly, and it is even truer for the daily charts, is this is where one will begin to see the first signs of a change in trend.
The 2013 break of support occurred on sharply higher volume, and there was further continuation, not quite the way the daily silver chart has developed, as will be seen in the last of these charts. Shown is the consolidation at the December 2015 lows. Compare that development with previous lows on the chart. Once price rallied away from the lows, that level is now being retested from mid-December. When we say something needs to be confirmed by a successful retest, this is a perfect example.
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