No one knows when gold and silver will rally and anyone who says otherwise has already been proven wrong… Despite a decent rally in both gold and silver over the past 7 trading days, [a look at the charts shows that] both remain in bear market conditions overall with no defined indication of ongoing strength.
The above comments are edited excerpts from an article* by Michael Noonan (edgetraderplus.com) entitled Gold And Silver – No Defined Bottom.
The following article is presented courtesy of Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) and www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and has been edited, abridged and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.
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Noonan goes on to say in further edited excerpts:
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…
The month of June is ending well, but there is no defined indication of ongoing strength. Friday’s 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, [which] is not the best showing for buyer’s ability to prove their worth.
Gold – Monthly Chart
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.
- Sellers were also unable to take advantage and move price lower but 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.
Gold – Weekly Chart
While the monthly chart [as seen below] had more of a positive look, it is tempered by the weekly, for reasons just explained.
Gold – Daily Chart
…The daily has the potential for buyers absorbing sellers at an area of resistance. The overall read of the last several trading days (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.
Silver -Monthly Chart
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 – Weekly Chart
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 or 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.
Silver – Daily Chart
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 many 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.
Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
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For everyone that feels that the value of both Gold and Silver are now being played by those selling paper or naked shorts, be wary of those effects on the value of PM’s since those hoping to drive PM’s downward will continue to push prices downward as much as possible, at least until something causes everyone to jump on the PM bandwagon, then we will see rapid gains in PM’s and rapid loses in the value of both stocks and the US$.