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..One need not be expert, or even conversant, in reading a 
chart to be able to read and appreciate how charts “talk” and reveal very clear information…Each of the following charts contain…[their] own message [related to] price volume behavior that has a convincing element of reason… See if you agree.
The Gold:Silver Ratio Favors Silver Long-term
We continue to favor silver purchases over gold solely on the basis of the gold:silver ratio having extended to the 78:1 area, where a single ounce of gold can buy 78 oz of silver, in theory. In theory because there are transaction costs from a dealer…We expect the ratio can continue to 80:1, perhaps higher,…[as] the chart on the higher weekly time frame [below] does not show any sign of an end to the down trend.
Silver: Weekly Chart
…Based on factual observations from reading developing market activity depicted in the chart, combined with logic, leads to that inescapable conclusion: [the silver] price is likely to go lower.
Silver: Daily Chart
The daily chart supports the weak read for this market. As indicated in the chart comments, the message from the market is weakness, followed by more weakness with each passing week and month.
When will a turnaround occur? As we keep saying, no one knows, and for sure we do not. What we know for certain is that the market will give clear signs when and as a turnaround is developing. For as long as the message remains constant, one must exercise patience. Actually, there is no choice, and those who have been impatient and tried to pick a bottom have paid a price, depending upon how hard-headed one is, or the size of one’s margin call.
What is also true is that smart money buys low and sells high, for the most part. It is less important to buy the exact bottom or sell the exact top, for it takes time to accumulate a position during lows, or distribute a position near highs.
Whenever you see large spikes in volume, you can be sure that smart money is on the other side of the trade. Who is on the other side? Weak handed traders with insufficient staying power.
Silver: 20 Minute Intra-Day Chart
If smart money were buying silver, below, (even though it is only a 20 minute intra-day chart, the principle is what matters), their activity (it shows up in increased volume) would be nearer the lows, and certainly not at the highs. The largest volume spike that sticks out like a sore thumb, occurred at the highs. This is not where smart money would be buying.
If not buying, then they must be selling, and weak-handed buyers are buying into the late stages of a rally. Confirmation occurs a few bars later when an even larger range bar appears to the down side and erasing all the buying effort from the rally to the high. We mentioned weak closes on the weekly chart as an indication that sellers are still in control and buyers cannot hold a rally. This 20 minute chart is an abbreviated time frame that demonstrates this principle over every time frame. It is a message from the market that bears heeding every time.
…Please keep in mind that all of the fundamental information on gold, and silver, is known. The whole world is aware of how bullish the news is, how bullish demand is relative to supply. Yet, despite that information, the market is telling everyone who cares to pay attention that those fundamental factors are not what is moving these markets. Even if one does not understand the underlying reasons, fundamental or otherwise, it pays to heed what the market is showing and react accordingly.
This is still a bear market, all other news notwithstanding. Price is the final arbiter, not one’s opinion.
[The original post written by Michael Noonan (edgetraderplus.com) is presented here by the editorial team of munKNEE.com (Your Key to Making Money!) and the FREE Market Intelligence Report newsletter (see sample here – sign up in the top right corner) in an edited ([ ]) and abridged (…) format to provide a fast and easy read.]
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