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Gold And Silver - All Fundamentals/Opinions Are Useless

By: Michael Noonan | Sunday, January 27, 2013

All general statements are untrue, [including the one above and this one]. There are exceptions to every general rule, so they cannot always be true.

There is truth to the consideration that all fundamentals and opinions are useless in the markets, as they pertain to timing, and timing plays a huge role when investing/trading. What fundamentals/opinions do is put one's belief system into a context with regard to the market[s]. If one wants to profit from any belief, he/she is then pitted against the forces of the marketplace in their exercise.

If you know about the fundamentals, to whatever degree you believe, and/or if you have an opinion, from whatever source and however reliable or not, the question then becomes, "What are you going to do about it?" Our premise topic, fundamentals and opinions are useless, goes back to what we have stated before:

It does not matter what others say about the market; what matters is what the market says about others.

People are drawn to articles/information that reinforces their beliefs. Markets force people to put aside their bias and deal with what is, or else deal with the consequences if the bias/belief is in conflict. The market is, and always will be, the final arbiter of all "facts" and "opinions."

The market is composed of all the known [and not so well-known] facts that affect supply and demand. "The gold held in New York and London is/may be gone." Fact or fiction? The Fed and London ain't telling, or what they are telling is that "belief" is untrue. Fiat currencies are being created at unprecedented levels. We all know that is a fact, and many believe gold and silver will/should recognize that fact and be priced accordingly, [but are not]. The fundamentals for silver supply and demand are incredibly bullish. Few can deny that, the few being the Fed and JPM, et al.

The market knows all of this! Yet, the price of both gold and silver are languishing in protracted trading ranges. So how valuable are the fundamentals or opinions about gold going to $5,000, or silver to $400, [pick your own number, as most undoubtedly have one]?

For right now, and for the pat 18 months or so, the best information in the world, the strongest opinions held have been "useless." The charts, [the market translated into a visual format], reflect the trading ranges, and current prices are just about dead center within them. The middle of a trading range is where the level of knowledge is at its lowest. It is a coin toss. Price can rally to the top of the range and still fail, or it can decline to the bottom of the range and fail to go lower. Flip a coin!

Whatever your opinion of where the price of gold and/or silver should be, this is what the market is saying about your "belief/opinion:"

[Monthly charts are not included as the month ends next week, and those charts will be included next week. The discussion for gold is more general, and a little more detail is given in the silver charts, as both are similar.]

The market is showing price to be in the middle of a lengthy trading range, [TR], and until the TR is broken, up or down, one is spinning wheels in between. Last week, we showed how the clustering of closes could signify support and a rally, or a pause before continuing lower. The gold "rally" fizzled and has retraced back to the clustering. Will it continue to act as support, or fail?

Not only is gold in the middle of the TR, it is also in the middle of a down channel. It is anyone's guess for now.

Let us add that the fundamentals are incredibly bullish, and within that context, we continue to advocate buying the physical at any price, and buy consistently. Our analysis pertains to trading/buying the futures. Regardless of the bullish context of the fundamentals, the market is saying, "Not right now." Until price rallies above $1,800, it is not going reach whatever future expectation one may have, which is all we are saying. For timing, any/all fundamental considerations are useless. For positioning one's self in the physical, now is the time. When gold/silver take off, [even we have a bias], it will be fast and furious [opinion], with no looking back, but that can be months, Quarters, possibly year[s] away.

Gold Weekly Chart
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The daily chart comments pretty much speak for themselves.

Last week, we noted a long position on the strength of the wide range, strong close bar, 6th bar from the end. The recommendation did not lead to much profit, but profits were taken prior to the decline, based on developing market activity at the time.

Gold Daily Chart
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While silver is weaker, relatively to gold, it is behaving relatively stronger of late. Note how the weekly close is higher/above the clustering of closes, where gold is right at the clustering location, [both still in the middle!].

As with gold, now is the time to continue accumulating [stacking, as it were] silver at any price. Sales of the American Eagle are going through the roof and were recently halted until 28 January. Why the government continues to sell them at all is beyond us in comprehension, given it is part of the forces [of evil] endeavoring to suppress the market's alternative to the insidious issue of fiat.

Silver Weekly Chart
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For as much as an argument can be made that price is holding reasonably well within the ongoing TR, the "fact" that silver failed to reach the upper channel line is a sign of weakness. Yet, unlike gold, the decline in silver held above the wide range, strong close bar where a long position was recommended. You can see the small range high at 32.50, 3rd bar from the end. It was the market's message telling us that demand was weak. The long position was liquidated profitably, before the decline set in. Love those messages!

Where will the decline stop? We have no clue, nor do we [or you] need to guess. Instead, simply wait for developing market activity to indicate demand is overcoming supply. Why guess when the best source of information will make some kind of factual declaration?!

Maybe price will hold potential support at the clustering of closes, maybe not. What is more important is that the existing TR is telling everyone to wait, for those inclined to heed the market's message. Even on a shorter time frame, within the TR, the market is STILL saying, price is not strong. Buy the physical, but not the futures.

Fundamental context matters for what side one chooses. The message from the market matters the most for timing and implementing one's belief. That is a fact that has never changed and one that never will. Count on it!

[Just don't take it to the bank. Banks cannot be trusted.]

Silver Daily Chart
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Author: Michael Noonan

Michael Noonan
http://edgetraderplus.com

Michael Noonan is a Chicago-based trader with over 30 years in the business. His sole approach to analysis is derived from developing market pattern behavior, found in the form of Price, Volume, and Time, and it is generated from the best source possible, the market itself.

Copyright © 2013-2014 Michael Noonan