Silver - Not Ready For Prime Time.

Saturday  21 September 2013

There are two distinct advantages derived from reading charts.  They are all based on
factual information, in the form of executed trades, and they are a short-cut for reading
about all the exogenous factors, [mostly fundamental], that impact the market.

Everyone familiar with or interested in silver knows about the dwindling supplies, the
manipulation of the COMEX/LBMA paper markets, the M F Global disappearing act
of accounts that stood ready to take delivery of [unavailable] silver, the inability to make
good on deliveries, etc, etc, etc.  All facts sufficient to drive silver to above all-time highs,
yet price continues to languish in the $18 – $25 range.

We attribute silver’s inability to fulfill PM holder expectations because Western world
central bankers will not allow the price to rise.  For years, central bankers have been
winning all the battles, but the ultimate outcome of the war has them doomed.  However,
it may be many more months, possibly a few years, before the war is lost.  What happens
in between will financially ruin paper holders, [contracts, stocks, fiat currencies, etc.],
and reward those smart enough to have accumulated and personally held the physical
metal. See Do You Prefer Fundamental Tale Or Technical Reality?, http://bit.ly/1eQNE4P

The stackers  will be rewarded for their insight and patience.  The latter continues to be
tested, but at the same time, it offers the advantage to accumulate more at these likely
never-to-be-seen-again prices for the next few generations.

Americans have been “conditioned” to “want it now!”  Chinese think in terms of future
outcome[s] and planning accordingly to be in a position to enjoy the benefits of what
is almost sure to come.  Nothing is ever guaranteed, just like tomorrow is promised to
no one.  We get to live in the present tense and conduct our lives as to what will bring
continuity for the next day/week/month/year/decade.

The reasons for buying and accumulating silver are more pressing with each passing
month.  No one knows how the central bankers and their compliant governments will
“change the rules.”  As an example, it may become a “criminal act” to buy or trade in
silver.  Already, there are reporting requirements in place that allows the government
to track who is buying.  Right, NSA?

Already the CIA has told bankers to get out-of-the-way when agents raid suspected safety
deposit boxes that might contain silver and gold.  Always remember:  If you do not hold
it, you do not own it.”  If anyone is storing PMs in any financial institution, you are at
risk of losing it all.

Get while the getting is good.

Play the financial chess game for desired end results that are not dependent on the next
rally/decline in the faux paper markets.  Time is running out to buy and hold.  Price does
not matter.  If price were to go to $200 the ounce, would you be concerned that you paid
$28 instead of $22, not that $22 is currently available.  Or, how about if at $200, you
missed buying because you did not want to pay $28 or $35, so you have none/less when
price reaches the $200 example?

Better to be smart, not “right.”

What are the prospects for silver, according to the charts?

Everyone can have whatever opinion [s]he wants, but facts prevail.  Everyone can have
a belief about what the market should do, but charts tell you what the market is doing,
irrespective of opinion or belief.

There is a high degree of logic within the markets, and it is evident when one suspends
opinion/belief and considers only the known facts, available to everyone at the same
time.   The market is the most reliable source of information, and all we need do is read
the developing “story” unfolding.

We break the monthly down into its various phases.  You can see each phase has shortened
its time element.  The current, new phase just getting underway is way under the element
of time.  Logically, does the latest developing phase have enough framework to overcome
the largest, just completed peak phase?

Common sense says no.  Even we are of the belief and opinion that silver will ultimately go
much higher, but the key word is ultimately.  For the present tense conditions, that is an
unrealistic expectation.  From this chart, we know silver is highly unlikely to rally to $100,
$200, or $300.  Actually, not even $50.  Facts keep our beliefs in check and context.

From this, it would be futile to expend mental energy promoting the premature notion
that silver will become worth considerably more per ounce.  Right now, it is struggling
to maintain between $18 – $25.  That is a fact.

The weekly chart zooms in on the difference between the last peak phase and the currently
just developing new price phase.  As mentioned, trend lines, TLs, are not the most reliable
charting tool, but they can be a general guide, and right now, silver is not positioned to
challenge/break the existing TL.  The “Market NMT,” [Needs More Time].

The reason why we keep referencing opinions/beliefs is because they are subservient to
the factual market forces.  Right now, the fact[s] of the market have silver “valued” where
it is, rightly or wrongly within the context of your own belief/opinion.  Always remember
beliefs and opinions are expressions of the Ego.  Egos are emotionally driven; facts are
reality based.

Upon which would you rather rely?

Buying and holding the physical metal aside, [the best and most consistent choice for
reasons outside of charts], near-term traders have some valuable, factual information
provided by the market.

Putting price into market segments, we can see support from the first box, on the left,
was broken to the downside, and another lower trading box formed.  Broken support
becomes future resistance, and you can see how price was unable to rally above that
established broken support/now resistance from the first box.

Once price rallied above the resistance of the second box, that now former resistance
becomes new support. strengthened by the same support from box 1.  The resistance
of box one, the $25 area, acted as effective resistance for the third and current box.

We already have a context for market expectation in buying and holding physical silver.
The lower, daily time frame can be used for making short-term buy/sell decisions in the
paper market.  Yes, it is blatantly manipulated, but if we have some rules of engagement,
then we need no be concerned about purposeful market manipulation.  We can choose
to buy/sell based upon sound trading rules that offer an edge.

One such rule is buying a known support area, if and only if developed trading rules
determine there is an entry signal, based on past, similar market set-ups.  There was one
such opportunity on Wednesday, marked as Buy on the chart.  It was prior to the Lying
Ben comment that in line with all previous broken promises, the promise to taper would
also be broken, and there would be none.

Good luck often comes to meet preparation, and we got “lucky” at a known support.  The
next day, note how small the price range was.  That is the market giving us factual
information that buyers were being matched by sellers who prevented the range from
extending higher.  The recommendation was to exit half the position to lock in a great
gain and see what develops on the balance, with a large potential profit cushion.

Most were waiting for the Fed announcement before deciding what to do.  Established
rules said to engage from the long side, which was prior to the “announcement.”  If we
were wrong, the risk was small.  If the signal were timely, there was an opportunity for
profit.  One can never know how much potential profit may result, but in this instance,
it was substantial, given current market conditions.

Charts tell us whatever we want to know about the market, in whatever context we choose
to view it, and even take advantage of the available information.  At the time of the trade
decision, everyone else had the exact same chart structure available to them.  Many
simply choose not to learn how to use it.  They prefer formed opinions or beliefs over facts.