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The Above Chart depicts about 2 years of forward projection for a relatively less popular, but gaining strength among currency traders Polish Zloty. This chart, is a startling example, how the "RANDOM WALK" theories are dangerous. In what follows, we give some more rational, why such theory seem to work Most of the time and fail badly at times referred as Black-Swan events.

Army of Armchair economists tell that markets are random and unpredictable. So, why invest you ask, wisely? Then they will tell you, that while the markets are unpredictable, the long term trend up is predictable, especially for Stocks they will say.

They may as well say that long term confiscation of Dollar Purchasing Power is predictable. Well, that, certainly seems to be close to truth, if you look at Dollars loss of 97% purchasing power, since creation of FEDERAL Reserve that was supposed to make stable (or flexible) as they referred to it.

Apparently the only direction Dollar showed the stability is Down (we predict some recovery any time now(:-, see our previous article "Collapsing Dollar: Not So Fast"). I am only presenting facts Dear Reader, have no other purpose.

So, could you make money by following this trend of Dollar Depreciation? Yes, if your trends are 20 Years long. Unfortunately, you could not make money, with this general knowledge, as Dollar had wonderful Years of 1980-1987 and 1995-2001, which would have wiped your trading account if you followed the "Dollar Confiscation" theory, while the theory itself would remain correct in a long run.

So, the markets are not random, but they are not one way either, especially, in any 10 year period or so. This introduction should make it clear, what we do is not easy at all. And what we do is to map (outline) the behavior of currencies against each other, in short (6 month) or long (20 year) period and we have a very successful records to show for those prognostications. They can be found in our former articles at this site and/or at our site personal site. This has importance beyond being useful for currency traders. This is important for all investors who are in the market to gain/retain PURCHASE POWER, rather than, make money, which may have lost its value. This applies 100% to current situation, where Stock Markets, and even, surprise, surprise! Gold has been losing value against most of currencies, since April 2010, which was correctly identified as the REAL TOP, in our recent article at this site einstein-of-the-markets-what-is-next.

I would like to explain, some of the best ways we found that these charts can be used, via illustration on this chart, itself. Most of the time, the currency markets will follow the outline, but the markets being what they are, manipulated, one needs to have very alert view of these charts. Looking at June 2010 period one can notice a clear divergence, where the USDPLN was moving higher while the Prediction(red line) was indicating the move lower. This was a period of so called "EURO CRISIS." The same can be observed on the charts depicted in the "Collapsing Dollar, Not So Fast" article. Again, the fundamental explanation of that was, that "EURO will collapse because of the Greece" (while, apparently, USA could not collapse because of California, or New York. It is now apparent that BIG BOYZ wanted to keep the latter argument for JUNE 2011).

Being as it may, the best way to read the predictive charts to observe any and all short term, strong, deviation from the predication line and stay out of that market until the market prices come back in line with the predictive line (Red LIne). Of course other methods such as, short term cycles can be used to pinpoint the change in the direction of "Stray" market back to the "in line" market.

One unequivocally proven feature of such predictive charts is that, they seem to predict, 1-2 years out, very well, because the "stray" markets do not last more than few months at most. So, the suggestion is that majority of users of such predictions will be investors and/or intermediate term swing traders. For those type of investors the opportunity exists to plan ahead for 1 or more years ahead.

Conclusion:

Markets are not random. That does not mean some of the valuation theories (such as Black-Scholes), built on random walk, their theories are incorrect. As models, with the assumptions built in, they are perfectly describing the Option valuations, until the real life takes over and those valuations do not resemble anything like what those models call for. After all: any and all models, are, in reality self fulfilling prophecies, to the extent that people follow them.

Life, on the other had, and therefore trading can only be modeled in probabilistic manner and those probabilities have discrete values not continues ones implied by the restrictive models, such as Black-Scholes model. As Heisenberg prevailed, in argument with Einstein, the "God Does Throw Dice" (Apparently Electrons with in the Atom, prefer certain values and do not even visit certain energy levels, but jump among them. How Nice!) and there is not much anybody can do against this Quantum Physics phenomenon, except know and comply with it.

Until the time when the more powerful traders (group of people) had enough fun with prevailing conditions and take the markets the other way, Everything looks like a random walk triumphs, but then they sense that no BOZOS are left in the markets and black-swan results.

Is this what we expect to see for SILVER within couple weeks or so. YOU BET.