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Michael Noonan

Michael Noonan

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,…

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Gold And Silver - It Is Silver Sending A Message

When the markets "speak," we "listen." For all of the non-stop bullish "news" about the unprecedented demand, more for gold than silver, and all of the talk about how useless the COMEX paper market is, it has been the paper market that the forces of supply and demand have been heeding. If it were otherwise, the unprecedented demand for gold would have the price of gold higher than the bogus paper market. Yet, that has not been the case.

When will this bear market in PMs turn around? When it does, and not a moment before. This is not some flip answer, it just happens to be the way all bear markets end: when they do. We have seen calls for a turnaround for several weeks now, none of which have been even close.

If you want to make rabbit stew, first, you have to catch the rabbit.

First, lets' see some concrete signs that a bottom is in before the regurgitation of "Gold is going to $10,000!" starts showing up in a host of new articles pandering for attention. It sure did not work for the previous ones.

The best way is to decide for yourself. Anyone can read a chart, [just not necessarily well], so let us go to the most reliable source, the market, and see what the prices of gold and silver have to say about what everyone else has been saying about them. People have been known to exaggerate, even lie in their "opinions," but the market never does either. It just is.

The issue we have with gold is a lack of an immediately identifiable support area. There is support, a little lower, and for that reason, we do not see a strong message coming from gold, just yet. On the other hand, [never take anything for granted in the markets], the fact that price is holding above obvious support is an indication of underlying strength. IF that is the case, we still need to see some concrete sign of stopping activity before price can turn around.

Gold Monthly Chart
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We show some potential support resting under current the price. Silver, unlike gold, is already at an area of support. We will get to that, shortly.

Gold Weekly Chart
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The reminder about the importance of how a wide-range bar usually contains future price activity is shown to keep it fresh in your mind when you see it again in the future. If you pay attention to charts, you will definitely see this pattern repeat over and over.

As we did these charts, in order as presented, after seeing the daily silver chart, you can come back and revisit this one with a different "eye" for its content. The difference between gold and silver was the synergy in all the time frames in silver, not so for gold.

It is a great example of reality is always there to be seen, but sometimes we fail to see it. The truth is often under the brightest light, while people look elsewhere for a "hidden" message.

Gold Daily Chart
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Here is silver on the monthly, already into an identifiable area of support. We should be looking closely for some form of stopping action, telling us price may stop going down.

Silver Monthly Chart
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Last week's bar stands out as a red flag for its price and volume. The same bar in gold was too similar to one that had already failed, so it could not be viewed in a more important vein as this one. We give a more detailed analysis on smart money and high volume activity on the daily chart, below. Suffice it to say that what is true on the daily is also true for the weekly. It is just more visible and easier to explain with more bar examples.

When you understand the explanation given on the daily, come back and look at this one again so you increase your discerning eye more when it may seem less is apparent.

Silver Weekly Chart
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Finally! The explanations on the chart as to why silver is sending a message. What needs to be understood is that there is no confirmation that a bottom is in. Before a trend can turn, it must stop going down.

No one can definitively say the trend has stopped going down, and even when it does, then we must deal with how long it may take to reverse. That can take many more months, or a year or two. It could turn around very quickly, but we cannot know the odds for that event, were it to occur. What we do, in the interim, is prepare! If this happens, then do that.

It never pays to buy the first rally after a bear market ends. There is usually a form of retesting of the lows before a market can begin to move higher. This is the first time we have talked about specifically preparing for a possible change in trend, at least from a pragmatic perspective. Sentiment for a change has been long-standing, [but of no avail.]

Keep accumulating physical gold and silver, a pragmatic stance we have advocated during the entire market decline, but for a different purpose. We cannot say the turnaround for gold and silver is "rabbit stew" ready, just yet. If the end is near, there will be many more signs. The market never lies.

Silver Daily Chart
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