Thursday, March 17, 2011


Update - 10:20pm EST

Silver is closing in on $35.00 again as it is now making big moves above the key resistance level. I was able to make this chart with 50 candles that has the key fibonacci levels as well as the 18 period moving average. It has the high average, the low average and close average. When looking at this daily chart it has found support very nicely at the 18 day low average and the average is still in a rising format keeping this in a bullish state. This weekend i'll get out nine of these charts that include the 1 minute, 10 minute, 60 minute, 5 hour, daily, weekly, monthly, quarterly and yearly. Observe the market on all time frames using 50 candles, two key fibonacci lines and the 18 period average.

Flat day today for metals

Not much to report today as the gold and silver markets are staying neutral on the intermediate time frame. My personal bias is that the markets will continue to go lower and thus have a test on the $31-$32 handle for silver, but this is only an educated guess. $34.00 is big support within' the silver range and a break below the $33.50 previous range should result in a fast move lower most likely to $32.50 and a fast move would be that of a few hours to make it lower. This is very normal for the silver market to have these sort of events take place within' the paper silver market. The ultimate outcome is still not in doubt by any means and that is when you purchase real physical bullion (or scrap) silver that you actually have silver, and if you have a $20 piece of paper that is known as 'money' or 'currency' that you have a piece of high quality paper that weighs one gram with very little intrinsic value. My local dealer today stated that there is going to be bad news that he can't let go of any of his maple leaf bullion for any less than $44.00 and this is find as great news. It shows you that even though the prices are neutralizing in this $34.00 area that they can still pop a ten dollar premium on this. When I mention the disconnect from paper to physical this is what I am referring to. This is where you have much higher premiums because of the real supply and demand and not the phony price action on the paper markets. This tells me that if we have that move to $31-32 area that it should have a nice bounce in this area or it will not even go this low to begin with. If it breaks below $30 per ounce on paper than the disconnect will even grow larger. In march of 2008 when Silver was over twenty dollars I was buying Maples for $25.00 from dealers and then the price plummeted to twelve Canadian fiat debt notes. It was a challenge at this point to even see twenty dollar prices at this time frame because most dealers and silver traders knew the down move was phony. Then as the price of silver rose to eighteen dollars in the spring/summer the maple leafs were selling for $24 to $25 and 999 generic bars were $22. I wonder if the price were to go back to $18 and a 50% reduction of price what the prices would be? Would we see $25 maples? The answer is no you will not because the real physical supply and demand doesn’t allocate it to be true.

Update 8pm eastern - I have found a way to add moving averages to these candle charts. I found a little trick in doing so, and I don't have enough data yet for a 20 day average, but that would be getting close. This weekend another short candle video will be done using all the time frames from 1 minutes to the quarter and the 18 period average for each. This market continues to trade in its current trend and that is a range bound market. The range is a fifty cent range (1.5%) from $34.00 to $34.50. It has pierced a little above and below this, but thats where it stands. There has been more support tests than resistance tests and that gives more short term creditably to the sellers and only by a fraction. Given the current status of being at the top end of the range gives the opportunity to either break higher or at least make the bias neutral for credibility. It's below the five and ten day average and a test there will change the message of the market. When it eventually makes it up to the five day average, what you may want to observe is how much silver retraces from this level. If it can make it back 38.2% and show some strength moving forward, these are often the moves that change trend direction.

1 comment:

  1. One more thing. Could you please talk a few sentences about what you think will happen when the dollar starts to have its major collapse, when it comes to equities and commodities listed in USD. And let say gold and silver free themsleves from the USD, what will they be measured against as it will be hard to determine a value for an oz of gold or silver if we can not measure it somehow. Would be thankful for comments on this.