Monday, July 11, 2011
This range that we have seen has put the price memory for this rally at the level we are currently stabilizing within' as we continue correcting sideways. This graph shows a ten percent barrier for each price movement takes three entries per day for this graph. I don't know if we are over staying our welcome here in this tight ragne, but we have established a major amount of support/resistance currently within' the $33 to $38 range. This tells me that this level is going to be significant area later on, and when I say significant I state that it will be noticeable after the fact. If this range happens to end with a break to the upside that brings parabolic gains and we never go below fifty again then this area is big for when looking back at today as a past moment, then I will most likely say this was an area it consolidated through time which is what is needed for markets not go straight up and build energy for large moves.
Earlier on this year on the blog I was saying to buy any price below $78.00 per ounce for protection against fiat currency and its over fifty percent lower than that level currently. Nothing has obviously changed and I still love the buys at these levels for people who may not want to or are able to time charts. Therefore, with these suppressed prices if you are buying today then I see this as buying on long term strength (check inflation adjusted chart below) as the market has been rallying well for the last few years with major upside room left. You are also buying on two levels of weakness. The first level is the short term move of an intermediate term crash and bear flag pattern that is bearish as well as being well below the 1980 highs inflation adjusted, as well as below the nominal highs. This means you are buying on weakness and what I have learned is that buying on weakness and selling on strength is a profitable way of making positive yields as long as you are good at finding when its to buy and sell. There can easily be more down side left, but again this is short term and creates more buying dips. It isn't easy for the most part and can be very difficult to find tops and bottoms in this market and it is easy to see when it has fallen to give a status of a 'dip'. I stated at $39 silver to be a big point on the way down and it was not such a case on support and it crashed again below this target. This level later became major resistance and therefore was established to be a fiboancci level acting accordingly. With this not being easy for the most part because tops and bottoms are so difficult to pick it becomes much easier when you think of how inflation works and how to counter this. It's easy to realize that products and services over the years are going up in price. If you have been on this planet enough years then you have seen it first hand as you look back at your childhood and how much more these items cost. This is important to realize that inflation is real and that there are no current signs of inflation ending and the signs are showing more growth towards inflation. Therefore if you are buying on a long term time frame and you see prices go down much lower then it can be generally safe to say that is a buying opportunity. If you bought some bullion at $39.00 as it was crashing lower in May then you can and very easily should hit that bottom. If you bought again at $34.00 area then the same is at true as it would be heading below $30.00. The reason I say this is for those whom did this strategy in 2008 when it fell to $16, $12, $9 and if you had bought on all of those dips you made a great play. If your goal is to turn it quick for a short term gain then buying on weakness and strength can cause problems.
Is it likely that buying on these dips will turn out to be a great play? Using math probability odds the answer leans towards "yes" and on a personal level, I would rather store money in gold and silver not only because of its upside potential and probabilities, protection against dollar collapses, but the biggest reason I love it is because it allows you to save money while you eliminate the ease of easy transaction. When you save in cash it is very easy to spend it when you have it in some sort of safe because of how easy it is to do such a thing. Gold and silver actually need a buyer and therefore I personally find it easier to save when you do so in precious metals. I can't speak for everyone, but when I hold fiat money then there enters a little bit of fear that I will be left with this when the music stops during this game of hot fiat currency.