Chart Analysis – Gold And Silver Price Trending Lower Until Demand Returns

This is an excerpt from Michael Noonan’s latest gold and silver commentary, from which we extracted his excellent chart analysis. The author is using chart analysis (supply/demand analysis at critical price points), which is not the same as technical analysis (in which technical indicators are analyzed). The gold charts and the silver charts are analyzed on several timeframes, which makes the chart analysis more reliable.

Each Quarter-ending, we review charts few ever look at, the annual and Quarterly charts. The longer the time frame, the more controlling and the greater effort it takes to effect a change. For all of 2014, so far, it can be readily seen that any rally attempts have been weak, making no upside retracement progress. How much lower could silver go, based on the annual? The low of the wide range rally of 2010, and that would be the $15 area.

The breaking of support in September is a narrower range bar relative to a similar break of support in the 2nd Q, six bars from the right on the Qtrly chart. Irrespective of where price may find support, the developing market activity shows no sign of bottoming, and the trend will not change until a bottom forms. Time-wise, this does not argue for a near-term turn from down to at least sideways, before going higher.

On the monthly, we give $14.65 as a Last Low Before High [LLBH], an area where price will sometimes return as a retest. That price is close enough to the $15 level from the annual, and one can see a low there on the Qtrly, as well, so it is a price to watch should silver continue lower.

silver_monthly_chart_03_October_2014

The monthly chart for the silver price remains down.

The crux for silver and gold is in the discussion on the weekly chart. Unless and until demand enters the picture, price will continue lower until it finds demand sufficient to effect a change. For right now, there is no demand apparent. It may develop next week, next month, next year, we do not know, but when demand does show up, it will make its presence known.

silver_weekly_chart_03_October_2014

The weekly silver price chart has broken critical support and does not show signs of exhaustion.

The daily says just how weak the silver market is. Whenever price goes under the lower support channel line, it is in oversold territory. Look for how long silver has remained oversold, evidencing no ability to rally, none. Here are a few signs to watch as a check on the character of this market. Resistance can now be expected at failed support, the 18.70 area, seen by the thin horizontal line. If the next reaction rally fails to reach that price, and forms a swing high under 18.70, it will leave behind another area of bearish spacing.

Once again, reading the information in present tense, the market gives the most reliable indicators upon which one can rely.

silver_daily_chart_03_October_2014

The daily silver price chart shows an acceleration to the downside.

As with silver, annual gold has not rallied very much in 2014. At the same time, the decline has been small, but in a down trend, supply has been proven. It is demand that must meet the burden of proof for change and demonstrate an ability to sustain rallies.

The Qtrly chart could not be any clearer in begging for a lower low under the 1200 area of support. We saw that at the end of last week, after the Qtr ended, but there is no definitive level of support above 1,100.

As shown on the monthly, 1,000 +/- is a logical area of support. Based on the inability of the market to show any kind of support, and knowing Anything Can Happen, that level must be viewed as a possibility, unless or until proven otherwise.

gold_monthly_chart_03_October_2014

The monthly gold price chart looks like it is going to test $1,000 an ounce.

What else can be said. This is like watching a car teetering on the edge of the cliff, waiting to see if/when it falls. The trend is down, and that is all ye need to know.

gold_weekly_chart_03_October_2014

The weekly gold price chart is right at a critical support level which is not likely to hold.

It is a known fact that we are not big on conventional TLs. Sometimes, they can be used to determine the angle of assent in an up market and descent in a down market. Whenever the angle steepens, it can be an alert for a possible end to that phase of trend. This is a daily chart, the lowest of the time frames considered here, so it is not controlling. It is just another factor to watch as the market develops.

It seems all the news you read has not affected the down trend, at all, when expectations would dictate otherwise. It is the news no one sees that continues to weigh on the PMs, so a diligence in reading the charts remains the best handle, to date. Do not be long any futures is the clear message. Hold all physical purchases as price is nearer the lows than not, and it is strong hands that buy low, weak hands sell. Pick the kind of company you wish to follow.

gold_daily_chart_03_October_2014

The daily gold price chart shows an acceleration to the downside with no signs of selling exhaustion.

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