By: Edge Trader Plus –
So many “experts” have so much to say in correlating the current prices for gold and silver with factors like how much gold China and Russia have been accumulating, the shortages of and demand for physical PMs, hypothecating, rehypothocating [aka stealing] of gold by Western Central Banks, the record sales for gold and silver coins, world-wide, etc, etc, etc.
Yet, with all of the pinpoint accuracy in reporting, backed by statistics, graphs, charts with arrows drawn in to show the next direction [always wrong] for PMs, there has been little demonstrable cause and effect relations between events and prices. We have two.
The easy one first, yet the one hardest for most people to accept: planetary influences on the real world, found in the expression, “As above, so below.” What happens above, in the planets, is manifested on earth. We do know for a fact that W D Gann was an astute astrologer, and he incorporated planetary movements very successfully in his work. “Wheels within wheels,” as he would say. Planetary orbits within each other relative to earth.
Now, before dismissing this notion out of hand, consider this: Most people in the world believe a Federal Reserve Note [FRN], is actually a dollar. If you are one of the many who happens to believe this massive lie as a fact, you have your facts wrong and should not be so judgmental of other facts. As an aside, a Federal Reserve Note is a debt instrument issued by the U S Treasury. That is a proven and known fact. Where it breaks down is in the mistaken belief that debt is money. Debt is the opposite of money, but this is not an article on what is and what is not money.
The lawful definition of a dollar is found in the Coinage Act of 1793, Section 20. This Act has never been overturned and is recognized as law to this day. It is the corporate Federal government that chooses to ignore the law and pretend Federal Reserve debt is money.
A Uranus square Pluto conjunction occurs when the planets are 90 degrees apart from each other. From 2012 through 2015, Uranus has squared Pluto seven times, the last on 18 March, a few weeks ago. What happened to gold during these events? When the Sun transits [moves across] the mid-point of the square, a change in trend is indicated. The October 2014 squaring was somewhat of a non-event, but there was a brief opportunity, and one need not have suffered loss exposure. Plus, nothing is perfect.
For all of those who utilize fundamental analysis, even conventional technical tools, none have been as on target as the one from “Above.”
(click images to enlarge)
Back to earth. Where on earth is Bab el-Mandeb, and why did it affect the price of gold? It is the purported shipping “choke point” for oil tankers, the 4th largest in the world. The strait is located between Yemen, Djibouti, and Eritrea, and it connects the Red Sea with the Gulf of Aden and the Arabian Sea.
Saudi Arabia just pulled an Obama and began bombing Yemen back into the Stone Age. Why? Ostensibly, the Saudis want to ensure the Bab el-Mandeb Strait is kept open for oil tanker passage. There is an unfounded “fear” that the Houthis of Yemen will cause major disruptions. Exactly who are the Houthis? Excellent question.
They are a purely Yemeni localized group, Shia, that want to keep Yemen free of government corruption. They are anti-American, no surprise there given the US history of destruction in the Middle East and the phony war on terror, but all the Houthis want is to be respected and not discriminated against by the government. They are not a warring faction and have no military capability, per se, and they have never been known to be a threat outside of Yemen. They are being labeled as “rebels” by the mainstream press because the Obama administration wants that kind of rhetoric in order to shape public opinion about them.
The Houthis have had some backing by Iran, and therein lies the rub. It is really the Arab Sunnis against Iranian Shias. One brand of Muslims against the other. The bombing of Yemen is a proxy war to get to Iran, just like the US-led coup in Ukraine has been a failed proxy war against Russia, in fact, one that has back-fired badly on Obama. After three days of intense bombing by the Saudis, the entire military structure of the legitimate Yemeni government has been destroyed. No one is being held accountable. Obama is backing the Saudis on yet another war bringing yet more destruction to innocent people.
This Saudi action prompted a sharp rally in gold and silver. The threat to any blockade of the Bab el-Mandeb Strait is a fiction, yet oil and gold rallied because of it. By Friday, the tenor of the gold/silver rally had abated.
What could be interesting, as an aside, is to see if China steps in and tells the Saudis to back off. China has a military presence near that strait, but the reason for a potential intervention is not that, rather, China has had its fill with the Obama administration administering destruction wherever it chooses to go.
While all eyes are focused on China’s enormous build-up of physical gold, the anticipation that perhaps that country will use their gold to initiate a “gold reset” using the Yuan, and the eventual destruction of the Fed’s fiat “dollar,” [really, just a FRN, a debt instrument], hardly anyone was paying attention to another Uranus square Pluto, and few had ever heard of the Houthis or the Bab el-Mandeb Strait. Both were pivotal, albeit temporary, forces on gold, last week. We knew about the squaring, but not about the square off in the Arabian Gulf.
The month does not end until Tuesday, but we will include the monthly charts just to take a peek on how they may end and if they may show anything going into April. There is nothing conclusive that says the correction from the 2011 highs has ended. Rallying and staying above 18 is the first hurdle silver must meet.
Going by previous patterns, last week we indicated this week’s activity had a higher probability of being a small range bar, which is exactly what developed. The location of the close suggests more selling may enter the market next week, and that would be in keeping with price activity in a down trending market. The onus for change is on buyers, and they have not yet met that burden.
The increased volume on the rally high, the mid-range close location on that bar, and the overlapping of the last 4 bars says sellers were meeting the efforts of buyers, creating a balance. From balance comes unbalance and odds favor a correction, although anything can happen.
Two areas of support are the 16.60 to 16.37 area, to as far as the D/S bar [Demand over Supply] low, the 16.10 area. In a down market, price usually makes greater inroads into a D/S bar. The character of the bars on any decline, along with volume, will determine if identified supports will hold.
Regardless of where price closes for March, there is still a lot of effort required to turn this trend around.
The developing market activity speaks for itself. Typical action in a down trending market. There is still no evidence of a turn in the offering.
After an $80 rally, there is room for a normal correction to develop over the next few weeks.