By Michael Noonan of EdgetraderPlus (edited and abridged by MunKnee staff)
One need not be expert, or even conversant, in reading a 
chart to be able to read and appreciate how charts “talk” and reveal very clear information…Each of the following charts contain…[their] own message [related to] price volume behavior that has a convincing element of reason… See if you agree.
The Gold:Silver Ratio Favors Silver Long-term
We continue to favor silver purchases over gold solely on the basis of the gold:silver ratio having extended to the 78:1 area, where a single ounce of gold can buy 78 oz of silver, in theory. In theory because there are transaction costs from a dealer…We expect the ratio can continue to 80:1, perhaps higher,…[as] the chart on the higher weekly time frame [below] does not show any sign of an end to the down trend.
Silver: Weekly Chart
…Based on factual observations from reading developing market activity depicted in the chart, combined with logic, leads to that inescapable conclusion:[the silver] price is likely to go lower.
Silver: Daily Chart
The daily chart supports the weak read for this market. As indicated in the chart comments, the message from the market is weakness, followed by more weakness with each passing week and month.
When will a turnaround occur? As we keep saying, no one knows, and for sure we do not. What we know for certain is that the market will give clear signs when and as a turnaround is developing. For as long as the message remains constant, one must exercise patience. Actually, there is no choice, and those who have been impatient and tried to pick a bottom have paid a price, depending upon how hard-headed one is, or the size of one’s margin call.
What is also true is that smart money buys low and sells high, for the most part. It is less important to buy the exact bottom or sell the exact top, for it takes time to accumulate a position during lows, or distribute a position near highs.
Leave A Comment