Metals Still Poised For Major Decline? How Markets Really Move

The support on the June Gold is 1403 both intraday and on the close. A break of that area will begin to warn of further weakness. Keep in mind, that even going sideways into next week is a weak bullish trend that would forewarn of a serious change to the downside thereafter.The shocking aspect of the metals has been the total lack of a bounce. The old gold rule of trading – What will not go up – goes down! Even the Mining press is starting to see the shorts are strengthening.

http://www.mining.com/web/gold-bears-suddenly-appear-more-emboldened-than-ever/?utm_source=digest-en-mining-130422&utm_medium=email&utm_campaign=digest

Silver has been leading the way. Less of a bounce, and more of clinging to the true trend. The gold promoters are increasing their claims for a rally raising their targets from $30,000 to even $50,000. This is more desperate than at any time I have ever seen. Not sure if someone is paying them to say this nonsense or what.

When I was called in for the 1987 Crash, I had to deal with academics who were out to find that illusive person who “FORCED” the market down. I asked if they understood what makes a market crash? They immediate pointed to some mythical short position that EVERY investigation of EVERY crash since 1907 began with and NEVER found. During the Great Depression, the subpoenaed everyone from Rockefeller on down. They were all long. Jesse Livermore was short, but he alone was not that “huge whale” or a short position. This is the same thing as conspiracy theories in gold. They assume that it must be a short to press the market down. WRONG!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

When the academics asked me what then makes a market crash I explained it was the opposite of their expectations. Once you have the MAJORITY of people who ever thought about buying already loaded to the gills, you start to run out of buying power. They cannot buy more. They are fully committed. There are no new suckers to convince. So what happens is precisely what we are witnessing – the DEAD CAT BOUNCE. The same took place in Japan after 1989. Everyone was long and as they got tired of being long or needed the money, they sold every bounce.

Bulls-Bears

The FUEL to create a collapse lies is the exhaustion of buyers. Something takes place that scares the longs, they try to sell and the result is a FLASH CRASH or good old fashion PANIC. The lack of a bounce is the kiss of death that it ain’t over under the fat lady SCREAMS – forget singing. There is a cycle to all things. It is how energy moves. The majority collect on one side or the other and that is the engine to propel the move in the opposite direction.

PRESELEC-3

Everything functions in this manner. Only a fool, who say buy all the time refusing to acknowledge there is a business cycle, forms the very energy necessary to create the cycle. A fool is quickly parted from his money because of his refusal to comprehend that there is indeed a time to buy and a time to sell. Until someone wises up and learns to “go with the flow”, they will be doomed to pure insanity – doing the same stupid thing constantly yet expecting a different result. Even politics swings back and forth because the “smart” people are NEVER married to a single party or position. Keeping an unbiased view of the world around you is essential to survival. You just have to go with the flow in order to survive so you might live for another day.