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Thursday, February 14, 2013

The Managers Push Gold And Silver Because They Can

This AB transition/delay which can be extremely frustrating to trade looks "normal" in terms money flows.  The invisible hand, oblivious to the hype and headlines, has been steadily accumulating weakness from the 2012 swing high.  This money flow pattern represents a weak to strong hand transfer and an important tactic of price management in gold and silver.  It also suggests why profiting from a secular bull market is not always easy.

As we have discussed numerous time on Insights, trading (investing) during this or any subsequent AB transition/delay will never be easy.  It requires patience within a world that increasingly has none.  This transfer of control, driven by vicious, self-reinforcing downward cycles (price and emotion) and timely doubt-creating headlines, ravages the inexperienced.  As a result, nerves and investment balances tend to fray until the transfer completes.  This often happens as the paper fuel runs out and window opportunity to carry out the operation closes.

As long as the paper market is stripped of its key adversary, the managers will 'push' gold and silver towards extreme downside concentrations, well, because they can.  And, while extreme concentration suggests exhaustion and increases the probability of a reversal, it usually comes as a complete surprise to those blinded by fear and/or greed.

Chart:  London PM Fixed Gold and GLD (ETF) Total Assets WA Stochastic Exponential Moving Average (13DEMA)


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