Metals due for price drop?

[SlugForAButt]

Looking at the market prices of silver & gold over the last few months, I've decided to maybe hold fire on more purchases for now as the charts seem to show probable price drops.

Just wondered if anyone else makes these sort of decisions, or am I reading too much into things?

 

 

 

 

 

 

Edited January 28, 2023 by SlugForAButt

[timsk]

1 hour ago, SlugForAButt said:

. . . Just wondered if anyone else makes these sort of decisions, or am I reading too much into things?

Yes, they do and no, you're not! I posted this on the silver monitoring thread last Monday . . .

https://www.thesilverforum.com/topic/368-silver-monitoring-thread-£-gbp-only/page/197/#comment-802206

 

[SlugForAButt]

Glad to hear it's not just me.

When you look at the 200 week average, it seems that they'll break up or down at some point but I dabble in a bit of swing trading and thought "why wouldn't gold & silver work the same way"?

[LawrenceChard]

9 hours ago, SlugForAButt said:

Glad to hear it's not just me.

When you look at the 200 week average, it seems that they'll break up or down at some point but I dabble in a bit of swing trading and thought "why wouldn't gold & silver work the same way"?

For me, that more or less sums up charts and technical analysis "they'll break up or down at some point"

😎

[SidS]

My eyes glaze over when I see graphs.

[timsk]

1 hour ago, SidS said:

My eyes glaze over when I see graphs.

I understand how you feel SidS - and Lawrence, too.

Undoubtedly, there's a lot of hocus pocus written about technical analysis and too many people believe that price will behave in a particular way because it exhibits one pattern or another or because a technical indicator says it's overbought or oversold etc. That's almost all bunkum. However, that doesn't mean charts are completely without utility. The trick, IMO, is to keep it super simple and not to read too much into them. Allow me to explain . . .

For the sake of argument, if there was no price history, none of us would have any idea whether the current silver spot price of circa £19.00 is at an all time low, an all time high - or somewhere in between. And that information is useful, because it tells us the extremes beyond which buyers and sellers are not prepared to trade. Very roughly, currently it's in the middle of the two extremes. However, as the chart in the OP clearly highlights, there's an ongoing gentle downtrend, defined by a series of lower highs and lower lows. As long as this pattern is maintained, then one can conclude that the current price - being near the top of the channel - is relatively 'expensive' and, when it's near the bottom of the channel - if it ever gets there - will be relatively 'cheap'. If the pattern is broken, and a new one is formed that comprises a series of higher highs and higher lows, then one can conclude that price is in an uptrend and people can make their buying and selling decisions accordingly.

I accept completely that all of this is in hindsight and that when a new uptrend is created then, with the benefit of hindsight in X weeks/months time, the current price of £19.00 might be regarded as relatively cheap. But we don't know that now; we only know what the chart is telling us today. For me, the information that it's imparting is that silver is relatively expensive and that now is not the time to make bullion purchases. Unless and until the technical picture changes, probability favours better buying opportunities presenting themselves in the future. Needless to say, all of this has to be weighed up against the fundamental picture: what's happening economically, politically and the war in Ukraine etc. Those are the drivers that will cause the technical picture to change. 

Edited January 29, 2023 by timsk

[SidS]

11 minutes ago, timsk said:

I understand how you feel SidS - and Lawrence, too.

Undoubtedly, there's a lot of hocus pocus written about technical analysis and too many people believe that price will behave in a particular way because it exhibits one pattern or another or because a technical indicator says it's overbought or oversold etc. That's almost all bunkum. However, that doesn't mean charts are completely without utility. The trick, IMO, is to keep it super simple and not to read too much into them. Allow me to explain . . .

For the sake of argument, if there was no price history, none of us would have any idea whether the current silver spot price of circa £19.00 is at an all time low, an all time high - or somewhere in between. And that information is useful, because it tells us the extremes beyond which buyers and sellers are not prepared to trade. Very roughly, currently it's in the middle of the two extremes. However, as the chart in the OP clearly highlights, there's an ongoing gentle downtrend, defined by a series of lower highs and lower lows. As long as this pattern is maintained, then one can conclude that the current price - being near the top of the channel - is relatively 'expensive' and, when it's near the bottom of the channel - if it ever gets there - will be relatively 'cheap'. If the pattern is broken, and a new one is formed that comprises a series of higher highs and higher lows, then one can conclude that price is in an uptrend and people can make their buying and selling decisions accordingly.

I accept completely that all of this is in hindsight and that when a new uptrend is created then, with the benefit of hindsight in X weeks/months time, the current price of £19.00 might be regarded as relatively cheap. But we don't know that now; we only know what the chart is telling us today. For me, the information that it's imparting is that silver is relatively expensive and that now is not the time to make bullion purchases. Unless and until the technical picture changes, probability favours better buying opportunities presenting themselves in the future. Needless to say, all of this has to be weighed up against the fundamental picture: what's happening economically, politically and the war in Ukraine etc. Those are the drivers that will cause the technical picture to change. 

It's not that I think graphs are useless. They are quite insightful no less, it's just I struggle to read them. It makes much more sense to me when you put it in words, as you just have! I guess I was more literary than mathematical.

[SlugForAButt]

On 28/01/2023 at 19:55, LawrenceChard said:

For me, that more or less sums up charts and technical analysis "they'll break up or down at some point"

😎

Break up or down refers to breaking out of the channel they've been sat in for a long time.

But, you knew that right?

[LawrenceChard]

2 hours ago, SlugForAButt said:

Break up or down refers to breaking out of the channel they've been sat in for a long time.

But, you knew that right?

Yes. Technical analysts spend hours compiling charts, reading the tea leaves, then project a pattern into the future, and their typical conclusion is something like...

"I expect (the) silver (price) to break higher if it hits £$€xxx, but if it fails to break upwards this time, I think it will crash (through its lower support level)..."

In other words, they think silver (or whatever) will go up, but if it doesn't go up, it will go down.

Of course, they may be wrong, and it might stay in its recent trading range, but that wouldn't be interesting to their readers.

I think I would rather go to a fortune teller on Blackpool Promenade!

😎

Edited January 29, 2023 by LawrenceChard

[timsk]

14 minutes ago, LawrenceChard said:

I think I would rather go to a fortune teller on Blackpool Promenade!

😎

Hi Lawrence,

Just wondering - did you miss my post, above?

I ask, because if you think reading charts is akin to reading tea leaves, then you've got the wrong end of the stick. Completely! Charts predict precisely nothing. So, TA is NOT about prediction, it's about probability. Unless and until one understands this and embraces it fully, then charts will forever remain a mystery.

😉

[Roy]

Deja vu?

On 24/03/2020 at 12:17, Wonger said:

I now predict that Gold will crash in excess of $1000 from here and it started today, see you at $400-$600 area guys and gals!

[LawrenceChard]

2 hours ago, timsk said:

Hi Lawrence,

Just wondering - did you miss my post, above?

I ask, because if you think reading charts is akin to reading tea leaves, then you've got the wrong end of the stick. Completely! Charts predict precisely nothing. So, TA is NOT about prediction, it's about probability. Unless and until one understands this and embraces it fully, then charts will forever remain a mystery.

😉

No, I saw your post above, although I did not look at the link to your earlier post.

Neither did I mention prediction, although I mentioned "projection", and "expect".

I am aware that forecasts are about probability, although the average person looking at a weather forecast expects it to be "right" because they fail to understand that it is based on statistics applied to data.

I am also aware there is a difference between "forecast" and "prediction", although I do not entirely agree with this statement:

"Forecasting is an estimation of a future events which one can make by incorporating and casting forward data related to the past in a pre-determined and systematic manner. Prediction is an estimate of future events made by subjective considerations."

I wonder if tasseographers / tasseomancers became extinct because they failed to foresee the popularity of tea bags?

😎

 

[timsk]

9 hours ago, LawrenceChard said:

. . . Neither did I mention prediction, although I mentioned "projection", and "expect". . .

Hi Lawrence,

You make some fair points and, while you didn't mention prediction, your summary of the way many (most?) people apply technical analysis certainly implied it - to my mind at least. Be that as it may, your summary is a very good and accurate one, and it's why people become disenchanted with TA and lose money. They're doing it wrong - it's as simple as that. It's like watching a child trying to fly a kite facing the wind - it's bound to end in disappointment! Use it in the right way - which doesn't involve 'projection' or 'expectation' - and the results are likely to be more useful and obviate the need to seek out the services of a fortune teller on Blackpool Promenade!

😉

[LawrenceChard]

1 hour ago, timsk said:

Hi Lawrence,

You make some fair points and, while you didn't mention prediction, your summary of the way many (most?) people apply technical analysis certainly implied it - to my mind at least. Be that as it may, your summary is a very good and accurate one, and it's why people become disenchanted with TA and lose money. They're doing it wrong - it's as simple as that. It's like watching a child trying to fly a kite facing the wind - it's bound to end in disappointment! Use it in the right way - which doesn't involve 'projection' or 'expectation' - and the results are likely to be more useful and obviate the need to seek out the services of a fortune teller on Blackpool Promenade!

😉

I don't doubt that T.A. can be a useful tool, if used with care, and possibly caution.

Most of the Blackpool Promenade fortune tellers have closed down due to unforeseen circumstances!

😎

Edited January 30, 2023 by LawrenceChard

[jhsilver]

Given that most of the trading on markets is driven by sophisticated algorithms I think we should pay attention to statistical data, especially 200 and RSI.

[LawrenceChard]

6 hours ago, jhsilver said:

Given that most of the trading on markets is driven by sophisticated algorithms I think we should pay attention to statistical data, especially 200 and RSI.

200?

RSI?

Was this written by a robot?

In which case, did it have Repetitive Strain Injury?

😎

[LawrenceChard]

On 29/01/2023 at 10:03, SidS said:

My eyes glaze over when I see graphs.

Cataracts?

😎

[SidS]

Glad I don't live in Portugal.

[SlugForAButt]

Looks like the Blackpool Promenade fortune tellers got this one right though...

 

[spoon]

I have gotten rather good a predicting the price of gold....i  always predict that the day after i buy it drops and the day after i sell it goes up.....never wrong yet.

[Paul]

If you measure your worth in Oz of gold rather the £ in the bank. If you buy something every month, you have more Oz, than previous.

Once you've rinsed and repeated this for 5 years or 60+ months. You got a whole bunch of shiny Oz.  It's only relevant for price when you sell it back for fiat paper 

[SlugForAButt]

1 hour ago, Paul said:

If you measure your worth in Oz of gold rather the £ in the bank. If you buy something every month, you have more Oz, than previous.

Once you've rinsed and repeated this for 5 years or 60+ months. You got a whole bunch of shiny Oz.  It's only relevant for price when you sell it back for fiat paper 

True.

But hopefully I can get more shiny Oz of Silver or Gold if I buy at the right times.

[timsk]

11 hours ago, spoon said:

I have gotten rather good a predicting the price of gold....i  always predict that the day after i buy it drops and the day after i sell it goes up.....never wrong yet.

In the dim and distance past, I tried my hand at day trading U.S. stocks. I picked ones with large intraday swings, typically $2.00 or more. One day, I was trading Electronic Arts (ERTS), and managed to buy the exact high of the day - down the the cent and then, later, sell the exact low of the day - again down to the cent. I realised there and then that I had a special gift although, sadly, it wasn't for day trading!