Wednesday  28 December 2011

  Starting with the weaker metal, silver has been unable to find any buyers, notwithstanding how often
one hears about the huge demand and limited supply for industrial usage, in addition to a possible
alternative to currency, behind gold.  The doomsayers camp generates a lot of verbal friction, but it
produces no heat when push comes to shove, and right now, sellers are pushing with impunity

 The position of the close on any bar tells us who won the battle between buyers and sellers.  It requires
no guesswork when looking at the annual close.  Buyers have been totally AWOL.  There is a very high
degree, almost a certainty, the a lower low will occur in 2012.  What is not certain is how much lower
price will go.  Looking at this chart alone, downside has room to retreat back to the low 20 range, around
22.  There is additional support around the 26 area, and that appears to almost be a given in an
environment where there are no givens.

  The point is just viewing the annual chart is to dispel all the rhetoric about the infinite printing of fiat
currency, how the corporate central bank, called the Federal Reserve, is destroying the Federal Reserve
Note, inflating its way out of the economic chaos it created, and how all of it is setting the stage for
precious metals to soar substantially higher.  Price is going in the opposite direction of all the rhetoric.
There is a message there.

 That said, we have been advocating the buying of physical over paper, and we are still of that mind,
but we have also been wrong in the timing, not anticipating the decline seen into year end.  The losses
in holding physical is much smaller over futures, but they are losses, nonetheless, relative to purchases
made higher.

  With the lower potential already covered, there is reason to be somewhat optimistic for price to get
back over the 40 level.  2012 says there will be more buying opportunities ahead.  First, we need to see
some ending action in the smaller time frames, and we see none on the immediate horizon.  Expectations
are for a two-sided affair, relative to the 2011 close.  The new year starts will sellers in control, how it
ends depends upon buyers.  Time for them to step up, or keep getting stepped on.

 The 2012 close for gold is just under mid-range the bar.  Edge for the year goes to the sellers.  We drew
two horizontal lines from the yearly high and low because that is where we see 2012 will trade, at least
for the first Quarter or two.  The peak in gold can last for a few years without taking away from the bullish
chart development, so no need to be in a hurry until more price development transpires and demonstrates
that there has been a turnaround.

 A step back can sometimes be constructive for the next step forward.  2012 may not be a clear trend.