In this spirit of the “Talking Bears” and Explaining Silver Manipulation, I am switching my daily analysis charts that I publish here to honest gold and silver and away from bullshit paper metal like GLD and SLV. So for now on I will be posting PHYS and PSLV which will be proxies for the spot gold and silver markets respectively. Now the shape of the chart and the technicals will be nearly identical but the price will be different. Also, these two physical metal trusts trade at some premium to the underlying net asset value (NAV) and will at times under or outperform the spot market by a fractional amount. But for broad technical purposes, both of these funds will suffice and conclusions will apply for the physical markets in general.
I have at times used both GLD and SLV as very short term trading vehicles in the past, but I will no longer have anything to do with them nor mention them at the risk that someone will conclude they are legitimate investment vehicles, they aren’t. They are constructs that are managed by the very people that are actively engaged in the greatest fraud in the history of mankind. This fraud has created a fractional reserve gold and silver where mass quantities of both metals have been created out of nowhere and exist on paper only. This fraud has effectively created supply that has met and outpaced demand, leading to artificially low prices in both metals. This fraud will end as all frauds do. If you are invested in physical and have your hands on it yourself, that is the best you can do. The 2nd best is to be invested in 100% bullion that is fully allocated and securely stored. In this way counter party risk is eliminated. Sprott’s funds fulfill this requirement and the bullion is fully allocated, segregated and audited , and stored at the Canadian Mint. The only risk you are subjected to is the capricious use of The Rule of Law, or suspension thereof by government. This will always be the case for anything other than gold and silver in your hand.
With that said, here is the first PSLV chart. PSLV is new so it will take some time for longer term charts to materialize. I bought PSLV on its 3rd trading day and as you can see it has done quite well since its initial trade. Last week’s smackdown has effectively driven price down to the Fibonacci 38.2% retrace level, a natural area of support. The Talking Bears have spoke to efforts to manage the price lower and what the results will be. I believe them and entered another large position today at Fibonacci support. Solid chart support exists at 12.50 from the previous consolidation zone in Dec. and in conjunction with the Fibonacci 38.2% line makes formidable support. The next area of support would be a previous swing low in conjunction with the Fibonacci 50% retrace level, again forming very strong support. Resistance is the high at 14.25. RSI is neutral and is not telling us anything special, while stochastics are in over-sold territory and starting to flatten out. A hook suggests reversal while horizontal movement sets up a possible embed (below 20 for 3 consecutive days), an indication of strengthening momentum to the downside. Since I am in this for the long haul, I took the plunge now without waiting for reversal confirmation.
PHYS is bouncing rather smartly at support and away from the Bollinger band. A well defined downtrend channel is now in place and annotated with the dashed red lines. Another way to see this is a sideways trend defined by a channel made up of resistance at 12.40 and support at 11.75. Quite a few days of trading reside neatly within these two horizontal boundaries. whether we are in the starting phase of a longer term downtrend or just marking time sideways will depend on critical support at 11.75. Resistance is coming initially from an area where the 18 and 45 day moving averages (red oval) are more or less co-located, around 12.10. Then the next level of resistance is the last swing high at 12.40. Stochastic is starting to either hook or flatten out, setting up a bullish cross or an embed. Watch this indicator to give the early sign as whether we work our way higher to re-test resistance of head lower through support.