Gold & Silver Morning Update: Algos Turning Markets into a Video Game


The HFT algos were turned back on in silver this morning at approximately 4am EST after an overnight rally to $31.70.  Silver has traded in lock-stop with Wednesday’s price action throughout the morning as the robots gun the market today.  (Perhaps every human trader in the pits is on vacation like The Doc?)


As can be clearly seen on its 5 year chart, silver continues to complete a large inverse head and shoulders formation while simultaneously completing a 2 year flag/pennant formation.

Silver Technical chart [Kitco Inc.]

In the short term, as silver has been gradually drifting lower over the past month, look for a final capitulation sell-off to finally complete the correction, which incidentally, would complete the inverse head and shoulders formation.

QE has never even slowed much less came to a stop, and will only continue to escalate from here on a global scale.  This means that in the long term, the fundamentals that have driven silver from $4 an ounce to $49.73 are only intensifying, and at some point, the next major bull rally will begin.  At this point, that looks likely to begin somewhere around September/ October, but could be kicked off sooner with a QE3 announcement by the Fed over the summer.

Gold is also trading in lock-step with Wednesday’s price action, proving that the gold and silver futures markets are more video game than actual markets.  Look for the cartel to continue capping gold at Sinclair’s $1650.  Gold may see $1610 again, but we would be surprised to see gold back in the $1500′s.

Comments

  1. I don’t have a problem with high frequency trading per se only when it is done with irredeemable bank credits emitted out of thin air by the federal reserve monopoly system backed by government guns enforcing legal tender laws forcing creditors to accept their debt at face value and prohibition on note issue by would be competitors.

  2. I might add with the intent to suppress the price of precious metals for political purposes…

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