Precious metals expert Michael Ballanger discusses why technical analysis does not work in the precious metals arena.
I have a great number of friends that pride themselves on being “technical analysts” and many of them are actually very good, especially the ones that are students of market history and even more so the ones that are “old” and by that, I mean “older than me.” I love the guys that can tell you what happened in the fall of 1987 and recite off the top of their head that intraday high and intraday low of Tuesday October 20, 1987, when the Dow Jones had its first 500-point intraday swing, especially when they can tell you what they had for lunch that day.
Most impressive, though, are those analysts that will make a technical assessment and state categorically that the next move will be “up” or it will be “down” and that brings me to the ones that I detest—the “wafflers,” the ones that tell you that the next direction is up unless we get a breakdown through point B in which event the next direction will be down. You know them; they fire up a chart of weekly gold prices and paste arrows on the “big, ugly, red candle” that now MIGHT be pointing to a down market UNLESS gold rises and NEGATES the signal. The wafflers are the types of market forecasters that give race track touts are good name; they are constantly being drawn into these traps that are set by the bullion banks and their legion of tape manipulators and in doing so, they take their ovine subscribers with them.
Below is the chart of the candle that was supposed to send shivers through the hearts of the gold bulls and, as you can see, it was precisely …read more