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Buck's Gin Bottling - Chart Analysis

Silver Buck

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So then miners might still be a good buy even with the recent run up they have had while Gold has remained flat?
I have no idea, and the Gin Bottle isn't saying.

I merely put this out there to give folks something to chew on other than the standard fare.

I tend to be a Skeptic by need and a Contrarian by design.
 

savvydon

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I read a lot of this stuff as well and usually finish an article wondering whose soul to sell next to dig up the funds to buy some more gold immediately - before it goes through the roof! I suspect that is exactly what many of these articles are designed to do, and for that very reason if no other logical available information to the contrary, I tend to be skeptical as well. That having been said, I do fundamentally believe that accumulation of metals is a good goal to pursue. I wish I had the time and energy to peel back more layers of the onion, as it were, to get a clearer picture of where we really are right now.

In regards to the cost of mining gold, there are many variables that are casually thrown out there which are hard to confirm or refute unless you really are on the inside. Along with increasing fuel costs I have read that the low hanging fruit has already been mined and that nowadays more and more ore needs to be refined for each ounce of gold produced. This sounds reasonable to me, but I have to take it on faith and don't know how significant that change has been over the past, say, ten years.

I think the most significant factor that will come into play with the miners going forward is sentiment. They have been pretty badly beaten up the past year or two as the precious metals market has corrected. I think it is a complex brew of factors which need to align, or not, to wake the majority of the public up to the significance of owning precious metals, and hence stimulate demand and improve sentiment. Only when that happens will we be able to board the rocket...:eating:
 

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The ‘All in Sustainable Cash Cost’ of gold, or the cost per ounce for a company to mine gold, is roughly $919. However that is for the US, where it is the cheapest to produce gold. In Africa, the level at which mining gold becomes profitable may be as high as $1, 300. The cost of gold production is broken down into the following areas:

$610 represents the direct cost of mining the gold.
$156 for mine development expenditure
$121 for sustaining Capital expenditure (to upgrade physical assets such as property).
$50 goes to gains made under currency hedging.
$44 administrative costs.
$44 goes in royalties (investors buy royalties and provide capital to the mine for future production and then they are paid back in royalties).
$29 for by-product credits.
$11 for the mine on-site exploration.
$26 for rehabilitation and accreditation.
$14 for other expenses.


Gold is most economically produced in North America, then in Europe. Africa is the most costly place to mine gold.

In some places in the world there has been a doubling in the cost of gold production over the past five years and it now stands at a world average of about $1, 000. Obviously, smaller mines are having greater difficulty in keeping up with that or will do in the future if the prices remain where they are. They may have to end up closing down. The only ones that will be able to maintain any sustained production will be the larger companies or the ones that have good cash flows and that might be able to prop themselves up for a while. There is also the added problem of the fact that fixed costs in the industry have seen a rise in recent years. Salaries, in particular have increased.

http://www.zerohedge.com/contributed/2013-06-28/gold-plunges
Remember, every mine and mining company has different cost of mining. It will depend on mining & regulatory taxes in the country of the mining project, yield (g/tonne) of gold produced and other aspects.

Look the price to mind gold from Barrick. Numbers range widely, but I want you too look at 2013 vs 2012 and see the trend. What is the trend between those two years? That will give you the answer you seek.



The market has already started to see high cost mining companies shut down as well as high cost projects get stopped or placed in a holding pattern. Miners have also been forced to tighten their belts. Only the strongest will survive now.

The important thing to remember is that gold is not just a commodity, no matter what Ben Bernanke wants you to believe.






 
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Silver Buck

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I also fundamentally believe that the accumulation of metals is a great thing; otherwise I wouldn't spend so much time studying the stuff. As far as peeling back that onion, I'm doing what I can when I can. It appears that it will be a life long process, but I'm seeing a Pot of Silver and a Pot of Gold at the end of the dig.

In the mean time, I always have that Gin Bottle in which to see if there is a bottom.

Silver decided to not play nice and go 'out-of-bounds'. However, she didn't want to go beyond that old Dark Red bottom rail, just yet. I think I do see that Blue Channel developing, but with Silver bouncing off of that Dark Red rail, perhaps she will play nice and come back to that Orange Channel.

I doubt it.

Silver has been running too smoothly, perhaps luring us into a false sense of security. Maybe 'this time is different', truly, at least for now. Maybe speculators will get Silver Fever again and she'll skyrocket up to the $40s again!

I just don't know, and the Gin Bottle once again isn't saying.

Enough prattling, more Bin Gottling.



I started this bit of Bottling an hour or so ago. It's always interesting to see what the PoS has done after I've done my scribbling.



It seems that Silver wants to come back to that Orange Channel. She must not have liked the taste when she went out of bounds.

Speaking of taste, I haven't had my taste of coffee yet this morning and I must fetch some. In the mean time...

Happy Charting.
 

Silver Buck

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Remember, every mine and mining company has different cost of mining. It will depend on mining & regulatory taxes in the country of the mining project, yield (g/tonne) of gold produced and other aspects.
Quite true. Most of those expenses are known years in advance and are taken into account. The changing yield would have been taken into account (I can't believe that all miners will believe that the yield will always get better as time goes on).

One of the first things I try to do before digging into commercially (versus independently) supplied data is to consider the source and if that source has a vested interest in selling you Snake Oil. In the sources you just provided, I see Bloomberg, Barclays, Goldman Sachs. Names I do not trust, so I do not trust the Snake Oil they are selling.

Again, I want to emphasis what has me being a Doubting Buck; Gold was deemed profitable 10 years ago when it was under $500. Gold was produced at a record pace (according to a few sources here) in 2013 and we are supposed to believe that Gold mining isn't profitable when the price ranged from $1200 to $1680?

I didn't see you hanging around here a few years back when GIMmers were saying that once Gold broke above $1100 that it was time to stop buying Gold since it was becoming overpriced. A few said that $1300 was too much for an ounce and refused to buy once it reached there (except perhaps for Irons who will buy a Sovereign at any price, just to keep the rest of us from having any). If it was overpriced a few years ago when it was at $1000 but now is grossly underpriced at $1250?

I'd rather listen to the independent old farts here first than those commercial sources that have a bottom line to meet, subscriptions, books, and/or services to sell. I also try to keep in mind when big players have big plays in the game and they may be trying to spin information out to us in order to tilt opinions. I try to take my time and take a long look at what's being served me, and by whom, before I start making any type of buy/sell/hold decisions (and I do have much more to learn).

I like to be a bit cautious before diving into any type of purchases and no longer buy the hype.

And I am no longer worried about missing the train.
 

savvydon

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FWIW, the GSR has been creeping up and the open interest for silver has been increasing relative to gold lately. Taken together I just can't shake the feeling that we may have some smack down in store nearer term for our lil lady.
 

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Quite true. Most of those expenses are known years in advance and are taken into account. The changing yield would have been taken into account (I can't believe that all miners will believe that the yield will always get better as time goes on).

One of the first things I try to do before digging into commercially (versus independently) supplied data is to consider the source and if that source has a vested interest in selling you Snake Oil. In the sources you just provided, I see Bloomberg, Barclays, Goldman Sachs. Names I do not trust, so I do not trust the Snake Oil they are selling.

Again, I want to emphasis what has me being a Doubting Buck; Gold was deemed profitable 10 years ago when it was under $500. Gold was produced at a record pace (according to a few sources here) in 2013 and we are supposed to believe that Gold mining isn't profitable when the price ranged from $1200 to $1680?

I didn't see you hanging around here a few years back when GIMmers were saying that once Gold broke above $1100 that it was time to stop buying Gold since it was becoming overpriced. A few said that $1300 was too much for an ounce and refused to buy once it reached there (except perhaps for Irons who will buy a Sovereign at any price, just to keep the rest of us from having any). If it was overpriced a few years ago when it was at $1000 but now is grossly underpriced at $1250?

I'd rather listen to the independent old farts here first than those commercial sources that have a bottom line to meet, subscriptions, books, and/or services to sell. I also try to keep in mind when big players have big plays in the game and they may be trying to spin information out to us in order to tilt opinions. I try to take my time and take a long look at what's being served me, and by whom, before I start making any type of buy/sell/hold decisions (and I do have much more to learn).

I like to be a bit cautious before diving into any type of purchases and no longer buy the hype.

And I am no longer worried about missing the train.
Once again you are talking about gold strictly as a commodity (looking at costs) and forgetting the money aspect if you want to talk about gold being overpriced vs underpriced at this point.

I have no idea where you get your data (want to provide your data for cost of mining?), but all data that I have found across multiple sources points to miners struggling and gold not being as profitable as it was before. High yield mines aren't as numerous as the time period you are talking about. Everything is more expensive than it was 10 years ago. That shouldn't be surprising since you run your own business and consider yourself a 'numbers guy.'
 

Ahillock

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[video=youtube_share;HaI1LKjPupw]http://youtu.be/HaI1LKjPupw[/video]

Regarding inflation over the past 10 years:

Energy costs- 125-150% higher
Wages (all employees)- 50% higher
Laborour (on the ground)- 200% higher

If you don't trust that mines are as profitable as 10 years ago, look at an independent variable; number of mines closing, projects being stopped because of costs, and number of miners going bankrupt and/or being bought out. If you don't trust the data given regarding costs and inflation, look at the end result.
 
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Silver Buck

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Everything is more expensive than it was 10 years ago.
Indeed, and one takes rising costs into consideration, especially if one is going into something for the 'long haul' and not merely setting up a retail store that can pull up stakes at any time and move (or simply close). Running a retail sales and service shop entails 1, 3, 5, and 10 year goals and projections. I cannot imagine mines doing anything less and imagine that their goals and projections are more along the lines of 3, 5, 10, 20, and 50 years.

Again, I ask you to simply look back 5 years and ponder on whether mines truly believed that they would not be profitable at $1250.

I did state earlier that the costs of mining is a complex issue; however, by using a bit of T/A one could do a bit of pondering and wonder what the mines (primarily investors) were thinking when they hit the 'Go' button at sub-$1000 (5 years ago), sub-$750 (7 1/2 years ago), and sub-$500 (10 years ago).

Did they truly, in their heart of hearts, believe that Gold was going 'To-Da-Moon!' and go All-In on that pipe dream?

I think not.

I want to go back and take a look at Gold vs Oil, but instead of looking at it as a percentage change over time, let's simply take a look at the Price of Gold and the Price of Oil in dollars.



Fuel costs have remained relatively flat over the past 10 years. Sure, there have been spikes, and troughs. But I'm pretty
certain that fuel costs have been hedged, so the fluctuating costs would be mitigated.

Or am I missing something here?
 

Ahillock

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Or am I missing something here?
Rather than looking at the absolute change in the price of energy, you need to look at it in terms of percent change. That will give you your answer as Tinbox pointed out. Also, rather than just focusing on energy you need to include other factors as they all add up. Regardless of whether a company has a 1, 3, 5, 10 year plan/projections/goals, COSTS have gone up. No way of beating around the bush on that.

Again:

Energy costs= 125-150% higher
Wages (all employees)= 50% higher
Labor (on the ground)= 200% higher

When your costs are anywhere from 50-200% higher, what do you think that will do to your profitability?

SB, since you have done a bunch of research, what number have you come across as being the all in cost for gold miners and what their level of profitability is?

Don't forget that mine grades are down 40-80% in some places. That means more labor + more energy + more wages to get less out than you were able to do 10 years ago. All the low hanging fruit is picked first. What comes after that fruit is picked?

Since you probably didn't listen to the Ken Hoffman interview, I will give you a slide from it:

 

Ahillock

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SB, another interesting thing to look at is the # of barrels of oil per ounce of gold. We are still in that 12-16 barrels of oil per ounce of gold range. Under around 15.5 barrels of oil per ounce of gold, that is when gold is actually undvalued in terms of being compared to oil (going back to you above question regarding people saying gold is undvalued now).






If you don't want to believe data because it is from Forbes, Bloomberg, WSJ...etc. there is plenty of other good data and analysis provided by others that say the same thing, miners are having a harder time turning a profit with gold mines as costs go up and grades go down. Check out Seeking Alpha for several great articles, as well as SRSRocco Report.


http://seekingalpha.com/article/154...mine-gold-complete-2013-first-quarter-figures




http://news.goldseek.com/GoldSeek/1378827837.php
 
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Silver Buck

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Re: Gin Bottle Reflections - Profitability

Well in the late 90's crude oil was in the $15 a barrel range. That is over a 600% increase in oil since then, more then gold.
That $15 was THE low for the '90s. It had ranged from $20-$30 for the most part during the '90s (averaging a bit under $25). I could just as easily cherry pick the figure of Oil being $40 a barrel back in the early '90s.



Sure, there's been quite the increase in price since then. If we go back 20 years, there's been an increase of $435% in the price of Oil (WTI Crude). And again, I did mention that investors could hedge the price of fuel (after all, it is what the COMEX is for, hedging).

Rather than looking at the absolute change in the price of energy, you need to look at it in terms of percent change.
I did look at the percent change of both Gold and Crude earlier on this page.

...I simply went and looked at the price of Gold over the last 10 years and came up with this:



"But SB, there's more to the picture!"

Indeed, and I will not pretend to know all of the pixels to that picture
The premise of this discussion I started was: "How long does it take a new mine to become profitable? The common consensus was at least 5 years and possibly as much as 10."

I took this as an opportunity to do a bit of digging and delving doing my own bit of Due Diligence while also allowing me to learn more about how to use the Charting Tools in my tool box.

After all, it IS the primary reason why I started this thread; I needed to do some practice T/A of my own sort and discuss what I see and how I look at my own version of T/A. It's how I learn best, by putting my hands on something and coming up with my own brew, my own concoction.

And it does help fill up the boring times of the day.
 

Tinbox

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Re: Gin Bottle Reflections - Profitability

That $15 was THE low for the '90s. It had ranged from $20-$30 for the most part during the '90s (averaging a bit under $25). I could just as easily cherry pick the figure of Oil being $40 a barrel back in the early '90s.
Here's what I'm seeing for yearly averages:
http://www.ioga.com/Special/crudeoil_Hist.htm

1990: 23.19
1991: 20.19
1992: 19.25
1993: 16.74
1994: 15.66
1995: 16.75
1996: 20.46
1997: 18.97
1998: 11.91
1999: 16.55


Are these numbers wrong? Rounding these I got an average of $18. Also not one year had an average as high as $25 according to this data.

If you average the last 3 years (what I would consider the late 90's) you get $15.81, so I suppose I did cherry picked by 81 cents.
 
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Ahillock

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Re: Gin Bottle Reflections - Profitability

I did look at the percent change of both Gold and Crude earlier on this page.
I saw that. I was referring to a YoY % change.


The premise of this discussion I started was: "How long does it take a new mine to become profitable? The common consensus was at least 5 years and possibly as much as 10."

I took this as an opportunity to do a bit of digging and delving doing my own bit of Due Diligence while also allowing me to learn more about how to use the Charting Tools in my tool box.

After all, it IS the primary reason why I started this thread; I needed to do some practice T/A of my own sort and discuss what I see and how I look at my own version of T/A. It's how I learn best, by putting my hands on something and coming up with my own brew, my own concoction.

And it does help fill up the boring times of the day.
Since you saw this as part of your own due diligence, can you share with us what cost you came across and believe is the average cost to mine one ounce of gold? The reason I ask is that you refuse to accept other commonly mentioned costs per ounce of gold. If you refuse to accept those because of some agenda you think they have (to bump, make you buy gold, mislead...etc.) then please provide what you have come across. Otherwise it just feels like a bunch of nothing at this point, as you model fails to include the rising costs of energy, wages, labor, decreasing ore grades...etc. over the past 10 years. At this point, objective data points to the average cost of being ~$1200 an ounce. Ever wonder why gold hasn't really dipped much below $1200 and stayed there long time? Hmmmm. Sometimes the answer is right before our eyes.
 

Silver Buck

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Re: Gin Bottle Reflections - Profitability

Since you saw this as part of your own due diligence, can you share with us what cost you came across and believe is the average cost to mine one ounce of gold?
No.

As I said, the total cost is complex and I do not have all of the pixels for that picture.

If you refuse to accept those because of some agenda you think they have (to bump, make you buy gold, mislead...etc.) then please provide what you have come across
I already have provided what has made me go "Hmmm..." I'm a Doubting Buck.

Otherwise it just feels like a bunch of nothing at this point, as you model fails to include the rising costs of energy, wages, labor, decreasing ore grades...etc. over the past 10 years.
It IS a bunch of nothing. Take a look at the title of my thread. Take a look at the title of my post that started this Topic of Ponderance. Keep things in perspective and in context.

I'm not saying that everything that everyone is putting out is false and/or misleading.

I'm stating that nothing should be taken 'As Presented' and one should do a bit of their own homework. I'm merely putting out what makes me go "Hmmm..." and why?

What don't you get about this?

At this point, objective data points to the average cost of being ~$1200 an ounce. Ever wonder why gold hasn't really dipped much below $1200 and stayed there long time? Hmmmm.
Of course I do wonder. I've stated so many times (but usually in other threads) that I wonder about how and why a price of any metal is what it is.

I simply put my thoughts and doubts out there for all to see and pick at and do my silly version of Gin Bottling while I'm at it.

==============/

@Tinbox

Sorry, but my computer ate my earlier response (something about a token running out of time, damn thread meters).

The actual average for the figures you provided for that time period is $17.97, so I have to take you to task for being off by $.03 and chastise you for being wrong on the high side. How dare you!

Here's what I would look at for the decade of the '90s as far as price goes (using WTI Crude since):



If I were to do make a budget decision based on 1990 alone, the price range was $16-$40. I'd suspect that the $40 spike was an anomaly, but it would scare me enough to believe that $16 would not be the expected price for the extended future (basically the life of the mine). Looking over the course of the next 3 years I see that the price is averaging around $20. Using this price as a base and the spread I presented, I'd budget my costs around the higher end and not the fantasy low end of fuel (in that way lies madness and business ruin). And of course I would hedge my costs on fuel (after all, that is what something like COMEX is for, hedging, right?).
 

Silver Buck

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Hindsight Is 20/20

Hindsight is 20/20, which isn't a crime. However, to ignore some foresight is a crime (especially when the Gin Bottle told you to keep your eyes open).

There have been a couple of times that I've chosen to ignore what the Gin Bottle was serving up because of the Silver Art Affliction, listening to my gut (his has been right, mine not so much). I doubted the Gin Bottle's Orange Channel, just to find out it was the correct trend. Now we have the Blue Channel, and I'm wondering why the Gin Bottle didn't show me signs earlier about the coming course change.

The thing is, it did.

I just didn't choose to chart upon it.

The PoS poked its periscope above the BB which can (but not always) indicate a course change to the downside. Silver had been trending sideways for quite some time (which probably lulled me into a bit of a slumber) and was due for a change. Fine, so I ignored the price breaking above the BB, what's the crime in that? I was too wrapped up in watching the price 'follow the channel' or bounce off of a rail and didn't step back to look at the bigger picture.

The bigger picture that the Gin Bottle had drawn up a month ago...



.

Two weeks later the Gin Bottle was giving us signs and clues to the upcoming change:

.




.

And yet it took me until yesterday to recognize the course change...

...

And now that the price has poked out of band to the downside, and RSI is at 40, do I start looking for another Channel change?

Unfortunately I've run out of pondering time for the morning... and it is Gin Bottle posting time.



The Gin Bottle wants to have a heart-to-heart chat with me after work about how I've chosen to let my gut do the thinking and not the Gin Bottle. For now though, I have to get to the shop before I have to sit myself down and have that 'Employer to Employee heart-to-heart' chat.

Happy Charting
 

Silver Buck

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Good Morning GIMmers,

Sorry for this morning's serving being a bit late. Went to grab today's chart and due to the right scale changing, I couldn't just simply grab-and-slip a chart into the layers of my Gin Bottling. Notice the scales to the right and how the price ($18.50) lines up just fine, but at the top, not so much:



I really should do a series of videos (just for the creative enjoyment) of how the Gin Bottle does its thing. Perhaps this weekend.

After missing ALL of the indicators that we were due for a channel change (it seems that the RSI had me hypnotized and believing we were going to be sideways forever...) I'm stepping back and looking at the bigger picture, and I'm especially looking left to use that bottom *ping* out of band as a starting point for this (possible) new Dark Green channel.

Take a look at Brother Andial's new Dark Green Rake:



The bolder Dark Green lines are the ones the Gin Bottle believes will pan out. My self? *shrugs*. I don't care as long as the Bottle keeps panning out Gin.

Speaking of panning out, I should get out of here and to the shop. Otherwise I'll have to resort to panhandling for FRNs, and it is just a bit too nippy out there right now.

Happy Charting
 

pitw

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I like this thread and open it everyday[at least once] but I sure as [L] don't understand it.:eek_ma: Keep it up.:bowdown:
 

Silver Buck

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I like this thread and open it everyday[at least once] but I sure as [L] don't understand it.:eek_ma: Keep it up.:bowdown:
That's OK, I don't understand what the Gin Bottle does either. I really need to do up some vidz about what I see and how I use the indicators and tools to create these servings of Gin.

Thanks for stopping by!
 

Silver Buck

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Good Morning GIMmers,

Another day, another month. I'm glad to see January leave, just wish it would have taken the winter weather with it.

Ah well...

The Gin Bottle states that Silver will follow that Dark Green channel for a bit (2 weeks... mehbe).

But...

If that RSI Slope is followed, that bottom rail won't hold, not one bit.

The Gin Bottle wants to draw another channel, one Brother Andial won't like (no sir, not one bit..).

Enough prattling...



Here's a chart I did a bit ago comparing Silver with the Dow, NASDAQ, and S&P 500:



That's enough Gin Bottling for a late Saturday morning. Time to get to some real work.

Enjoy the weekend GIMmers.

Happy Charting
 

andial

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I can accept that "new" green channel SB. I don't like it, but i can accept it.
 

savvydon

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I can accept that "new" green channel SB. I don't like it, but i can accept it.
Resistance is futile - and apparently support ain't all it's cracked up to be either... I'm glad ya accept it. Maybe if I can too that will be the sign that we are finally ready to get through this bullchit and start riding. :4_8_4v:
 

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We got a bounce off of horizontal support going back several months, now we're entering the same area again. Think of it as an attack on a defensive line. The first time they repel the attackers, but with no reinforcements, the attackers regroup, and will break through.

If there were buyers here, we would have bounced out of this area, not hung around.

To quote Lancers, DIVER DOWN.:cry_smile:
 

Silver Buck

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Good Morn... err... Afternoon GIMmers,

Was unexpectedly distracted this morning and am dealing with a very minor technical difficulty, so this may be very short and sweet.

Bottom rail of the Dark Green Channel is looking to be valid.



We got a bounce off of horizontal support going back several months, now we're entering the same area again. Think of it as an attack on a defensive line. The first time they repel the attackers, but with no reinforcements, the attackers regroup, and will break through.

If there were buyers here, we would have bounced out of this area, not hung around.

To quote Lancers, DIVER DOWN.:cry_smile:
Is this the Horizontal Support you speak of?



I imagine so, but I've learned to not automatically assume.

---------------------------------/

We've heard often of 'Open Interest' and there has been much discussion concerning such of late: Here's the definition from Investopedia:

Open Interest (link)

"The number of options or futures contracts that are still unliquidated at the end of a trading day. A rise or fall in open interest shows that money is flowing into or out of a futures contract or option, respectively. In futures markets, rising open interest is considered good for the current trend. Open interest also measures liquidity. "

My take on this is that OI is the amount of paper in play. As the amount of OI goes down, the sentiment that it reflects is that investors are not interested in parking investment money in that particular stock, commodity, etc. Here's a chart the Gin Bottle crudely put together over the weekend showing the connection between the rise of price and the rise of OI, except for on particular time frame:



Open Interest was declining while the price was rising. Could this have been the Canary in the Mine showing that folks needed to get out before the collapse?

These are the types of things that makes the Gin Bottle go "Hmmm..." and keep me awake at night (the GB needs to be a bit more quiet when pondering).

Anyway, it's late enough in the day and I must get to doing some actual work.

Happy Charting
 

Eat Beef

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Yes, that's the support, the summer lows.

OI is roughly equivalent to volume. It doesn't make a call on price direction, it makes a call on momentum.

I'm dubious as to your OI chart, not because I doubt you, but I have no idea how the OI on it was calculated. Remember, these are futures, they cancel every 60 days. OI is constantly ebbing and flowing from one contract to the other.

Most of the OIs on longer term charts are algorithms, not actual number of contracts traded. That's not to say that there's not useful info there, but the main thing is to know that the OI is high enough that the contract is liquid. The Joos will rape you if you jump in a thin market.
 

Silver Buck

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Yes, that's the support, the summer lows.

OI is roughly equivalent to volume. It doesn't make a call on price direction, it makes a call on momentum.

I'm dubious as to your OI chart, not because I doubt you, but I have no idea how the OI on it was calculated. Remember, these are futures, they cancel every 60 days. OI is constantly ebbing and flowing from one contract to the other.

Most of the OIs on longer term charts are algorithms, not actual number of contracts traded. That's not to say that there's not useful info there, but the main thing is to know that the OI is high enough that the contract is liquid. The Joos will rape you if you jump in a thin market.
I do not know how the OI was calculated on that chart (it gives me no options to customize that Indicator). The other site I go to won't even give me OI as an Indicator.

I'm hoping to get a better grasp and feel for OI and why it may be important to look at as an Indicator.

Here's a Weekly Chart I tossed together this afternoon looking for a correlation between OI and Price Trend and to see if a disconnect between the two may be some sort of Indicator:



I didn't have much time to sit back and chew on this chart, so take this serving of Gin as one that was sloppily tossed together (I see where I need to illustrate a few things more clearly).

Thanks for the feedback and input.
 

Silver Buck

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Good Morning GIMmers,

Another day and another brief discussion of a current topic and of course the standard chart.

First: Why do we do Technical Analysis (TA) in the first place?

Some good answers to this question and why it works can be found here at 'How The Market Works':

Technical Analysis (link)

I'm not the type of person who copy/pastes entire articles, I like to c/p relevant or teaser material and let the reader decide on whether or not it is worth the time to go through the article (I recommend this one). There is much I would love to go over on that page, but I like to keep my posts here a bit shorter for most days so I'll focus on the one Indicator that we've been talking about of late:

Volume

Volume Confirms Action – Volume is extremely important. For a trend to continue, volume must increase. This represents added interest and additional buying which is required for a trend to propel itself to new highs. If a rally continues on lower volume, the trend cannot sustain itself and will fail. Let’s take a look at the rallies we had in 2008 as an example. Notice how the rallies were made on low volume and on the declines, we saw increasing volume. A healthy, strong market would exhibit the complete opposite.
Perhaps this is the sense I've been getting with Open Interest as seen either connected or disconnected with market action and trend. What I do know is that the more I learn about TA the better understanding and grasp I have of markets in general. I do understand that TA is NOT a 'Crystal Ball', but a Tool to be used. How one uses their TA Tool Box is up to each (ch)artist.

I simply like to scribble on the walls.

Enough of class lecturing, we need more scribbling.



The Gin Bottle speaks for itself on this one, so no need for me to add anything more here (but I always welcome questions and feedback).

Happy Charting.
 

Eat Beef

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By cutting the tails, you're ignoring all the trades that happened below your lines. The lines are meant to include as much intel as possible, as the point is to risk and make real money.

Imagine buying off the green line, only to see the price fall below it, stop you out, then bounce above it again. Cutting the wicks/tails is not precise enough.
 
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By cutting the tails, you're ignoring all the trades that happened below your lines. The lines are meant to include as much intel as possible, as the point is to risk and make real money.

Imagine buying off the green line, only to see the price fall below it, stop you out, then bounce above it again. Cutting the wicks/tails is not precise enough.
Aint nuttin wrong with a little tail now and then. :s1:
 

Silver Buck

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Aint nuttin wrong with a little tail now and then. :s1:
Yeah... but I don't know about getting my wick cut :cry_smile:

By cutting the tails, you're ignoring all the trades that happened below your lines. The lines are meant to include as much intel as possible, as the point is to risk and make real money.

Imagine buying off the green line, only to see the price fall below it, stop you out, then bounce above it again. Cutting the wicks/tails is not precise enough.
I do typically ignore the wicks and tails when drawing my Channel Lines. However, I pay close attention to when they poke out of bounds of the Bollinger Bands (periscope up/ping down).

Here's a series showing how I use these wicks or tails as Indicators:

These two points is what I used to establish that Dark Red Channel:



I'm always keeping an eye on those 'Out of Bounds' moments to change the channel. This next one I almost ignore due to the time being the end of the year:



I didn't ignore it but drew the next channel basing my Trend Line from the current out of band closing price to the previous out of band closing price:



I use two points such as those to build the next channel (in that case it was the Orange one).

The next time to change the channel was just recently which gave me the two points in which to build the current Dark Green channel:



There are times when the tip of the wick or tail will confirm a trend line, but I typically don't use those for charting purposes (at least at this time). I know my methods are a bit unorthodox, but I do dare to be different.

Now, on to the Gin Bottling serving of the day!



It's a waiting game for the Gin Bottle at this time. It is tempting to draw a new channel up following those Green Candle Opens.

However, the Gin Bottle is telling me to not succumb to temptation and let the Dark Green Channel prove its worth.

...

It's been an hour since that chart was grabbed and we're into the trading day, so...

Let's take a look.



Hmmm... Silver seems to be in quite the good mood this morning.

Well! Let's see how the day goes!

Speaking of the day going, I need to get going and remove some snow so I can seize the day.

Happy Charting
 

andial

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Holding above twenty will send us back into that upward sloping orange channel and out of the grips of that downward sloping green channel that Gcubed is so fond of.;)
 

savvydon

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Holding above twenty will send us back into that upward sloping orange channel and out of the grips of that downward sloping green channel that Gcubed is so fond of.;)
It would be nice to see a day where she shoots up and builds from there but so far in the early going she seems to be obeying the law of gravity. :bear_angry:
 

Tinbox

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Is the debt ceiling going to get passed before the deadline? If not, maybe that'll be the boost gold and silver need to break out of their current range.
 
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Holding above twenty will send us back into that upward sloping orange channel and out of the grips of that downward sloping green channel that Gcubed is so fond of.;)
I aint fond of it. I gotsta LIVE with it. I aint no Joo Bankster so I got NO CONTROL of it! :cry_smile:
 

andial

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Geesh, for a guy who lives in a place where it never goes below 60 degrees you sure are grouchy. I have to go shovel out some more snow now.
 

Zed

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