Strong Upside Reversal Suggests Higher Prices for Gold & Silver

As accumulators of PHYSICAL GOLD and SILVER (vs. traders of paper precious metals, in the form of COMEX futures contracts, ETFs, swaps derivatives, certificates, unallocated precious metals, etc.), periodic dollar-cost averaging is the preferred method of hoarding precious metals.  It takes the emotions out of attempting to time the exact pricing bottoms, and ensures a steady supply of sound money--an unencumbered, non-fiat currency.  In short, 100% possession is ownership, and not a merely slip of paper or ledger item representing a legal claim to an asset which may or may not exist in someone else's vaults.

Even if said physical gold exists in said vault (in many cases, it does not exist), there are multiple claims against the precious metal, in a dizzying ponzi scheme of rehypothecation.  There are an estimated 100 ounces of paper gold traded for every one ounce of real, physical bullion.

In the context of accumulating physical precious metals vs. trading paper precious metals, technical analysis of charts aren't necessarily aligned with the hoarding objective.  However, if MAY be a viable resource to trigger buying impulses.  I say MAY because in distorted markets (the precious metals asset class is extremely manipulated), technical charts may be rendered less than reliable.

However, technical analysis (TA) can be a useful tool to optimize entry points.  Buying low and selling high is not the objective.  Accumulation (hopefully at lower prices) is the sole objective, if indeed fiat currency dies. With that in mind, here are some candlestick charts which may be of value to analytical types:

http://www.goldsqueeze.com/analysis/strong-upside-reversal-suggests-higher-prices-for-gold-silver#sthash.qr3QSRJw.dpuf

http://www.goldsqueeze.com/analysis/gold-silver-daily-analysis#sthash.qr3QSRJw.dpuf

According to Gresham's Law, bad money crowds out good money, as good money is hoarded and goes underground, black market-style.  The bad money continues to be re-circulated in a proverbial game of hot potato.  In that scenario, why would one trade in good money (i.e. physical bullion) in exchange for bad money that becomes increasingly worthless (i.e. fiat paper currency)?

The purpose of accumulating precious metals isn't to profit by buying low and selling high.  The aim is to protect purchasing power by possessing an asset which maintains its store of value.  It's a savings account--without the bank as the intermediary.

Having said that, as I declare TA has limited utility in distorted markets, it can also provide some insight into what the big money is doing (suggested by higher volume and accumulation/distribution dichotomies).  And yesterday's and last Friday's technical indicators flash that the big money is buying at these prices.  Now could the smart money be early--and can prices go lower from here?  Absolutely, as many big moves are followed by temporary reversals.  In other words, we could be bouncing off the bottom from here.

But the indicators suggest an inflection point, or a major bottom is at hand.  Of course, going back to 2001, a quick glance at the precious metals charts would reveal we are still in the midst of a secular bull market, with major corrective bottoms in 2008 and 2014.

While silver is the weaker sister to gold, it also has higher upside potential, assuming one can stomach the higher volatility.  Both gold and silver have unique properties, but their monetary value is the common characteristic and the primary reason why they should be accumulated.