David Morgan | October 2, 2017 - 12:33pm

Listen to the Podcast Audio: https://www.moneymetals.com/podcasts...trouble-001167

Mike Gleason: It is my privilege now, to welcome back our good friend David Morgan, of The Morgan Report. David, it's always a real pleasure to have you on with us. How are you, sir?

David Morgan: Mike, I'm doing well. Thank you for having me.

Mike Gleason: Well, first off, let's discuss what's been driving the recent pullback in your view. Gold was over $1,350 not too long ago and is now is decisively back under $1,300, as we're talking here on Wednesday afternoon. Silver has pulled back, and is moving toward the lower end of its year-long trading range, and has a 16 handle, once again. So what do you make of the recent market action, and what's behind it David?

David Morgan: Well, it's a lot of, algorithms that trade all these markets. You can't get around that fact. The second thing is, a lot of people are -- in my view -- been on the lazy side, which means they just generally off the technical analysis doesn't work, because it's a manipulated market. Well, actually it works fine, if you ever took the time to read The Silver Manifesto, with my co-author, Chris Marchese, you would definitely find out that technical analysis is a tool. It's not perfect, but it's something to pay attention to.

So, when we have a support or resistance level, it normally takes three tries to get through that level, either from the upside or the downside. Recent times, $1,300 was the level that had to be tested three times, for gold to have that $1,300 breakout. It did it. Third try it went through. It got up to $1,350. I warned my members at that time that normally, a breakout level is tested at least one time, and forecast it would see $1,300 or below. And it was moving higher, higher, higher, and there were a lot of articles about gold is at a 11-month high, gold is at a 12-month high.

And I don't want to say I get it right every time. I'm not trying to imply that. What I'm trying to imply is that technical analysis does have some benefit, and that there are some general principles that work most of the time, this being one of them. The last one that cinched it for me, and this is one that you've got to combine as much knowledge as you can, and throw out the junk and keep the diamonds, then that is what the Commitment of Traders look like. And the Commitment of Traders look very unsatisfactory at the time that gold was getting in this 11-month, 12-month high area.

It looked to me like, based on the COT, that it was also due to come back. So, that's the reason ... I mean as trite as it sounds, it's absolutely the most honest and truthful thing you can say about why a market was up or down, it's because there's more sellers than buyers, that's why the market goes down, or there's more buyers than sellers and that's why the market moves up. I don't care if it's wheat. I don't care if it's rice. I don't care if it's a stock or an ETF, gold or silver. It does not matter.

If there's buying pressure, it goes higher. If there's selling pressure, it moves lower. It's that simple. What everyone wants to know is why, and that is too difficult to announce, because there could be individual reasons. Someone might have an emergency and they sell a bag of silver because that's all the savings they have, or whatever. So I don't want to go down this rabbit hole too far, Mike, but I want to state, is you can generally say, "Oh, yes. The Fed announced they're going to raise rates and they're going taper back on their balance sheet," and all this stuff, and everyone says, "Well, that's the reason."

Well that's a reason, and it may be one of the major reasons, but it's not necessarily all reasons. So I'll leave it at that.

http://silverseek.com/commentary/fed...-trouble-16879