RE:Market forecasts. Tony,
The way I look at it is that the marketplace always eventually expresses the fundamentals of supply and demand.
For instance monetary inflation fundamentally leads to price inflation, all other things being equal.
Growth of debt by nations, corporations and individuals, once it reaches levels where it is difficult or impossible to service, will lead to a very negative effects on GDP and recessions or depressions.
However, if you are trading gold and silver, you are faced with the fact that you can't know for certain how the fundamentals will express themselves with demand for PMs.
Or how the fundamentals may change.
We don't know if the current mountain of debt can be kept stable while global GDP grows and lessens the debt burden as a drag on economies.
If Central Bankers can keep the game going, then monetary inflation should fundamentally lead to price inflation and boost the price of PMs.
But, if we have indeed reached a critical mass of global debt and that debt can't be maintained and we experience global deflation and debt destruction and de-leveraging such as 2008-2009, that would lead to a dramatically different outcome.
If we experience large scale debt destruction and contraction of money supply, I would expect stock markets and silver and gold to decline in value.
Gold as the premier monetary metal might gain in purchasing power even if it loses nominal price.
Silver would fare worse due to declining industrial use.
Mining stocks would be badly hurt IMO.
I would want to be mostly in gold bullion and cash in that scenario.
So where does technical analysis fit into the picture?
TA provides an unbiased look at markets without considering fundamentals.
Decisions of whether to be long or short are based on price action and not on supposing a particular fundamental outcome.
TA and fundamentals can be used in association, but trading decisions are made by price action.
If you are a trader or investor who has a large commitment to any market, you can easily go broke in the short term while waiting for the fundamentals to eventually play out.
If you are wrong about the fundamentals you go broke because you are on the wrong side of the market.
Some analysts speak with great confidence about their certainty that the near term is going to be more inflation.
Others speak with the same confidence that we face imminent deflation.
The future is unknown and nobody can forecast it with continuing accuracy.
It is delusional for us to think that we can have high confidence of any particular outcome.
TA gives us a methodology to limit losses and helps manage money, given that uncertainty in markets.
goldguy