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Gold, Silver Rally Put Down

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On Wednesday, both gold and silver tried to break out to the next levels. Both were cruising along trading above their resistance levels, but once again the rallies appear to have been put down. This morning, both are trading back below those levels.

This type of trading action is common when a market is getting ready to make a much bigger move -- a couple of false breakouts followed by a return to the top or bottom of the range. In the case of the metals, both are trying to break out to the upside. We are expecting a test of the bottoms -- $1,280-$1,290.

As we often write, the consolidation is the time of most confusion, forcing traders and investors to make bad decisions as they try to catch the move before it confirms. This time is not different and as traders, we will stay short until we have proof that they are breaking out to the upside. As investors, we will hold our long positions because investors should not be trading; they are investing.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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