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Gold, silver frustrations mount

Commentaries & Views

Once again, gold, silver and platinum appear to be under pressure. The trend remains up, but the trading action has been miserable. This is always the type of action that creates traders to do the wrong thing because they become emotional.

If you remember the movie Trading Places, the Dukes talked about the trading action with the classic quote "that can't be right." I can tell you that the markets are always right, and the current action is precisely what the metals are doing. Too many put too much emphasis on economic conditions versus the fact of how markets trade.

If you take a rational look at the charts, what you will see is that gold and silver ran up a little too fast, taking them too far over the mean. Typically, markets will retrace to the mean following overbought or oversold conditions. Other than the fact that the trade is ugly and possibly painful, the trend is still up, and this is probably a buying opportunity.

Traders must always be prepared to take a loss and reverse their position, making trading difficult. When it comes to the footprint that markets leave, you can not debate the price. It is what it is. If you want to trade, be prepared to take losses and quit thinking the market is wrong.

In all markets, price action determines what will happen in the next day, week, or month. Keep the two strategies separate. The worst trade anyone can make is turning a trade into an investment hoping for a way out. Traders must learn to take their losses and move on to the next trade.

Patience, discipline, and money management always win the day. Let the map of the markets show you the way.

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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.