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Look for an oversold bounce in gold and silver

Commentaries & Views

Gold, silver and platinum have been under heavy pressure, destroying every support level on the way. From a purely technical view of the charts, they have all broken down, which brings much lower prices into play. The trend is lower, and we are short the futures maintaining ownership of our physical metals.

Everyone wants to know what happened and why gold, silver and platinum have reversed so quickly. There is no textbook answer; however, the higher interest rate environment is not bullish for metals, which means the reappointment of Chair Powell is not a positive note for the bulls.

The overall economy is in horrible shape. The asset appreciation created in equities is more because of the money printing and increased money supply. In other words, the rally is more of a mirage than based on solid fundamentals. Like all markets, the metals have overreacted to news versus understanding the action behind it.

Emotions run high in both selloffs and rallies, and this time is no different. Over the next ten years, there is no doubt gold, silver and platinum will be higher than today; however, in the next ten days, they could be anywhere. That is the difference between trading and investing, but either way, emotions lose and create bad decisions.

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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2021-11-26 Bubba’s Black Friday Webinar

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.