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Global fears drive gold and crude higher

Commentaries & Views

In typical fashion, gold and crude oil exploded late Friday after news of a possible Russian push into Ukraine. The moves came after the old pit hour closings, which told us a couple of things. The sharp upside was a combination short squeeze and FOMO trade.

We have been long crude most of the year with a couple of reversals. Gold has reversed to the long side of the market, although I’m not a huge fan of short squeeze fear moves. However, I will follow the algorithm and have already reversed to the long side.

Although we are long now, I would not be surprised if gold fails. Moves based on fear tend to fizzle quickly; it would be no surprise to see gold, crude and bonds be under some pressure. However, our reversal signal to flip back is far away. As of today, the reversal in gold to short is around 1800.

This type of action brings in another trading style, active day trading on 5–10-minute charts. Silver remains short, while platinum would belong if we traded it.

Precious metals should be owned on a physical basis with capital that is not needed tomorrow or anytime soon. Trading should be done with paper, knowing that we can trade either side without emotions.

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.

Join me Monday, Feb. 14, for our Monday Night Strategy call at 4:30 EST

2022-02-14 Monday Night Strategy Call

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.