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Fear continues to be driving gold

Commentaries & Views

Once again, Monday Gold pushed higher on the fears of the possibility of Russia invading Ukraine. We put the probabilities of that happening at less than 10%. The fears are being stoked by the administration trying to advance their agenda.

We are long Gold and reversed Silver this morning; however, that does not change our views that the spike rally is based on fear and short covering. This does not mean that Gold and Silver will not continue to rally; however, the speed at which the rally has traveled will slow. It would be no surprise to see a sell-off in the next day or two.

Too many watch markets tick by tick or second by second, which is enough to drive anyone crazy. We are long and expect the rally to continue; however, we know that the start of this rally was purely driven by fear. This is always one of the problems in the trading and investing world, immediate gratification.

Traders and investors must learn the value of delayed gratification, knowing that no market goes straight up or down. Understanding that fact will make you a better trader and investor. Markets move for many reasons. The recent move in Gold was based on fear and short covering.

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.

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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.