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Gold reverses while silver stays long

Commentaries & Views

You can’t always get what you want -- the classic by the Rolling Stones is playing out right in front of us. We were long gold, silver and platinum and today. We will short gold and platinum while staying long silver. However, we are only shorting paper while holding physical.

Gold was almost perfect until it went down too far, triggering a reversal. Although I like gold, the price action and the pattern suggest that there is more room to the downside. This morning gold is below the major support of $1,940 and now looks headed to $1,900.

Silver remains long, but another down day will trigger a reversal. With the FED reporting on Wednesday, it is anyone’s guess on how the metals will react to a .25 rate hike. Remember, most news is already price in. Based on our algorithms, we will be looking for lower prices.

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.

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.