April Fools, what's next for gold and silver
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
For the past three weeks gold and silver have been stuck in a tight trading range, indicating a much bigger move is coming. The pattern we are watching is known as consolidation, which is simply a short-term battle between the bulls and the bears.
All markets spend about 65% of the time in this pattern, which torments traders and investors alike. The rotation that takes place in consolidation is simply a battle between the strong hands, bulls buying until a point and then the bears selling to a point. This rotation creates many false starts in what’s next.
Nobody knows the direction of the next move out of consolidation; however, we understand that the longer it lasts, the bigger the next move will be. Whether you are trading or investing, there are different ways to trade this pattern.
As of now, the trend is lower for gold, silver, and platinum. We are short gold and silver, expecting the next big move to be lower. There are no guarantees that we will be correct, but the trend is the trend until it changes. The ranges we are watching are 1900-1960 gold and 24.5 -26 silver. Until one of these levels is violated, consolidation will continue.
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 us Saturday, April 2; I will be hosting our Day Traders Dream webinar. The link to register is below.