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Gold and Silver from breaking out to ugly

Commentaries & Views

Late last week, gold and silver looked like they could breakout to the upside, but they failed. Looking at the price action over the weekend, the precious metals could be breaking down again, headed towards the recent lows.

We remain short and look for a test of $1,800 for gold and $21 for silver. This is a very crucial time not only for precious metals but equities and other key asset classes. As we have witnessed over the past couple of weeks, light volume can change sentiment. The odds are that the precious metals test their lows before finding any traction.

The entire market structure has problems; inflation is skyrocketing much faster than the government and the FED will admit. There is no sign that they have a fix which we already knew. Eventually, this should work in favor of gold and silver. Until then, we will stay short paper gold and silver.

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.