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Gold and silver are weak but show promise

Commentaries & Views

Once again, Monday gold showed many weaknesses while silver had some strengths. Platinum is finally showing some life and could lead the metals out of the doldrums. For now, we will remain short gold and silver. If we traded platinum, we would be long.

With a lower trend in gold and silver, there are some critical levels below, which would be healthy for the metals, giving them a more powerful rally when it comes. Charts are made from geometrical patterns. A pullback to $1800 for gold and $21 for silver would complete a pattern that should lead to a rally.

Two big concerns for us are that volume and price action are lacking. Light volume creates lousy price action, which in turn creates false moves. This action is a part of all markets; liquidity dries up along with volatility, creating a much bigger challenge. Until further notice, short is the correct side of the metals.

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.