Gold and silver are weak but show promise
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
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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