Gold and silver appear to be in a confused state; although gold got hammered on Monday, the trend has reversed to higher while the trend in silver is down. The action has all parties scratching their heads, trying to figure out the next move.
Have the metals accounted for inflation and the rate hike coming tomorrow? Based on history, we believe the markets have already priced in this information. Markets are far ahead of the news reported; there are no secrets or surprises in today's markets.
Our current positions are long gold, short silver, and uncomfortable with both. With the rough day in gold on Monday, it's hard to want to be long. With silver at 21, it's hard to want to be short. These facts alone make it easy to follow a method knowing that a reversal will come if prices move enough.
There are too many who try and interpret how the markets will react to news when the facts are that the information is priced in. Trade the news and you almost guarantee yourself a loss. Price action is the key. Nothing else matters.
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 me Monday, June 20, for our Monday Night Strategy Call at 4:30 ET.
