Yesterday we wrote that the metals were melting down, which brought many questions. The biggest question investors are asking is why the metals could be so bad in the current economic environment. The answer is simple: the price action is negative.
Investors in all markets question whether a market is correct. When investing or trading, we must remember the market is always right. Markets are inanimate objects that price themselves off of the price action that is being created by buyers and sellers.
Too many read the Wall Street Journal or listen to the news; the problem with those sources is that their info is old and late. In today’s technology world, the information flow is lightning quick. In other words, there are no secrets or inside info. For example, the monthly jobs number comes out Friday, and you can bet the big banks have already calculated that number.
This brings us to the bottom line; gold, silver and platinum are going lower until proven otherwise. A short-term rally would be no surprise; however, the trend is down and the meltdown should continue. Strong dollar, high rates, nothing matters but the trend.
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.
