The weakness in gold, silver and platinum has continued. Every rally attempt has been met by sellers. Monday, precious metals tried to rally, showing nice gains early only to fail miserably by the end of the day. There is more room to the downside and rallies should be sold.
Until further notice, rallies will be the short covering variety that is created by too many shorts. Dead cat bounces and phony rallies that look good are a part of trading in any market. The precious metals are in a downtrend, and we remain short.
With the recent action, look for gold to find support at 1650, silver at 18, and platinum at 800. If those levels are violated, there will be new levels to watch. Consolidation for a few days would be no surprise; the speed down has been a little too fast. Unless the pattern changes, the metals will remain weak.
Forget about the news, the headlines, and anything you believe affects the price. Until the price action changes, there is no hope of a sustained rally. This can change at any time; markets never announce their intentions.
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, July 25, for our Monday Night Strategy Call at 4:30 est.
