Monday was an ugly day for gold and silver. Both were sold relentlessly taking gold down 50.00 to the 1850 area and silver was worse down to 22.13. This was not unexpected and there is more room down with 1800 in play for gold and 21.50 in silver.
We do expect a rally in the next day or two which will be created by a short squeeze. Like the equity markets, both the bulls and bears become a little too aggressive on both sides which creates mean reversion. However, that does not change the trend. The downtrends are strong and all rallies to resistance levels should be sold.
This is FED week and the jobs number comes out Friday, both could create some wild action in the metals. With the 10-year Notes reaching 3% for the first time since 2018, the negative cloud remains over markets and 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 months. 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.
Todd Horwitz Chief Strategist BubbaTrading.com
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