From the children’s book, gold and silver have become the bus where the wheels go round and round. The continued churn around the mean has been brutal along with light volume and little price action. Of course, this is the type of action one would expect before a big move.

Equity markets are acting the same way which makes all active trading painful. Gold continues to churn around 1850, silver 22. Eventually this will end and markets will breakout, up or down.

We remain short although the price action itself has removed the bigger edge. All markets go through phases, gold and silver are in a downtrend. The fact that they stopped going down and are rotating around the mean suggests a big move. We will assume down for now, but they could go either way.

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
Stop being a prophet and make profits

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