For a few days it appeared that gold and silver had found a bottom. There was hope that the lows were in and a rally was coming. Once again, they failed to take out the resistance levels and sold off hard from the Tuesday highs.

In fact, Tuesday’s action would be considered a key reversal, signaling much more room to the downside. Gold and silver continued to get hammered this morning; the targets on the downside are 1650 gold and 18 silver.

If the price action continues at the current pace there could be some acceleration to the downside. We remain short paper metals with no intentions or reversing anytime soon. Obviously, markets can change at any time but the price suggests the sellers are in control.

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