Late last week gold and silver looked like they could breakout to the upside, they failed. Looking at the price action over the weekend the precious metals could be breaking down again, headed towards the recent lows.

We remain short and look for a test of 1800 gold, 21 silver. This is a very key time not only for precious metals but equities and other key asset classes. As we have witnessed over the past couple of weeks, light volume can change sentiment. Odds are the precious metals test lows before find any traction.

The entire market structure has problems. Inflation is skyrocketing much faster than the government and the FED will admit. There is no sign that they have a fix which we already knew. Eventually this should work in favor of gold and silver. Until then we will stay short paper gold and silver.

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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