When watching markets, we all should understand that price action is the key or the lack of it. As we watch gold and silver daily, we have been witnessing the decline of interest. Volume is drying up as the metals churn and then tick lower.

Every day this slow dull action continues increasing the odds of a move lower first. In gold the new range is 1800-1860 and silver is 20-22. The support levels will be crucial for both, failure there brings in play a fast steep drop.

The trade in gold, silver and platinum has been frustrating. When trading we want movement in either direction – we have none. The lack of activity is concerning because that usually signals a big move down in hard asset commodities.

We continue to watch and remain long gold, short silver and looking for a move. The congestion pattern is impossible to trade because markets are directionless.

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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