Gold and silver tried to take off Monday before failing about 1860 gold, 22 silver. We expect this pattern to continue based on the price action. There is nothing to get too excited about although these are solid asset classes.

You must remember, we trade paper and buy physical. We have done very well trading the metals; the net through all trades is a big winner. We don’t trade physical, we accumulate. When we are short, we are basically neutral long. When we are long, we are double long.

All markets leave a footprint and a direction that they want to go. Price action and the footprint give the trader the highest probability of success. The patterns are geometrical and repeat over and over from different levels.

The big challenge for metals in the early rounds is the margin calls we expect in a tanking equity market. Eventually, we expect big up moves in commodities including, gold, silver, and platinum. Patience and price action are the key.

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