Gold, silver, and platinum have fallen into a deep hole and show no signs over reversing. This has been one of the worst beatings for precious metals in a long time. Since the August 12th peak gold is down almost 7%, silver and platinum down almost 20%. The selling has been relentless.
With some of the ugliest price action many keep fishing for the bottom claiming that there is no reason for the metals to go lower. There is always a reason for price movement, but all that matters is the price and the trend. Unfortunately, this is one lesson that many metals believers never understand.
Precious metals are in big trouble here; under 17 silver, 800 platinum and 1700 gold are all in play. All three are making new yearly lows and going lower. However, a short-term rally should be here in the next day or two. The jobs report could provide the short covering rally, but we will be sellers of all rallies until further notice.
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
Stop being a prophet and make profits
Join me Saturday September 3rd at Noon EST as we present our Hedging Model for the last time.