Just when it looked safe to get back in the gold waters, the sharks once again ripped the heart out of the gold bulls. Gold’s failure to break above resistance was a warning sign. Last week we wrote about the key resistance level that gold needed to break through…it failed.
Silver, after breaking out to the upside, has struggled since, however still above key support indicating higher prices are coming. Platinum is under pressure again making a lower high just when it appeared it was ready to run.
We remain short gold, long silver, and would be long platinum if it were liquid enough to trade. There is no way to know where the metals will end up today or tomorrow, but the trends are clear, silver and platinum up, gold down. Until they reverse, we are buyers of silver and sellers of gold.
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.