First, lets be clear about one thing. I’m a big fan of owning physical metals which I will never sell. Second, I will trade the paper gold long or short depending on the trend. However, Gold, Silver and Platinum are hard asset commodities, that may be needed as a currency someday. They are not a hedge against an equity portfolio.
Gold has turned into a nasty downtrend along with Platinum. Silver has also turned down just not as severe yet. Obviously, we don’t know what the future holds with the exception that the metals will be higher someday. What happens over the next week, month and longer is what we are trading.
The trends are down and all rallies should be sold until that pattern changes. For the news junkies, the metals are in trouble in the short run, but history tells us that they will be higher 10 years from now. You must decide if you are trading or investing, they are completely different.
Investing in general comes down to your time horizon, appetite for risk and many other factors. Trading can be any time frame from minutes to days and weeks; that decision is yours. Just remember markets go both ways.
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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