Gold and Silver look like they are headed for a rough period. Looking back, they were down for the 2nd week in a row. Neither has seen a positive week in the last nine. We have been watching gold and silver consolidate, now they are breaking down.
Silver looks worse than gold with it breaking through major support this morning. Friday’s action was a warning sign for gold and silver: big rally early followed by failure. Gold did close higher Friday while silver lower, but both were ugly.
We must remember that trading paper metals is a short-term play for more active traders and has nothing to do with physical holdings. We have been short gold and silver since April 25th, gold at 1907 and silver at 23.61. We will remain short until the price action suggests a turn in trend.
Too many try to pick tops and bottoms when the footprint and price action is a much better view to the next move. There appears to be more trouble coming in all markets, eventually gold and silver will turn around but there is no percentage in being early.
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
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