Although many believe that gold is a protective investment for their portfolio, they would be wrong. Gold, silver, and platinum look to be headed much lower. Last week’s rally attempt was put down; we expect more of the same. We are sellers of rallies at resistance levels.

Precious metals are hard asset commodities that we agree should be owned, but when trading, price action remains the key. The picture looks bleak: gold, silver and platinum should continue to head lower. For gold the next target is 1680, silver 18, and platinum 800.

Now, this doesn’t mean that we will not see some short covering bounces which are natural to all markets. Metals’ price action is ugly. There is no reason to expect a rally no matter what happens to the dollar or anything else, the trend is down. Wait for the action to tell you they are reversing not your fear or opinion.

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

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