From the greatest trading movie of all time, Trading Places, one of the best lines was “that can’t right.” That line is used way too often when it comes to markets; we hear it now when it comes to Gold and Silver. The question certainly rings true, with all the turmoil in markets and the globe one would think they would be going higher.
We must always remember that although current events can move market many times, they have already priced in the action we are seeing today. Since we are trend traders, and the current trend is higher, we are long but not surprised by the current price action because consolidation is a part of all markets.
What this price action shows us is that Gold and Silver are great hard assets but not protected against the equity markets and are not a hedge. If you consider Gold and Silver anything but a hard asset, they may once again be a currency.
We are long term holders of Gold, Silver and Platinum as hard asset investments and will continue to do so. We will also trade them from either side of the market depending on the trend – its that simple.