Gold and silver tried to take off Monday before failing about $1,860 for gold and $22 for silver. We expect this pattern to continue based on the price action. There is nothing to get too excited about, although these are solid asset classes.
You must remember, we trade paper and buy physical. We have done very well trading the metals; the net through all trades is a big winner. We don’t trade physical we accumulate. When we are short, we are basically neutral long, and when we are long, we are double long.
All markets leave a footprint and a direction that they want to go. Price action and the footprint give the trader the highest probability of success. The patterns are geometrical and repeat over and over from different levels.
The big challenge for metals in the early rounds is the margin calls we expect in a tanking equity market. Eventually, we expect big up moves in commodities, including gold, silver, and platinum. Patience and price action are the key.
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 month. 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.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; However, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.