Gold and silver fail once again

TORONTO (May 18) Like reading a textbook, the recent price action in gold and silver has moved according to script. The technical trade has been almost perfect. While those who cry manipulation or some other nonsense, gold reached support rallied, reached resistance, and failed.

Once again, $1,800 gold and $21 silver are key levels to hold on this move down. Based on current price action, troubles in the equity markets, and the ignorance of the FED, we suspect the metals have more room to go on the downside. In the next few days, we will be looking for a new support level.

Too many mix trading and investing in the same strategy, which will destroy those who do. They are two completely separate strategies; mixing them creates too many issues, emotionally and rationally. The trend is lower, and the correct side for traders is short. You must quit fighting the tape and price action.

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.

Kitco