New day, more economic data, and still gold and silver can’t find buyers to support them. We often hear that precious metals are being manipulated and being pushed lower; however, there is not enough volume and a lack of interest with buyers sitting on the sidelines.
Price action is always the determining factor in markets. Until proven otherwise, the action is ugly, signaling the sellers are in control. With PPI this morning, the selling could become a lot heavier, which is what we expect. We are short and do not see enough buyers to reverse the trend.
As gold and silver hover around key levels, the next push lower could get nasty. Depending on PPI this morning, gold could see 1800 and silver below 21. Obviously, this is speculation, but the price action and data we have suggests the selling pressure has room to the downside.
With pressure on many markets, lousy economic data, and other factors, we are expecting a short-covering bear market rally. If gold and silver get hammered this morning on the PPI number, we are looking for a spot for a short-term trade to play for a bounce before selling again.
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.
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