Weekend Precious Metals Update (Gold and Silver)

I’m not ashamed to admit it; I took a net loss day trading gold since the breakout of the triangle pattern on the daily chart.  My trade setups were right, and there is ZERO regret.  Looking back I did nothing wrong.  While there is no way to control how much we make on a trade, we certainly can control our losses.  Any trader who thinks they can be right all the time is going to have a tough time with the ego, which leads to a host of psychological issues and down a path toward ruin.  My net loss in gold is less than 3/4 of one percent of the capital in my current trading account.  The potential reward was a multiple of that risk.  Bottom line is anyone who can’t admit or is ashamed of losses is in the wrong business.

Moving on, what is interesting to me is the fact that there was no follow through on one particular trade where I felt I had great location and great probabilities, and when this trade did not follow through it was a clear sign that the bulls were weak or the bears were strong.  Either way it was a sign to re-evaluate/step-aside and wait for another opportunity.  That particular trade on Monday was also the last one I took last week.

In my last post in gold I expected $1,585 to be initial support based on the daily chart and so far that has held up.

I also mentioned in last week’s post that the COT report got cutoff prior to the significant breakout, which put a question mark on what was going on underneath the hood.  The commercial traders were NET short 19,767 contracts in this week’s report while Open Interest declined 16,893 contracts.

With the recent selloff and rally back to the breakout area, I am especially looking forward to the coming week’s COT report where I can get a good comparison of what has been happening the past few weeks in regards to changes in Open Interest, Price, and Volume.

Lastly, it has been the right move for many months not to tie any trading capital up of mine in gold for the intermediate or long term.  That day will come.

As for the charts, the $1,585 area needs to hold if there is another visit, or gold starts to scare the longs, and further entice speculative shorts.  A breakdown of the horizontal major support level is definitely not what the bulls want to see regardless of how much bravado they put on today about the eventual fiat currency collapse.

My approach to viewing market behavior has been and will continue to be objective, disciplined, and consistent.

The link to that last post on gold can be found here.

In silver there is still little reason to be overly optimistic as far as the chart is concerned and volatility to the max should continue.  This is not a contract to trade for amateurs.

The story in silver is the same as gold.  I expected the $27 area to be initial support and so far this has held.  A breakdown of major support is a nightmare scenario for the bulls from a charting perspective.  There is not a chance I would be dip buying or trying to time the bottom, but don’t let me stop any of you from doing what you think is right.

The one thing that is encouraging from a trading perspective is there is some clear skies for almost $4.00 an ounce to major trendline resistance if silver can get another run above $28.00

My last post on silver outlining my trade plan for expected volatility and a super conservative approach can be found here.


Consulting? ScottPluschau@gmail.com


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