How to Trade Gold, Silver, and Precious Metal Miners in This Still-Dicey Market
Precious metals may be close to a bottom, but there could be sharply lower prices still to come.
Since 2011 when gold and silver started another major bull market correction, the best position has been to move to cash, or sell/write options against your positions to protect your investment until the next trend resumes.
If you take a look at the chart below of gold you will notice that in 2008 we had a similar breakdown in price, which purged the market of investors who where long gold. And if you compare the last two breakdowns, they look very much the same. If price holds true then much higher prices are likely to unfold at the end of 2013.
The key here is for the price to move and hold above the major resistance line. If it can do that then we are looking at a possible breakout to gold at $2600 - $3500. With that being said, gold and silver may just be starting a bear market. Depending what the price of gold does when my resistance level is touched, my outlook may change from bullish to bearish.
Also with last week's economic numbers getting better in the US, I do have concerns that gold may be starting a bear market, but we will not know that for several more months.
Gold Daily Technical Chart
Major technical damage has been done to the chart of gold. This can be seen as bullish or bearish price action, but until a price and volume pattern unfolds which puts the odds on the bullish or bearish side, I remain neutral.
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