Jeez. What a way to start the week! Silver sneaks up to almost $50 early Monday morning only to tail off big time. What to we do now? According to the tweets I see and the various blog posts I’ve read, we Freak Out.
Amazing how the bearish calls suddenly just pop up out of nowhere. People are freaking out all over the place and it doesn’t seem as if they know why.
So let’s make a plan to take advantage, shall we?
First, I’m using the gold chart (GC_F futures) as my reference. As discussed last week, gold and silver are in what’s called a BULL MARKET. We should expect in this last phase of this BULL MARKET that any pullback would equal 25-35 points.
An equivalent silver move would be roughly 4 points, but the froth in silver may warrant a bit more. We should be so lucky as to see $42.
As you can see, these numbers roughly correlate to 10-day and/or 20-day moving averages. Futures have already tagged the 10-day, but with a big Fed day tomorrow, we could see a re-test of these lows first. Just depends on what’s said in The Bernank’s special press conference.
Our good friend the US dollar has yet to catch a sustainable bid, so I’m very cautious about anyone calling for a top at this point in the metals. Remember, the USD should have $4 more downside potential.
Once a confirmed bottom is in on gold, then, I plan on ADDING some options in SLV. The freaking out is only going to provide better places to buy…..not sell.
Trade well and trade the extremes – always!