Buying Pullbacks in Silver & Gold
Buying Pullbacks in Silver & Gold By Andy Hecht for FA Trader
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- Silver and gold correct, but copper goes the other way
- Long-term technicals continue to point higher
- The fundamentals depend on the herd
- Buying pullbacks in the silver and gold markets
- The upside potential above critical resistance in silver
Greed and fear are two strong emotions, and the pair is often responsible for herd behavior in markets across all asset classes. As my esteemed colleague, Avi likes to say, sentiment speaks and is everything. There is nothing quite like a raging bull market; everyone wants to hop on board. In 2017, Bitcoin and the other digital currencies went from assets most market participants to front-page news. Even my 86-year-old mother was asking how she could hop on the bullish train that took the price of the tokens from 6 cents in 2010 to almost $20,000. The Bitcoin frenzy was nothing new; nothing is as s
exy and mouth-watering than a gold old-fashion bull market run. As Gordon Gecko said in the movie Wall Street, “Greed is good,” particularly if the bull market continues.
Bear markets are the other side of the coin. When asset prices drop sharply, fear drives market participants to head for the exits. The mad scramble often occurs in a hurry and sends prices far below where fundamentals may dictate. Any technical or fundamental analyst worth their salt will tell you that fear and greed should not drive investing or trading. Markets rarely move in a straight line even during the most bullish trends. Prices tend to take the stairs to the upside. When it comes to bear market, every once and awhile, asset prices can take the elevator shaft lower when everyone, including my 86-year-old mother, attempts to sell at the same time.
It was a very bullish summer season for the gold and silver markets. However, the price action on September 5 and 6 reminded us to remember that greed and fear can cause significant corrections at times. Successful trading or investment requires a plan that addresses risk and reward. A discipline that avoids reactions to greed and fear often separates winners from losers in markets.
Silver and gold correct, but copper goes the other way
It was a week of reversals in the metals markets as I had highlighted in my weekly summary report. The impact of gravity hit the gold and silver markets late last week after both had made new highs. Meanwhile, copper went the other way as the early week new low led to a significant price recovery by the end of the week.
The daily chart of December gold futures highlights the move to a marginal new high at $1566.20 on September 4 that gave way to the selling that took the price over $50 lower. Meanwhile, gold held the $1500 level so far, but time will tell if the reversal on the weekly chart brings a new wave of selling next week.