Gold and silver continue insleepy trade as the equities continue to rally. The pattern in the metals isquiet consolidation, hovering near the recent lows. Volume has been light andvolatility nonexistent; however, the metals appear to be preparing for a bigmove.
The sellers appear to beexhausted since taking gold from $1,365 to $1,280. Typically trading actionlike this will lead to a much bigger move in the very near future. Gold isconsolidating on the bottom end of the range while the Dow and S&P churn atthe top end.
We expect a move of 5% or morebased on the current pattern; that move can go either way. Our expectations arethat the lows are in and the move is up. The risk-reward favors the upside aswell, assuming the lows are in.
The most important thing toremember when trading and investing is to make sure you know where the exit is.We will exit long positions if the metals take out the recent lows. Until then,we look for a move higher.
By Todd 'Bubba' HorwitzContributing tokitco.com
Follow @Bubba_Trading