It's Do or Die for Gold & Silver

Gold and silver have lost their "luster" over the last few months. Gold is down 14% from its 2020 high and silver 23% from its high in February of this year. 

So what's going on with these ancient relics? 

Well, for one there are a lot of asset classes competing for capital. It use to be mostly stocks, ETFs, and real estate but now we can add crypto and NFTs to the mix.  

So why am I bringing up gold and silver? Because of the potential for a low-risk, high-reward trading opportunity. That's it. Nothing more. 

Forget the bull and bear case or the macroeconomics. We know that each side of a trade almost always has a good and valid argument.

What I look for when it comes to trading opportunities is how easy it is to know when you're wrong. This goes against conventional wisdom because most people only think about how much money they can make.

But understanding and knowing when you're wrong is far more important and should be the first thing you consider. It's the key to longevity in this game.

Let's take a look...

I believe that above $1700 a solid case can be made to be bullish gold. With prices trading approximately $100 higher than current prices you're going to have to give gold some room to move if you trade the futures.

However, if you look at a daily chart of the gold miners/GDX (The Canadian equivalent would be XGD.TO) you can see that it's trading very close to major support at $30.

This is important because it's very obvious when you're wrong on this trade. Any close below $30 would increase the odds that the price is going to continue lower. If this happens you cut your losses and get out.

What about silver?

You can see that the line in the sand for silver is around $22. Buyers have continued to defend this area over the last 12 months. Any move below $22 would more than likely be the end for higher prices, at least in the short to medium term.

If you look at silver miners/SIL you can see that the $37/$38 area has been a solid area of support over the last 10 months. A break below this level would more than likely be the end of the line for silver bulls.

By understanding and knowing where you are wrong on a trade, you can position accordingly and let the trade take care of itself.

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