In the September 11 interview with Eric King of King World News, I mentioned that a number of credible analysts were saying that gold and silver looked like they were about the have a technical breakout to the upside. Gold’s and silver’s price action since have confirmed those predictions.
In the interview, I warned long-term investors to be prepared for volatile price action because such a move will bring technical traders to the gold and silver markets. These traders will not be there because of concerns about a declining dollar or the stability of the world’s financial structure, but solely because of the price action. When they perceive the move to the upside to be over, or they have hit their price targets, they will bail out, thereby adding to the metals volatility.
So, as prices march higher, investors need to be prepared for some sharp corrections. This is not a prediction that a correction is imminent, only a warning that somewhere in this move there will be sharp downside moves. Considering the present state of financial affairs worldwide, physical gold and silver investors need to hold on and definitely not try to trade any intermediate moves.
Over the years, during various precious metals bull markets I have seen investors attempt to trade intermediate moves only to be left on the sidelines as the metals marched high. Many times they accurately picked intermediate tops but failed to get back in before prices moved up again.
As the old, seasoned veteran said in Reminiscences of a Stock Market Operator, “It’s a bull market. Get your position and hold on.”