Gold and silver prices seem to be pausing and rounding over a bit today, and since they have reached our upper targets for a short-term trade I am going to take profits here and sell my long positions in both metals today.
I mentioned the possiblility of selling these positions last Thursday because technical signals were indicating the possibility of a very short-term steep drop (correction) in both metals and this risk is still present. There are two possibilities for this market at the moment: a sharp drop into the end of this week/early next week or a continued rise into the week's end and then a sharp drop. As I mentioned in Thursday's blog, the end of August is a strong reversal zone for all markets so prices will likely make a major change in direction then. The potential correction here could go as low as the $1300 area in gold and the $20 area in silver, so I feel it is worth stepping aside now. I want to emphasize that this would most likely be a short-term correction. If prices do fall to these levels (and find support) it will be an excellent buying opportunity and we will want to go long again.