We are now moving out of a reversal zone for gold and silver, and both metals dropped steeply today (most likely a reaction to news and speculation that the Fed will raise interest rates before the year is over). This suggests that instead of a reversal up, prices may be breaking down (this sometimes happens in a "reversal" zone). Silver is especially vulnerable here because its final medium-term cycle bottom is due at any time over the next few weeks. Today's sharp drop in silver suggests that this correction is in progress with a target price range of $17.50 -
$18.50. There is another reversal zone coming up in the first week of August so we could see prices continue down into that time (which would be ideal for a final bottom in silver's medium-term cycle). It is still possible for gold prices to stay above our stop loss level at $1,300 because, unlike silver, it is only taking a subcycle correction (its final cycle bottom isn't due for at least 8 weeks); however, gold is close to $1300 now and could easily go lower into the end of this month as it follows silver's lead. For these reasons I am going to sell my long position in gold now and stand aside both metals until the cycle directions are more clear. If these prices continue down now we will want to buy again if silver stabilizes around $18 over the next few weeks. Gold prices could find support anywhere from $1,230 - $1,300. Gold closed today about 1.5% below our entry point for our long position so we are taking a small loss here, but we are still above our original stop loss point. I am putting a sell order in tonight before tomorrow's market open.
Selling my long position in gold and remaining out of silver for now.