Gold and silver both broke out above the highs of the previous month and are set up for trades on the long side. The recommended strategy is to get long and use tight protective sell stops. The following week, start trailing the protective sell stops just below the previous week's low. We have absolutely no idea how long the run may last, but the intention is to add to the long positions on a weekly basis and trailing the protective sell stops on the entire position. If stopped out, be prepared to re-enter. We want to ride this train as long as it's moving. Here's what we are looking at:

December Gold broke a previous month's high for the first time since July, it has made higher weekly lows for four out of the last five weeks and higher weekly highs for three out of the last four weeks, and it has only closed below the 18-day Moving Average one time in the last month.

December Silver has made higher weekly lows for four out of the last five weeks and higher weekly highs for four consecutive weeks and it has closed above the 18-day Moving Average every single day for the last month.

Be cautious when trading the metals! Volatility can get pretty extreme at times (as we witnessed back on the Spring) and slippage on stops can sometimes be horrendous as gap openings are not uncommon. Only well-capitalized traders (financially and emotionally) should be involved in these markets.

Disclaimer: There is risk of loss in all commodity trading. The data contained are believed to be reliable, but have not been independently verified by Pearce Financial. Accordingly, such data cannot be guaranteed as to reliability, accuracy, or completeness, and as such are subject to change without notice. Pearce Financial will not be responsible for any indirect, compensatory, or consequential damages, including loss of profits which may result from reliance on this data. Pearce Financial and/or its Principals and employees may or may not follow strictly any or all of the trading recommendations contained herein. The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.

© 2006 Pearce Financial, LLC
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