Over the years I’ve had much more success trading precious metals than the stock market. Even though they tend be more extreme or erratic than the stocks, they tend to move in more predictable patterns. The best market for trading in the second half of 2010 and the first quarter of 2011 was silver. After the “blow off” top however silver has become very volatile and hard to trade. In fact, I lost a good percentage of my gain trying to re-establish my long position. I have a tendency to be early picking bottoms and when you do that in an extremely volatile market you tend to get chopped up. I should’ve waited until silver broke back above their 10 day moving average on the daily chart, that would’ve been a good trade. Instead, I had given up on the trade by that point and missed the rebound.

As you can see, July Silver Futures remain below the 50 day moving average which comes in at roughly $39. A close back above that level would indicate that silver has officially turned back up.

Gold is actually in a stronger market pattern than silver. During the sharp sell off in silver, gold simply went down and tested the 50 day simple moving average. Now gold has popped back above the 10 and 20 day moving averages which means it remains in an uptrend.

Palladium is another metal that maintained it’s uptrend during the commodity sell off. I had been waiting for the Palladium ETF – PALL to test the $70 area and had every intention of buying at that level. Unfortunately, by the the time that test of the 200 day moving average occurred I was so beat up from silver that I skipped the trade. That just compounded my error as the market quickly rallied back.

Gold and Palladium both look like they have turned the corner and are set to move higher. If July Silver Futures close back above $39 they would confirm the resumption of the bullish trend in precious metals.