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Quick Take: Palladium Leads Precious Metals

NEW YORK ( TheStreet) -- Precious metals are higher Friday's session. TheStreet's Joe Deaux spoke to David Morgan, publisher of "The Silver Investor," about whether that will continue.

"One day doesn't make a market," Morgan said, who doesn't put a ton of emphasis into one knee-jerk reaction from the market. Instead, he mostly looks for outperformance based on double- or triple-percentage moves. For instance, if gold is up 0.5%, he wants to see silver up about 1.5% for at least a couple of days.

Based on this, he can establish a changing in the trend and then look to find his position.

Lately, that leader has been palladium. The white metal, along with platinum, is traded on much lower volume than either silver or gold and, according to Morgan, that makes it even better.

Due to shortened supply from South Africa, the prices have been pushing higher, Morgan said. Although the larger breakout from the metal hasn't happened yet, this would be a key indicator for the group if it did.

Seasonally, August tends to be the worst month for the metals group, he added, although the season hasn't played much of a role in the last couple years of price action. Of more significance, however, was the key reversal seen in silver prices on June 28.

"It's called a key reversal for a reason," he said, noting that while many are calling for lower metal prices and sub-$1,000 gold, he thinks we may have already seen the bottom in the two metals.

-- Written by Bret Kenwell in Petoskey, Mich.

Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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