We realize this may be surprising given this hour and given the fact that we closed our speculative short positions in the precious metals sector earlier today, but it seems that the short positions are now - based on today’s session - once again justified from the risk to reward point of view.

The reasons are:

• The shape of today’s session in gold (big daily reversal)
• Very likely close below the 38.2% Fibonacci retracement based on the daily closing prices
• A move a bit above the 38.2% Fibonacci retracement based on the intra-day extremes
• The big daily reversal in the USD Index and invalidation of the move below its 61.8% Fibonacci retracement that took place right before the cyclical turning point
• Mining stocks reversal, underperformance and likely close below yesterday’s closing price

What we haven’t seen today is silver’s short-term outperformance, which is not necessary, but it would be a great addition to the above list of bearish factors. Because of the above, we are not re-entering the position with 150% of the full position, but with 100% of the full position.

The stop-loss orders and target levels are the same as previously, with higher SL in gold ($1,243) and DGLD ($48.78).

As always, we will keep you – our subscribers – informed.

Trading capital (supplementary part of the portfolio; our opinion): Short positions (100% of the full position) in gold, silver and mining stocks are justified from the risk/reward perspective with the following stop-loss orders and initial target price levels / profit-take orders:

• Gold: exit-profit-take level: $1,063; stop-loss: $1,243; initial target price for the DGLD ETN: $81.88; stop-loss for the DGLD ETN $48.78
• Silver: initial target price: $13.12; stop-loss: $17.53; initial target price for the DSLV ETN: $46.18; stop-loss for the DSLV ETN $24.86
• Mining stocks (price levels for the GDX ETF): initial target price: $9.34; stop-loss: $24.63; initial target price for the DUST ETF: $143.56; stop-loss for the DUST ETF $27.97

In case one wants to bet on junior mining stocks' prices (we do not suggest doing so – we think senior mining stocks are more predictable in the case of short-term trades – if one wants to do it anyway, we provide the details), here are the stop-loss details and initial target prices:

• GDXJ ETF: initial target price: $14.13; stop-loss: $40.12
• JDST ETF: initial target price: $104.26; stop-loss: $18.88

Long-term capital (core part of the portfolio; our opinion): No positions (in other words: cash)

Insurance capital (core part of the portfolio; our opinion): Full position

Thank you.

Sincerely,
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager

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