As you know, we're normally posting alerts on U.S. trading days. Today is not one of those days, but we thought you might appreciate a quick message from us with a brief description of Friday's action.

The USD Index moved very insignificantly below the previous 2018 low and rallied back up, invalidating almost all breakdowns below important support levels. The short-term outlook for the USD therefore improved greatly.

Gold, on the other hand, moved temporarily higher - to the September 2017 and January 2018 highs and then it reversed and - based on GLD and kitco's intraday data - declined. The reversal is not visible on Stockcharts' charts, but it should be. The implications are bearish.

Silver also declined, and we can say the same about mining stocks. Interestingly, the latter were actually close to erasing almost the entire Valentine's Day rally. Part of the daily decline was reversed, but miners still ended the session over 2% lower.

The decline in mining stocks is quite similar to the January 25, 2018 performance (the first decline after the top). Back then the big rally took 2 days to be completed and the initial decline erased about half of it. This time, the rally was a one-day phenomenon, but still, the initial decline erased about half of it.

Naturally, the above is a sign of underperformance of the mining stocks relatively to gold, which is a bearish factor.

Summing up, the outlook remains bearish, but it's not yet extremely bearish from the short-term point of view. In other words, everything that we wrote regarding the outlook in our previous several alerts remains up-to-date.

Thank you.

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

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