Briefly: We are doubling the size of the current speculative SHORT positions in gold, silver, and mining stocks.

Gold and silver took a dive today and we can say the same about the mining stocks. The GDX to GLD ratio (can be interpreted similarly to the HUI to gold ratio, but it more useful in intraday terms) is significantly down today, confirming points that we made today and yesterday about the relationship between gold stocks and gold. Moreover, the PM sector continues to show weakness relative to the action in the USD Index. Well, the USDX is higher today, but the point is that metals and miners started to decline in a visible manner even before USD’s rally picked up.

All the above are bearish confirmations for the precious metals sector, which make the outlook more bearish than it was previously.

Consequently, we are doubling the size of our current (already profitable) speculative short positions. Their initial price targets and stop-loss levels remain unchanged.

As always, we’ll keep you – our subscribers – informed.

To summarize:

Trading capital (supplementary part of the portfolio; our opinion): Full short positions (200% 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:

• Gold: initial target price: $1,142; stop-loss: $1,272; initial target price for the DGLD ETN: $63.96; stop-loss for the DGLD ETN $46.38
• Silver: initial target price: $14.42; stop-loss: $16.46; initial target price for the DSLV ETN: $32.97; stop-loss for the DSLV ETN $24.07
• Mining stocks (price levels for the GDX ETF): initial target price: $19.12; stop-loss: $23.64; initial target price for the DUST ETF: $37.97; stop-loss for the DUST ETF $20.87

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 – but 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: $28.10; stop-loss: $34.82
• JDST ETF: initial target price: $74.83 stop-loss: $42.78

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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