In our previous articles, we warned that the trend remained down and that the surprises should be seen to the downside. Yesterday we saw one of them.

Gold broke below the rising support line once again - that's the same line that was unsuccessfully broken just a few days ago. That's particularly interesting given that the USD Index "should have" helped gold to move higher when it declined in the first part of the session. Instead, gold moved lower and ended up closing below the significant support. This is a big development.

That's not the only thing that one should consider when trading/investing in the precious metals sector:

• The Euro Index corrected half of the October - November decline and then pulled back down once again.
• The USD Index moved very close to our target level that we mentioned yesterday (80.50, while the USD moved to 80.60).
• Stocks finally declined yesterday after a series of daily rallies.
• Palladium plunged.
• Silver and miners underperformed gold on a daily basis.
• A major move was seen in the Dow:gold ratio.

The key question is: "How can the above affect me and my portfolio?"

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Gold moved to the declining resistance line (based on the Oct. 30 and Nov. 7 highs) on Friday. This suggests that the next move might be to the downside, however, the invalidation of the breakdown below the medium-term rising support line is still in play.

At the same time, the breakdown in silver was confirmed as silver closed below the 61.8% Fibonacci retracement level based on the June-August rally ($20.80) for the third consecutive trading day. Naturally, this is a bearish sign. What should one do given the above? How to position yourself? In today's Market Alert we cover the situation from various angles and discuss one that helps us decide which side of the market is likely to prevail in the coming days.

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This week:

• Gold invalidates a breakdown. Short-term and medium-term implications
• Silver reaches significant volume levels
• Platinum-to-gold ratio shapes its future
• Miners get ready for a move up
• Dollar sends a bullish signal
• Euro reaches 2-months low
• True Seasonals shows the stock market in a new perspective.

Also, we look at Janet Yellen’s recent predictions regarding inflation and the housing bubble. We recall year 2005, when Mrs. Yellen were closer to “dovish” interpretation of reality rather than “hawkish”, and were not concerned about possible inflationary scenarios. You’ll learn about why this is important today, and what this tells us about Fed’s future actions.

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Gold moved higher yesterday and the volume for the GLD ETF was not tiny - it was above average, taking this month into account, and it was significant enough to convince us that the invalidation of the breakdown below the rising support line (based on June and October lows) was indeed meaningful.

However, silver closed below the previous October lows (even taking the intra-day lows into account), and it not only confirmed the breakdown below the rising support line, but also moved below the 61.8% Fibonacci retracement level based on the June-August rally ($20.80).

What should gold and silver investors do given the bullish action in gold and the bearish action in silver? The answer to this question is precisely what we focus on in today's Market Alert.

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Gold declined once again yesterday and the GLD ETF moved to the medium-term declining resistance line based on the August and September highs. The breakout above this line is what started the previous move up about a month ago, so the move back to this line is quite significant. At the same time, we saw a breakdown in silver and it all happened, along with a very small move higher in case of the USD Index. The precious metals market looks weak. In today's Market Alert we focus on the implications of this situation for short-term traders and long-term investors (as always, with the emphasis on profiting from it).

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