Below you will find a quick summary of the report that we're preparing at this moment and that we will publish later today.

The Euro Index and the general stock market have likely reached their local tops and the USD Index - a local bottom. Along with return of strong correlations between precious metals and abovementioned markets it is highly likely that yesterday's action was the beginning of awaited consolidation, with possible targets of $127, $124 and $121 for the GLD ETF (respectively $1,300, $1265 and $1235 for spot gold) and around $20 for SLV ETF (around $20.5 for spot silver). After this consolidation will complete, it seems that the next rally is going to be really significant for gold, silver and mining stocks with targets $1500 for gold and perhaps $30 for silver.

Based on the information that we have right now it seems that betting on lower prices of metals in the short term could be profitable, however, we believe that using put options (November ones appear suitable) with limited part of one's speculative capital is the only way to go. Using other speculative vehicles doesn't seem appropriate from our point of view and - if you do not plan to use options - we don't suggest opening any speculative position here. We will comment further on this subject in today's Premium Update.

The consolidation is likely to end when USD Index reaches 80-level and precious metals get close to one of the abovementioned support levels. Following rally is expected to be substantial.

Thank you.

Sincerely, Przemyslaw Radomski