Briefly: in our opinion, full (250% of the regular size of the position) speculative short position in gold, silver, and mining stocks is justified from the risk/reward point of view at the moment of publishing this Alert.

Today's analysis is going to be rather brief, as practically nothing changed in the last 24 hours, so the situation in gold and silver is just as it was when we had been writing the yesterday's analysis. Consequently, everything in it remains up-to-date and if you haven't had the chance to read it yesterday, we encourage you to do so today. Also, if you didn't have the chance to read this week's flagship analysis (Monday's Gold & Silver Trading Alert), we also encourage you to read it today.

If you're short on time, you can skip reading Monday's analysis and just focus on yesterday's issue as the next flagship analysis will include update on all or almost all key details that we discussed previously.

One thing that we would like to already emphasize today, is how perfectly the long-term triangle-vertex-based reversals in gold worked.

The Timely Gold Reversal

Gold was very likely to reverse and it did exactly that, just like we wrote earlier. This week's volume is already huge even though there's still one session left before the week is over. When huge volume confirms reversals, they are particularly reliable.

Moving back to the short-term picture, the only thing that did change in the last 24 hours was the performance of mining stocks as they had not been trading when we were writing yesterday's analysis.

Miners and the Rest of the PMs Crowd

Gold miners - bottom of the above chart - declined and closed at the new 2019 low. The HUI Index moved up initially, but then declined anyway, thus confirming that yesterday's slide was not accidental. The outlook is definitely bearish.

Summary

Summing up, gold reversed almost exactly at its triangle-vertex-based reversals, and both gold stocks and silver just closed at new yearly lows, which is a bearish combination. Based on the crystal-clear shooting star reversals, gold getting Cramerized, very weak gold response to the recent missile strike, the 61.8% Fibonacci retracements that were just hit, along with multiple similarities present in gold, silver, and mining stocks, as well as on the critical situation in the USD Index, both the medium-term and short-term outlooks for the precious metals market are very bearish. Given the proximity of the triangle-based reversals in gold, silver stocks' big volume spike, and the extreme weakness in gold stocks relative to gold, it seems that the short-term rally in gold, silver, and miners is now over. In other words, the profit potential of our trading positions remains intact.

In our view, if there ever was an excellent time to enter or add to one's short positions in the precious metals sector - this is it.

As always, we'll keep you - our subscribers - informed.

To summarize:

Trading capital (supplementary part of the portfolio; our opinion): Full speculative short position (250% of the full position) in gold, silver, and mining stocks is justified from the risk/reward perspective with the following stop-loss orders and binding exit profit-take price levels:

• Gold futures: profit-take exit price: $1,391; stop-loss: $1,622; initial target price for the DGLD ETN: $36.37; stop-loss for the DGLD ETN: $22.89
• Silver futures: profit-take exit price: $15.11; stop-loss: $19.06; initial target price for the DSLV ETN: $24.88; stop-loss for the DSLV ETN: $14.07
• Mining stocks (price levels for the GDX ETF): profit-take exit price: $23.21; stop-loss: $30.11; initial target price for the DUST ETF: $14.69; stop-loss for the DUST ETF $5.09

In case one wants to bet on junior mining stocks' prices, here are the stop-loss details and target prices:

• GDXJ ETF: profit-take exit price: $30.32; stop-loss: $44.22
• JDST ETF: profit-take exit price: $35.88 stop-loss: $9.68

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

Whether you already subscribed or not, we encourage you to find out how to make the most of our alerts and read our replies to the most common alert-and-gold-trading-related-questions.

Please note that the in the trading section we describe the situation for the day that the alert is posted. In other words, it we are writing about a speculative position, it means that it is up-to-date on the day it was posted. We are also featuring the initial target prices, so that you can decide whether keeping a position on a given day is something that is in tune with your approach (some moves are too small for medium-term traders and some might appear too big for day-traders).

Plus, you might want to read why our stop-loss orders are usually relatively far from the current price.

Please note that a full position doesn't mean using all of the capital for a given trade. You will find details on our thoughts on gold portfolio structuring in the Key Insights section on our website.

As a reminder - "initial target price" means exactly that - an "initial" one, it's not a price level at which we suggest closing positions. If this becomes the case (like it did in the previous trade) we will refer to these levels as levels of exit orders (exactly as we've done previously). Stop-loss levels, however, are naturally not "initial", but something that, in our opinion, might be entered as an order.

Since it is impossible to synchronize target prices and stop-loss levels for all the ETFs and ETNs with the main markets that we provide these levels for (gold, silver and mining stocks - the GDX ETF), the stop-loss levels and target prices for other ETNs and ETF (among other: UGLD, DGLD, USLV, DSLV, NUGT, DUST, JNUG, JDST) are provided as supplementary, and not as "final". This means that if a stop-loss or a target level is reached for any of the "additional instruments" (DGLD for instance), but not for the "main instrument" (gold in this case), we will view positions in both gold and DGLD as still open and the stop-loss for DGLD would have to be moved lower. On the other hand, if gold moves to a stop-loss level but DGLD doesn't, then we will view both positions (in gold and DGLD) as closed. In other words, since it's not possible to be 100% certain that each related instrument moves to a given level when the underlying instrument does, we can't provide levels that would be binding. The levels that we do provide are our best estimate of the levels that will correspond to the levels in the underlying assets, but it will be the underlying assets that one will need to focus on regarding the signs pointing to closing a given position or keeping it open. We might adjust the levels in the "additional instruments" without adjusting the levels in the "main instruments", which will simply mean that we have improved our estimation of these levels, not that we changed our outlook on the markets. We are already working on a tool that would update these levels on a daily basis for the most popular ETFs, ETNs and individual mining stocks.

Our preferred ways to invest in and to trade gold along with the reasoning can be found in the how to buy gold section. Additionally, our preferred ETFs and ETNs can be found in our Gold & Silver ETF Ranking.

As a reminder, Gold & Silver Trading Alerts are posted before or on each trading day (we usually post them before the opening bell, but we don't promise doing that each day). If there's anything urgent, we will send you an additional small alert before posting the main one.

Thank you.

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