Just a quick note after the Fed decision and before Yellen’s speech. The rates were increased as we expected and precious metals declined as we expected - at least initially after the announcement. Before the rates were increased, gold, silver and mining stocks rallied and this is something that we saw before an analogous situation (Fed’s important announcement) at the end of October. This - despite an initial move higher (especially in silver) is what started the major decline in the entire precious metals sector - consequently, today’s temporary pre-announcement strength is not bullish.

Now, did the situation become much more bearish yet? Almost. It will be much clearer after Yellen’s speech. We don’t expect to hear anything unusual (the policy will stay accommodative, we’ll keep on monitoring the various economic indicators, and so on and so forth) and after the dust settles, the markets will likely resume their previous major trends - which in case of the precious metals market is down. There is a small chance that Yellen will say something that the markets will view as bullish for PMs and miners, so we are not doubling our short positions just yet, but we do think that the current short position remains justified.

As always, we’ll keep you - our subscribers - informed. If the outlook changes today and becomes much more bearish or bullish, we’ll send another alert, but we don’t expect to hear anything unusual and we don’t think that the outlook will change today. If it does - we’ll let you know.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA
Founder, Editor-in-chief

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