We saw a few bearish confirmations during today's session and consequently we think that speculative short positions are once again justified from the risk to reward point of view.

The main reasons are gold's continuous (no new high in gold despite a new low in USD and a decline in gold in light of USD’s comeback) intra-day weakness relative to the USD Index and USD's reversal. The key things about the latter is that previous declines following the "hangman" candlestick (like the current one) ended with a reversal just like today's one and the same was the case when USD reached the rising support lines recently. The additional reason is miners’ move back below the rising red support line.

To summarize:

Trading capital (supplementary part of the portfolio; our opinion): Short positions (100% of the full position) in gold, silver and mining stocks are justified from the risk/reward perspective with the following entry prices, stop-loss orders and initial target price levels:

• Gold: initial target price: $1,006; stop-loss: $1,393, initial target price for the DGLD ETN: $74.37; stop-loss for the DGLD ETN $36.89
• Silver: initial target price: $13.12; stop-loss: $21.63, initial target price for the DSLV ETN: $39.78; stop-loss for the DSLV ETN $14.34
• Mining stocks (price levels for the GDX ETF): initial target price: $9.34; stop-loss: $33.17, initial target price for the DUST ETF: $297; stop-loss for the DUST ETF $18.80

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 – 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: $14.13; stop-loss: $54.29
• JDST ETF: initial target price: $245; stop-loss: $15.80

Long-term capital (core part of the portfolio; our opinion): No positions

Insurance capital (core part of the portfolio; our opinion): Full position

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

Thank you.

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

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