Based on today's strength in the USD Index and a visible move above the 2015 highs along with precious metals market's reaction to the above, we think that re-opening speculative short positions is justified from the risk to reward point of view. It's likely that the USD Index will end the session above 100 for the fourth time in a row. The strength in the precious metals is not huge, but the reason is that probably a lot of investors don't believe in USD's breakout YET, as they are not aware of the near-perfect symmetry between the current rally and the previous big decline (as discussed in the November 15 Gold & Silver Trading Alert). Once they realize that the breakout in USD has indeed taken place, they can sell their gold holdings very quickly (it would not be the first time that precious metals would be late to react to USD's signals).

As always, we will keep you – our subscribers – updated.

To summarize:

Trading capital (supplementary part of the portfolio; our opinion): Short positions (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: $1,272, initial target price for the DGLD ETN: $73.19; stop-loss for the DGLD ETN $47.51
• Silver: initial target price: $13.12; stop-loss: $18.13, initial target price for the DSLV ETN: $39.78; stop-loss for the DSLV ETN $22.81
• Mining stocks (price levels for the GDX ETF): initial target price: $9.34; stop-loss: $23.12, initial target price for the DUST ETF: $297; stop-loss for the DUST ETF $38.52

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: $38.23
• JDST ETF: initial target price: $245; stop-loss: $26.58

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

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

Thank you.

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

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