The silver profit-take level was just hit, and as we described on November 28, when we had opened the long position, reaching the target level in gold, silver OR mining stocks automatically closes the entire position. Consequently, the long positions in gold, silver AND mining stocks were just closed. The gold position was closed at a loss so small that it was almost a break-even (opened at about $1188 and closed at about $1179), but silver and mining stocks closed visibly higher, so the positions were closed at a visible (especially in case of silver) profit. We had opened the long position in silver, when it had been trading at about $16.57 and we have closed it today at $17.27. The GDX ETF was at about $20.80 when we were opening the long position (precisely: when the alert was posted) and when silver moved to $17.27, thus triggering the profit taking, GDX was at about $21.70.

Overall, this trade was quite profitable given its length (only 8 trading days). That’s yet another profitable trade that we closed recently (by the way, the short position that we had opened in crude oil just yesterday when the latter was still trading above $51, is also already profitable).

What’s next? It depends. The outlook for precious metals is no longer as bullish as it was before today’s session precisely due to silver’s strong outperformance. That’s a bearish sign, especially that mining stocks are not outperforming gold today. If precious metals were not in a medium-term downtrend, we would consider keeping the long positions intact, but since it is very likely that the medium-term downtrend remains in place, having a counter-trend position in light of the big bearish sign from silver is no longer justified from the risk to reward point of view.

Naturally, the above remains to be the case regardless of the result of the trade (if you’ve been following our analysis for some time, you are well aware of that, but quite a lot new subscribers joined us recently, so we think it’s a good idea to mention this). So, if one chose only to trade silver and wants to keep the profits rising, it doesn’t seem to be justified to do so, because the outlook changed based on silver’s outperformance. If one chose only to trade gold, and doesn’t want to close the position at even a tiny loss - keeping the position is… still not justified because the outlook changed. It is exactly the same if one entered the trade at a different price. It is the outlook and thus the risk to reward ratio that determines whether a position makes sense (a.k.a. is justified) or not, not the status of the trade (flat, profitable, or even losing).

All in all, it seems that taking profits off the table and waiting for additional confirmations before opening another trade is currently justified from the risk to reward point of view. Depending on what confirmations we’ll get, we’ll open either a long or short position, however, given the medium-term downtrend, the latter is more probable.

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

Thank you.

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

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