Just a note to clarify the current outlook and the current trading positions. (As I mentioned earlier today, the situation in gold can still be viewed as somewhat positive in the very near term, you may have found the text to be confusing – I apologize for that.)

Even though we could still see a rally in gold in the following days, it seems that at this time being – once again – on the short side of the precious metals market (precisely: junior mining stocks) is justified from the risk to reward point of view.

I view short positions in the GDXJ (or long ones in inversely leveraged instruments such as JDST) as justified from the risk to reward point of view, and I no longer think that having long positions in gold is currently justified.

Today’s session provides us with additional bearish confirmation. While gold is practically flat today, the GDX and GDXJ are already down visibly – poised to end the session below their previous June low. This is a sign of weakness and a strong bearish confirmation.

Moreover, in the previous cases, the RSI at 30 resulted in higher prices practically immediately, and this time, we’re seeing continuation of weakness instead. This tells us that the analogies to the other RSI-based cases are not that relevant. Conversely, the critical situation in the long-term HUI Index chart remains very relevant. And it’s pointing to much lower mining stock prices in the following weeks and months.

To summarize:

Trading capital (supplementary part of the portfolio; our opinion): Full speculative short positions (300% of the full position) in mining stocks are justified from the risk to reward point of view with the following binding exit profit-take price levels:

Mining stocks (price levels for the GDXJ ETF): binding profit-take exit price: $24.12; stop-loss: none (the volatility is too big to justify a stop-loss order in case of this particular trade)

Alternatively, if one seeks leverage, we’re providing the binding profit-take levels for the JDST (2x leveraged) and GDXD (3x leveraged – which is not suggested for most traders/investors due to the significant leverage). The binding profit-take level for the JDST: $39.87; stop-loss for the JDST: none (the volatility is too big to justify a SL order in case of this particular trade); binding profit-take level for the GDXD: $94.87; stop-loss for the GDXD: none (the volatility is too big to justify a SL order in case of this particular trade).

For-your-information targets (our opinion; we continue to think that mining stocks are the preferred way of taking advantage of the upcoming price move, but if for whatever reason one wants / has to use silver or gold for this trade, we are providing the details anyway.):

Silver futures upside profit-take exit price: unclear at this time - initially, it might be a good idea to exit, when gold moves to $1,512.

Gold futures upside profit-take exit price: $1,512.

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

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

Thank you.

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