Briefly: In our opinion speculative long positions in gold, silver and mining stocks are justified from the risk/reward perspective.

In the alert that we sent to you earlier today we wrote that the pre-market weakness in gold and silver was likely not something that would change the short-term outlook, which at this time is bullish.

Silver declined particularly visibly today and reached our initial downside target level - the declining very long-term support line based on the 2003 and 2008 lows. Silver moved slightly below our stop-loss order, but it seems that re-entering long positions right away might be a good idea [silver is below $17 at the moment of posting/sending this alert].

We have previously mentioned that silver's huge underperformance is something that we expect to see at the final bottom of the decline in the precious metals sector. Silver has underperformed today and in the past days in general, but it doesn't seem to us that the scale of the event is big enough to indicate a major bottom. It could indicate a local bottom, which seems quite likely now, though.

We haven't seen a big, volatile drop in the gold stocks to gold ratio and gold is not hated in the mainstream media at this time - we haven't seen critical bullish confirmations just yet.

All in all, silver has just reached its initial downside target level and gold was less than $10 above its corresponding level and it seems to us that today's price action has provided a good opportunity to increase the sizes of the speculative long positions in the precious metals sector.

Instead of half of the regular position, it now seems that the regular position is more appropriate in most cases.

As always, we will keep you informed.

Trading capital (our opinion):

It seems that having speculative long positions is gold, silver and mining stocks is a good idea:

• Gold: stop-loss: $1,187, initial target price: $1,249
• Silver: stop-loss: $16.57, initial target price: $18.07
• Mining stocks (price levels for the GDX ETF): stop-loss: $20.94, initial target price: $23.37

In case one wants to bet on higher junior mining stock ETFs, here are the stop-loss details and initial target prices:

• GDXJ stop-loss: $33.80, initial target price: $37.14
• JNUG stop-loss: $12.37, initial target price: $16.34

Long-term capital (our opinion): No positions

Insurance capital (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 on our thoughts on gold portfolio structuring in the Key Insights section on our website.

Our preferred ways to invest in and to trade gold along with the reasoning can be found in the how to buy gold section. Additionally, our preferred ETFs and ETNs can be found in our Gold & Silver ETF Ranking.

As always, we'll keep you - our subscribers - updated should our views on the market change. We will continue to send out Gold & Silver Trading Alerts on each trading day and we will send additional Alerts whenever appropriate.

The trading position presented above is the netted version of positions based on subjective signals (opinion) from your Editor, and the automated tools (SP Indicators and the upcoming self-similarity-based tool).

As a reminder, Gold & Silver Trading Alerts are posted before or on each trading day (we usually post them before the opening bell, but we don't promise doing that each day). If there's anything urgent, we will send you an additional small alert before posting the main one.

Thank you.

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

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