Briefly: In our opinion no speculative positions in gold, silver and mining stocks are now justified from the risk/reward perspective.

We didn’t see much action yesterday, so the situation remains largely unchanged, and consequently, what we wrote in our last alert is still up to date. Let’s look at the charts (charts courtesy of http://stockcharts.com).

Yesterday, we wrote about the USD Index:

The USD Index moved higher once again (and the EUR/USD pair declined once again) and it is now even more extremely overbought in the short term. It is also another day closer to the turning point. Consequently, the risk of a decline in the following days that could push metals (probably temporarily) higher has once again increased. Therefore, if we hadn’t closed the short positions yesterday, we would have done so today.

Actually, yesterday the USD Index moved even higher, which adds to the possibility of a reversal at the cyclical turning point.

Yesterday, we commented on gold’s reaction to the dollar’s strength:

[The yellow metal responded] just a little. Gold declined, but the move didn’t take the yellow metal below the previous highs, even though the USD Index moved to new highs. The implications are bullish for gold.

On the other hand, we just saw an attempt to move above the declining resistance line – which failed almost instantly. This is a bearish sign.

Overall, the short-term picture for gold is rather unclear at this time.

The yellow metal edged lower yesterday which upholds the remarks cited above.

As far as the long-term outlook for gold is concerned, there haven’t been any changes either and our yesterday’s comments are still valid:

From the long-term perspective nothing changed. Gold remains below the declining resistance line and it looks to us like it’s preparing for a bigger move. At this time the trend remains down, so the move lower is more likely, but – especially given gold’s strength when compared to the moves in the USD Index – we can’t rule out a situation in which gold first moves closer to its previous local highs (a bit below $1,400) and declines after these levels are reached.

At this time, we’re sticking to the good old “when in doubt, stay out.” The situation hasn’t become much clearer compared with yesterday and we would prefer to wait for some more information before entering the next trade.

To summarize:

Trading capital (our opinion): No positions.

Long-term capital: No positions.

Insurance capital: 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.

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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