Briefly: In our opinion no speculative positions are justified from the risk/reward perspective. In other words, closing the remaining short positions in gold and silver and taking profits off the table is likely a good idea in our opinion.

Today’s alert is going to be rather short as we would like to send it to you as soon as possible.

The key news today is that the USD Index rallied once again and moved to the declining resistance line (based on 2005 and 2010 highs). It’s very likely that this level will stop the rally for some time and that it will have a positive impact on the precious metals market.

With this in mind, it seems that keeping short positions in gold and silver is no longer justified from the risk/reward point of view. Gold was about $2 above our exit price earlier today and silver was at $17.32 (intra-day low), which is also much closer to our projected exit price than it is to the price at which we had mentioned opening short positions.

Consequently, it seems prudent to exit the profitable short positions even given the possibility that gold and silver might move even lower today. It simply seems too risky in light of the additional gains that it could (!) provide.

At this time we are planning to enter long positions in gold, silver and mining stocks and to profit on the corrective upswing, which in our opinion seems to be just around the corner.

Trading capital (our opinion):

It seems that placing buy orders (going long) at this time might be a good idea with the following entry prices (placing limit orders seems to be a good idea), stop-loss orders and initial target prices:

• Gold: entry $1,204, stop-loss $1,187, initial target price $1,249.
• Silver: entry $17.06, stop-loss $16.89, initial target price $18.07.
• Mining stocks (price levels for the GDX ETF): entry $22.08, stop-loss $21.59, initial target price $23.37.

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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PS. Today’s Forex Trading Alert will provide additional information regarding the situation in the currency markets.