Gold is declining today and it’s taking the mining stocks with it. Silver is down but not significantly so. The protective stop-loss order closed our position slightly below the Jan 29 low, so we are not participating in today’s decline to the full extent.

The question is how much does today’s decline change with regard to outlook. It could be the case that the second top in gold is already in. However, it doesn’t necessarily mean that the decline will accelerate immediately. We could still get another move higher in the PMs, especially if the USD Index declines. During this time, silver would be likely to outperform, just like we had indicated previously.

Why could gold move higher once again? As that would be in tune with how it topped in October 2008, September 2011, and in the first months of 2018. These are the multi-top formations where the first top was formed on huge volume - we featured charts with them in yesterday’s Gold & Silver Trading Alert.

The most decisive of these declines, was the September 2011 slide, and gold still initially declined by moving back and forth and not in a straight line.

All in all, at this time, we are keeping the long position in silver intact, and we are not re-entering the long position in gold. Given the size of the decline in mining stocks, today, it was certainly a good decision not to be long in this part of the PM market.

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

Thank you.

Sincerely,
Przemyslaw Radomski, CFA