It seems that we are approaching another speculative shorting opportunity in PM stocks.

After sending this message, I'm going to short the PM stock sector by purchasing GDX June put options, strike price 38 (currently trading at $1.50) with 7% of my speculative capital.

This time, I'm purchasing the short-term options only, as it seems that if we don't plunge soon, we will rally much higher. This means that buying options with additional time value, but with less leverage is not really justified here.

The overall situation is very similar to the one we had on April 1st (day preceding the plunge), but I don't want to go into details here, because at the time of writing, it's only 1h before markets close today.

Yes, I realize that this is the opposite position to what I suggested as far as long-term capital is concerned, but this is exactly what charts and common sense are saying. We are in a bull market in the precious metals, but it seems that PM stocks have gone too far too quick, and what I wrote about the general stock market in the previous Premium Update, is still relevant today.

I cannot say the same about the physical metals. If gold is to correct, then I currently (!) expect it to hold at its support line marked on GLD chart in the previous Premium Update. This support is currently at about $890 in gold, so the downside is quite limited here. Silver could drop relatively more, but I would still prefer to short PM stocks at the moment. However, if you currently have any speculative long positions in the precious metals, you might want to consider closing them at least partly.

If you own precious metals stocks as speculation, you may also consider limiting your positions here.

Sincerely,
Przemyslaw Radomski