We've seen a move lower in gold recently (including today) so you might appreciate a quick update. Again, the question is if anything changed. We don't think so. In other words, we continue to believe that betting on higher precious metals prices is a good idea in short- (trading) and long-term (investment).

In our March 6th (buy) Market Alert we wrote the following:

"We may or may not have seen a bottom in gold, but it seems that waiting for the final bottom to be reached is not worth the risk of missing the rally in case it takes off later today or tomorrow. If stocks declined, it seems that metals would move only a bit lower - perhaps to the lower part of the target areas that we mentioned previously. Consequently, we believe that it's a good idea to open speculative long positions (bet on higher prices) in gold, silver and mining stocks now. At the same time, traders should prepare themselves emotionally for the scenario in which metals move temporarily lower for a few days and then form a bottom. We realize that going long before seeing a confirmation that the bottom is in, is difficult, but this is the appropriate approach in our view - the risk of metals moving sharply higher soon is simply too big for one not to be in the market."

Please note that gold has just moved to the "lower part of the target areas" that we mentioned previously and the situation developed within the expected range of outcomes. We were not certain if the final bottom was in or not, but decided to go long as we didn't think that the price would move much lower (if it moved lower at all - now we see that this was the case, but a week ago this was nothing more than one of possible outcomes ). This is the scenario that we suggested preparing for emotionally.

In the latest Premium Update we continued to comment on the 2006-now similarity and emphasized that it is still in place. The price level that gold reached today almost precisely corresponds to the final - early Jan 2007 -bottom of the analogous decline. The early-March 2012 upswing is in our opinion analogous move to the one seen in the last 2 weeks of 2006.

Consequently, it seems that the final bottom for this decline has already been reached or is very close to being reached. If we get another buy signal from our "extreme" indicators based on today's closing prices, we will consider suggesting adding to the speculative long positions.

On a side note, platinum is now approximately $30 more expensive than gold, which is positive information if you acted on our previous suggestions to switch a part of your long-term investments from gold to platinum. If you didn't do so yet - it's not too late to proceed.

Thank you.

Sincerely,
Przemyslaw Radomski