Gold and silver prices took a dive today and many of the speculative long positions that precious metals traders had opened were destroyed. Fortunately, you - as our subscriber - were not among them. In yesterday's Market Alert we included a list of bullish and bearish factors present on the precious metals market at that moment and our suggestion to stay out of the market as we felt that the situation was too dangerous. To be honest, a few subscribers even cancelled their subscriptions yesterday, saying that we were the only ones who thought that metal prices might decline soon - which proves how tense the situation was just a day ago. Of course, yesterday nobody knew that it would become even more tense today. Since that is the case, we decided to send out this message even though we don't have the latest values of our indicators yet - and they might (!) flash a buy signal based on today's volatile price moves.

Of course, the question is if the correction is over yet and is it safe to bet on higher gold, silver, and mining stock prices in the short term. In general, the answer is "not yet". While it is true that gold hit yesterday's target level, silver and mining stocks didn't. The shape of today's decline and the fact that we didn't see a rebound before the end of the session are both short-term bearish factors. Meanwhile, we continue to believe that long-term capital should remain invested in the precious metals sector (speaking of which - please note that platinum performed much better than gold today - if one can call a decline of "only $40" a good performance - and is currently only $20 cheaper than gold).

At this time it seems that gold will decline another $40 (GLD would move close to 160 or so and spot gold close to $1,650) before the final bottom is reached. The targets for silver and HUI didn't change and remain at: $33 and 500 respectively.

Please note that we may issue a buy alert before these price levels are reached, especially if our SP "extreme" indicators flash a buy signal (we will send a Market Alert should that be the case).

Naturally, we will provide much more detailed analysis (including charts) in this week's Premium Update (scheduled for Friday, March 2nd, 2012) and you will be kept up-to-date, should anything change before that time (we monitor the market practically at all times even if you don't hear from us between Premium Updates).

Thank you.

Sincerely,
Przemyslaw Radomski