We summarized the previous Premium Update in the following way:

"The probability of gold moving higher from here (to $1,750) before a big move lower (below $1,550) is seen appears now to be about 70%. A move down to $1,400 or so seems fairly remote with an estimated 10% likelihood at this time. Note that precious metals may move to $1,550 once again, before the rally materializes (and it will not automatically invalidate the above calculations)."

The precious metals sector moved lower yesterday so the question is if the above is still up to date.

On the very long-term gold chart we wrote that "the most common way for gold to complete the consolidation pattern is to provide a second bottom relatively close (in terms of price) to the first one". This and the very long-term cycles seen in silver are currently the most important technical factors. The silver cycles are clearly in place, so the question is if the bullish implications related to previous bottom in gold have changed.

Today, gold is testing its September lows. Testing means that gold is trading close to this level, but hasn't decisively broken it. There was no breakdown that would invalidate the bullish "double gold bottom" theory.

So, we remain bullish on the precious metals sector for the time being. We will provide much more details in tomorrow's Premium Update.

As always, we'll keep you updated if anything changes.

Thank you.

Sincerely,
Przemyslaw Radomski