Gold, silver and mining stocks have reached the support levels that I wrote about in this week's Premium Update (areas marked with red ellipses). I have also mentioned that we may need to wait for a confirmation signal from one of our indicators - we have now received this confirmation (based on yesterday's close).

Silver moved to the 50% Fibonacci retracement level on a strong volume. This is another factor suggesting that the bottom has just been reached, as similar actions in the past have marked the reversal days: June 26 2007, August 16 2007, March 20 2008, April 1 2008, August 15 2008, September 10 2008, March 2 2009, and the recent local low - June 8 2009.

Since the precious metals sector has been recently strongly correlated with the dollar, I would ideally like to see the USD Index close to a strong resistance line (making further gains unlikely), but almost every other factor points to higher gold and silver prices ahead, so the overall risk/reward ratio is favorable here.

Therefore, if you were waiting for the green light to enter/add to your long positions and close the remaining short ones - here it is. It is possible that we will get lower from here on a short-term basis, but it is not probable in my view that we would get much lower. Please note the fact that by buying here you are NOT buying at the top. If you enter a speculative trade here, please remember not to use more money than you can afford to lose on this particular trade.

If you wish to ride this upswing by purchasing PM stocks, I recommend using the Leverage Calculators from the tools section on my website, to make sure that your holdings best fit your investment strategy. Still, below you will find top 3 gold and silver stocks for short-term (if you plan to hold these stocks for less than 2 months) and long-term investors (if you plan to hold these stocks for more than 6 months), which should be appropriate for most investors:

Gold - short term:

GSS, AUY, GOLD

Gold - long term:

GOLD, KGC, AEM

Silver - short term:

PAAS, SLW, SSRI

Silver - long term:

SSRI, PAAS, SLW

Sincerely,
Przemyslaw Radomski