We've summarized the latest update in the following way:

"Summing up, the most probable outcome at this time is another move up in the following week followed by a 1-2 weeks of corrective decline. This outcome is it tune with the seasonal tendencies adjusted for the influence of derivatives. At the same time, we must note that given the amount of above-mentioned uncertainty, this projection may be subject to change as more information becomes available."

In short, the above is up-to-date as far as the market situation is concerned not up-to-date as far as implications for gold are concerned.

Much has happened on Tuesday: gold rallied, euro reversed and invalidated its breakout, USD Index moved back to it's previous key support level and stocks declined. Silver and mining stocks moved higher as well, but their upswings were much less visible than the one seen in gold. We believe that the most important thing was not noticed by most investors - namely, gold:UDN ratio (gold from the non-USD perspective) has finally broken out above its rising resistance line.

Gold rallied on strong volume and this suggests that a move below $1,600 is rather unlikely given the above-mentioned events. So, with upside at $1,800 (as mentioned in previous updates) and downside at $1,600 it seems that gold is in a quite favorable situation.

Meanwhile the general stock market moved lower today - below support level which at the same time is a "neck" of the bearish head-and-shoulders pattern. This should be viewed as bearish, but let's not forget that in the past few years most of the head-and-shoulders patterns were quickly invalidated and followed by a rally. Therefore, we believe we should wait for a confirmation before stating that a severe decline is likely to emerge. Such confirmation could take form of 2 more daily closes below $120 for DIA ETF and below 126.5 in case of SPY ETF. Financials have not moved below their June lows, so they are no longer leading stocks lower, which is a bullish indication.

The most likely scenario for silver and mining stocks depends on the general stock market. If stocks rally, then we'll likely see a huge catch up in mining stocks and possibly in silver.

Summing up, we're suggesting being fully invested with one's long-term gold investments. At the same time we prefer to wait for the situation on the stock market to crystallize a bit before suggesting analogous move for silver and mining stocks. The same is the case with speculative positions. As always - we'll keep you updated.

Thank you.

Sincerely,

Przemyslaw Radomski