Gold, silver and mining stock are rallying strongly today, just as we expected them to. It's second half of November and this is where the precious metals market tends to soar - according to its True Seasonal patterns.

Silver is already above its November high and other precious metals are close to analogous price levels. Mining stocks rallied as well, however they didn't erase last week's decline so far. The strength seen in silver stocks bodes well for the situation, though. In the last Premium Update we wrote the following: 

"Since prices were above the declining resistance line for two months and the move lower was so sharp, it is probably temporary given the volatile history of silver stocks. A pullback is probable, which could take the silver bears by surprise."

Naturally, by writing about "pullback" we didn't mean that the move higher (for instance the one that we see today) will be temporary phenomenon. Conversely, we think that last week's weakness was something temporary and that another strong rally is just starting - not only in metals, but also in mining stocks.

The general stock market moved higher today as well and it might be the case that the decline is over also here.

The most bullish fact about today's price moves is this: at the moment of writing these words USD Index declined by 0.34 today and at the same time gold moved higher $20.40 and silver moved higher $0.84. The decline in the dollar was modest and the rally in metals sizable. This is the type of action that we see ahead of big rallies so we are happy to report that we presently have this type of confirmation.

In the last Premium Update we summarized the USD section in the following way:

"Summing up, the situation is slightly more bearish than not in the USD Index. The last few weeks proved that the precious metals were able to rally without lower values for the dollar, so when the USD Index does move lower, the rally in precious metals prices should really accelerate."

This is very up-to-date and we are seeing the positive side of this relationship right now.

Summing up, we continue to believe that being long gold, silver and mining stocks from both: speculative and investment point of view, is a good idea.

As always, we'll keep you updated should our views on the market change - even if it means sending another message in several minutes.

As a reminder - our next Premium Update is scheduled for November 30th – there will be no Premium Update this week. However, we understand that because of the sharp decline in the mining stocks you might appreciate some extra updates from us. Consequently, until the next Premium Update is posted (in 2 weeks), we will be sending Market Alerts on or after each trading day regardless if a material change is seen or not. You can rest assured that you will be kept up to date. 

Thank you.

Sincerely,
Przemyslaw Radomski, CFA