Yesterday was a volatile day on the gold and silver market. Gold corrected practically exactly to the Fibonacci 61.8% retracement based on its November rally and bounced back closing slightly above the $1,720 level. Silver declined almost $1 initially only to come back with exceptional strength. Miners not only declined less profoundly than gold, but they also managed to close the day higher. 

While there are no certainties as to replying to the "why" question in case of short-term moves, this suggests that the sell-off was something artificial. It could have been the case that one or a few big traders closed their positions early in the morning but the rest of the market was convinced that metals and miners were going higher and were waiting for a better buying opportunity - which arrived thanks to the decline. 

All in all, yesterday's decline and subsequent rebound showed strength of the market. The situation remains bullish now and if gold invalidates the breakdown below the rising support line that we mentioned yesterday, then we will become even more bullish.    

Consequently, we believe that keeping speculative long positions in gold, silver and mining stocks is a good idea. 

We also believe that keeping stop-loss orders for your speculative long positions intact is also a good idea ($1,695 for gold, $32.7 for silver and 430 for the HUI Index), just to be safe. This is the time of the year when volatility can be a big issue. 

We suggest keeping your long-term precious metals investments intact.

As a reminder, for more information about ways of purchasing gold, see our How to Buy Gold section: 

You will find our ranking of best gold and silver ETFs and ETNs here:

As always, we'll keep you - our subscribers - updated should our views on the market change - even if it means sending another message in several minutes. The next Premium Update will be posted tomorrow.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA