As you probably read previously, we are preparing new features for you all the time and the only reason you don't see an announcement of something new every week is that some things like new tools require much more time than a few weeks (some have been in development for well over a year). One of the tools that is ready and that we are (successfully) testing provided us with a bearish indication for the gold market. The suggestion is that gold would drop at least $30 in a week or so. The tool is based on detecting self-similar patterns and it seems that it based the above indication on the possible completion of the ABC (zigzag) pattern - the one that we shown in the GLD ETF chart in the latest Premium Update (gray, dashed lines). This is not a sure bet, of course, but something to keep in mind if you are speculatively long gold or silver at the moment.

On Friday gold and silver declined despite a move lower in the USD Index, which is a bearish short-term sign.

On the other hand, we have gold above the 300-day moving average which is a major support, and this is clearly a bullish factor. The USD Index seems to be in a medium-term downtrend, so the surprises here "should" be to the upside. If the medium-term technical picture wasn't enough, we have the Fed "on our (long-term gold bulls') side" as Bernanke recently decided to print "some" more money over the coming months and likely years.

All of the above leaves us - unfortunately - with a blurry picture for the short term. We would prefer to report to you more exciting news about gold having bottomed, but we - as always - will continue to report the situation exactly as we see it, and at this time it simply seems best to wait for a confirmation of a bottom (for instance if gold moves to the 300-day moving average and comes back up in a sharp manner) or for the evidence of the return to normalcy in terms of the negative correlation between gold and the USD Index.

At this time, we continue to believe that being out of the speculative positions in gold and silver is a good idea and so is being only partially long in case of the precious metals mining stocks (because of the buy signal from one of the SP Indicators.)

We're not even close to suggesting getting out of the long-term precious metals investments here.

All in all, the information reported in the latest Premium Update remains up-to-date.

As always, we'll keep you updated should our views on the market change - even if it means sending another message in several minutes. We will also continue to send you Market Alerts on a daily basis (with the exception of Fridays when Premium Updates are posted) at least until the end of December.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA