The markets didn't do much so far this week. Gold and mining stocks moved slightly higher and silver is more or less where it was just a week ago. The volume that accompanied gold's move higher was very low, which is not encouraging. The same thing was the case in the final days of 2011 and gold plunged temporarily right before the year ended.

There were a few noteworthy developments in the non-USD gold charts. Gold priced in the British Pound bounced after reaching its declining support line (breakdown was invalidated which is a bullish sign). The same can be said about gold priced in the Canadian dollar. Gold priced in the euro did not invalidate its breakdown so far, so the situation here is slightly more bearish than not. Gold priced in the Japanese yen is moving higher once again and the situation is clearly bullish here.

In order to see all of the above at the same time we examine the gold:UDN ratio, which is a weighted average based on the above-mentioned prices. In case of this ratio, the breakdown was invalidated and it seems that gold is right at or very close to a major bottom.

All in all, we are close to suggesting getting back on the long side of the precious metals market, but we don't suggest going speculatively long gold/silver/mining stocks just yet.

We suggest remaining in the precious metals market with your long-term investments.

Meanwhile, we just posted an essay which is a detailed reply to one of the questions that we received recently - why do we compare the current bull market with the 1970-80 one given that the fundamental situation is far from identical. You can read it here:

1980 Top in Gold as a Reference Point for Precious Metals Investors

As always, we'll keep you updated should our views on the market change - even if it means sending another message in several minutes and we will provide you with more details in tomorrow's Premium Update.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA