Today is one of those days when we create more alerts than you receive. This is the case when an alert is written and moved to the "formatting, testing and sending" stage but it becomes clear that we will need to write another alert to update the one that is about to be sent.
Just an hour ago we wrote an alert stating that metals had moved slightly lower today, but all in all not much had happened and that the bullish picture remained in place. Right now - after gold's and silver's sharp comeback we have a better piece of information to report.
What we saw earlier today was a "bear trap" - a trap for those who were bearish on a given asset (precious metals in this case) and entered short positions after seeing a decline (not wanting to miss a "profitable" decline). Why is this happening? At times those "in the know" realize that there are stop-loss orders close to a given level and trigger a small decline that triggers these orders which makes the price move even lower. When these orders are "harvested" the entity goes long once again - at a more favorable price and at the expense of those who placed their stop-loss orders so close.
At the moment of writing these words gold trades at $1,687 - considerably above its 300-day moving average - the situation looks bullish.
Platinum moved higher once again and is now priced approximately $5 higher than gold.
Mining stocks moved lower today and bounced back later on. This is actually somewhat bearish because both gold and main stock indices moved higher today - the S&P 500 is actually above its 2012 intraday high. This underperformance is a bearish factor, but at this time we see it as a temporary weakness.
We remain bullish on the precious metals sector and just as we indicated previously, at this time half of the long position is suggested for gold, silver and mining stocks.
Naturally, we suggest remaining in the precious metals market with your long-term investments.
As you recall from yesterday's Market Alert, we have recently expanded the Dictionary section on our website and now it includes related terms and dialogs that can help understand what a given terms means for gold and silver investors. Here are three more terms for you to look at:
As always, we'll keep you updated should our views on the market change. We will continue to send out Market Alerts on a daily basis (except when Premium Updates are posted) at least until the end of January, 2013 and we will send additional Market Alerts whenever appropriate.
Thank you.
Sincerely,
Przemyslaw Radomski, CFA
