Overall, gold, silver and miners are just where they were when we created last Friday's Premium Update and everything what we wrote in it, remains up-to-date.

There is one thing that we would like to comment on today, though. It's the sector's performance on Friday compared to the moves in the USD Index. USD Index had been overbought and yet it rallied once again and the rally was not small. The USD closed 0.65 higher on Friday. Initially metals declined but managed to pull back and actually erase the whole daily decline.

We have the precious metals market after a lengthy consolidation - actually the biggest one in this bull market so far. We have indicators suggesting that situation is now more extreme than it was in 2008. We have very negative sentiment and discouragement is ubiquitous. We have recently seen multiple major long-term buy signals. And now - we also have seen the lack of reaction to dollar's daily - yet significant - rally.

It's actually difficult to imagine a more favorable combination of signals. OK, if we see a confirmed breakout above short-term resistance lines in case of gold, silver and mining stocks, then the situation will become even more bullish. However, by that time a part of the rally will have already materialized, so the risk/reward ratio might be similar to what we have right now. We will probably suggest - for the first time since we introduced the sizes of positions in the gold portfolio report - doubling the size of the long position. This is not the case just yet, but it might be the case soon, so be prepared.

Full speculative long positions are suggested for gold and silver, and mining stocks.

Naturally, we suggest remaining in the precious metals market with your long-term investments. In particular, don't let the bearish analyses, declining prices or sideway movements make you sell your long-term precious metals investments. It's a good time to be adding to the long-term gold & silver investments, not a bad one.

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 March, 2013 and we will send additional Market Alerts whenever appropriate.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA