In short, we suggest getting back on the short side of the market in case of gold and mining stocks (half of the regular position) with the following stop-loss levels: $1,356, 266, and $28.60 for gold, HUI, and GDX ETF, respectively.

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Gold moved very temporarily above the $1,340 level (our stop loss level for the short position) and mining stocks moved above their stop-loss levels as well (GDX moved above 26.55 and HUI Index moved above 246), so according to our suggestions these are the price levels from which you no longer have short positions.

The mining stocks (GDX ETF) moved to their declining resistance line, there was no breakout here. They are also just several cents above their 61.8% Fibonacci retracement level based on the June decline - a very small, unconfirmed breakout.

The silver price broke visibly above its declining resistance line, but it used to break temporarily above its previous declining resistance lines and then plunge once again, so we don't see this as an overly bullish signal. The breakout above the 20-day moving average is more meaningful, but still, it's not yet confirmed. The fact that silver moved sharply higher also relative to gold is a bearish signal that we have been waiting for and which we have described in the past few updates/alerts. Finally, the move up materialized a day before silver's cyclical turning point, which makes this turning point definitely a bearish factor. Please note that Both declines: the April an June ones were preceded by such a local move up right before the cyclical turning point and also right before the plunge.

In case of gold we have an unconfirmed (!) breakout above the declining resistance line based on April and June tops. However, the current move up is very similar to what we saw after the April decline. In fact, it seems that the April decline-and-pullback pattern is repeating here. Please note that after April's huge decline gold corrected 61.8% and then declined once again. This week gold rallied to the 61.8% retracement based on the June decline, so we can say that things are in tune with the previous pattern. Unless we see more strength in the coming days, it seems that we will see another decline.

The last but not the least important factor to be considered - the USD Index moved temporarily below its 61.8% Fibonacci retracement level, which might be the reason that made people buy gold today (yes, there are multiple fundamental reasons for gold to move higher, but in the very short term, technical factors are more important). At the moment of writing these words, the USD Index is back above / at the 61.8% Fibonacci retracement level (strong support) and right at its cyclical turning point. The outlook here remains bullish for the coming weeks.

Consequently, it seems that re-entering speculative short positions with new stop-loss levels is a good idea right now. These stop loss levels will be quite close to where gold and miners are right now:

• Stop loss for gold's speculative short position: $1,356
• Stop loss for the HUI Index's speculative short position (theoretically, as you can't short the index by itself): 266
• Stop loss for GDX ETF's speculative short position: $28.60

To summarize:

Long-term capital: Half position in gold, silver, platinum and mining stocks. As far as long-term mining stock selection is concerned, we suggest using our tools before making purchases: Golden StockPicker and the Silver StockPicker

Trading capital: Short positions (half) in gold, silver and mining stocks.

We are not ruling out the case in which we're going to see a breakout today (which is not likely, even though another small move higher could be seen), and in this case the short position would have to be closed. Consequently, we suggest placing the following stop-loss orders:

• Stop loss for gold's speculative short position: $1,356
• Stop loss for silver's speculative short position: $20.90
• Stop loss for the HUI Index's speculative short position (theoretically, as you can't short the index by itself): 266
• Stop loss for GDX ETF's speculative short position: $28.60

We suggest placing buy orders for the speculative long positions in gold and silver for gold at $1,105 and silver at $15.20 (and closing the short position at that time - if these levels are reached). The analogous level for the HUI Index is 155. If gold moves to $1,105 but other market don't move to their targets - we suggest closing short positions in gold, silver and mining stocks and going long these sectors anyway. If silver or HUI reaches the target but gold doesn't, we suggest closing all above-mentioned short positions, but going long only the market that reached its target. In this case you will likely hear from us shortly, but you know what's our take even before that happens.

Entry levels and stop losses for the above rather-soon-to-be-opened long positions:

• Gold: $1,105 (stop-loss: $970)
• Silver: $15.20 (stop-loss: $14.20)
• HUI: 155 (stop-loss: 137)

These levels are slightly above the price targets to maximize the odds of entering the trade (if everyone thinks that gold will move to $1090 they will buy before it reaches this level and ultimately gold may not drop as low at all).

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

As a reminder, Market Alerts are posted before or on each trading day (we usually post them before the opening bell, but we don't promise doing that each day). If there's anything urgent we will send you an additional small alert before posting the main one.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA