Our profit-take levels were reached today in case of gold and mining stocks, and consequently your speculative long positions are now closed. However, we also suggest closing the speculative long position in silver. The risk of silver not moving to its target level, given that gold and miners have reached theirs, is relatively high.

The previous, above-mentioned long position was suggested in the Oct 23 Market Alert, which we wrote when gold was at $1,332. We described the trade as a counter-trend bounce - a tradable (yet relatively risky) one and it turned out to be profitable.

What's next? We rarely switch from a long position to a short one on the very same day, but this is the case today.

Gold moved to it's declining resistance line based on Feb and Aug highs which corresponds to the 61.8% retracement based on the Aug-Oct decline. The analogous declining resistance line was reached today in case of the HUI Index. We can also say the same thing about the HUI:gold ratio.

The USD Index is right at the cyclical turning point after a medium-term decline. Please note that dollar's cyclical turning points sometimes worked on the precious metals market even if they were not that precise on the currency index itself (in late August 2013 for instance).

On a very short-term note, gold and miners have reversed direction after reaching our target levels and we now have a good possibility that they will form a bearish shooting star candlestick patterns - that is if they close without falling once again. These patterns will be bearish for the short term, which could ignite much bigger declines based on the medium-term resistance lines being reached in case of gold and mining stocks (the declining resistance line in case of silver had already been reached a few days ago).

To summarize:

Long-term capital: Half position in gold, silver, platinum and mining stocks.

Trading capital: Half position: short position in gold, silver and mining stocks.

Stop-loss orders for the above-mentioned speculative short positions:

• Gold: $1,392
• Silver: $23.9
• HUI Index: 268
• GDX ETF: $28.8

As always, we'll keep you - our subscribers - 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) 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