The HUI Index has hit the stop-loss level for the long-term investments. At this time we suggest closing the remaining half of the long positions in the mining stocks. Fundamentally, this is selling cheap. However, in the current technical environment, and a major - confirmed - breakdown, we could see them much cheaper in the coming days or weeks. In 2008 selling in the middle of the decline was also selling stocks that were already cheap, but yet, buying them back at much lower prices turned out to be profitable.

The question remains what to do with gold and silver investments given today's decline. They have not yet reached their stop-loss levels (gold is very close), but it seems that selling or (preferably) hedging half of them is a good idea right now. It seems that miners will drag metals lower and decline strongly as what we have today is quite likely to be followed by at least some weakness - during which the stop-loss levels will be reached. We will revisit the situation over the weekend based on today's closing prices and in the Monday's Market Alert we will discuss whether or not to close the remaining half of long-term gold and silver investments. $1,400 for gold and $22 for silver could be seen in the following weeks.

Please note that our portfolio includes three parts: insurance, investment, and trading capital. We don't suggest selling gold and silver that you have in the insurance category.

In case of the speculative capital, our subjective analysis now implies short positions in the entire sector. However, exactly the opposite is suggested by our indicators, so overall, we suggest closing the positions that are currently opened.

Summing up, we suggest no speculative position right now and we suggest keeping only half of the long-term gold and silver investments. We don't suggest keeping the long investment position in the mining stocks at this time.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA