Stocks moved higher once again yesterday, as we expected them to. Stocks don't have as strong a fundamental situation as precious metals do, but it is gold and silver that have risen substantially in the past decade and need correcting. We continue to believe that gold and silver will provide much greater profits for those who keep their attention on this promising market.

Is it hard to think about a declining market as a promising one? It's likely the case for those who didn't analyze the previous bull market and didn't see that over 30 years ago gold's almost-50% slide was shortly followed by a pullback and then the rally took it to new highs. Plus, silver soared. Again, this is precisely the time when one needs to pay extra attention to this market, not the other way around.

The correction provides us with a great opportunity - to buy back at lower prices and make profits that we will earn on long-term investments even bigger. The key question is, always, "Is the bottom already in?" At this time we don't think that this is the case.

Gold declined yesterday and so did mining stocks. Silver moved only a little lower. Is this a bullish divergence? We don't think so - that was just a one-day event, a "price noise". If we see further strength in silver we might suggest closing short positions - that is not the case just yet.

Summing up, we continue to believe that betting on lower values of silver and mining stocks is justified from the risk/reward point of view. It's probably a good idea in case of gold as well, but we are not that convinced, so we're staying out. In other words, we continue to suggest having speculative short positions in silver and mining stocks.

The stop-loss levels are:

• Silver: $25.30
• GDX ETF: $32.2
• HUI Index: 305

Here's the up-to-date version of our trading/investment plan:

1. When gold moves to $1,305 open a long position in gold (with $1,268 as a stop-loss level).
2. When silver moves to $18.20 close the short position and open a long position in silver (with $17.65 as a stop-loss level).
3. When the XAU Index moves to 84, close the short position and open a long position in the mining stocks (with 80 in the XAU Index as a stop-loss level).

The above ($1,305, $18.20 and 84) are also the levels at which we suggest getting back on the long side of the precious metals market with half of your long-term investments. We will send a separate confirmation to get fully back in.

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 May, 2013 and we will send additional Market Alerts whenever appropriate. We have prolonged the time in which you - our subscribers - will receive Market Alerts daily for another full month.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA