We devoted yesterday's Market Alert to silver's and miners' strong performance on Friday and we summarized it by stating the following:

Consequently, it seems that the best approach at this time is to stick with the bearish interpretation of silver's and miners' strength on Friday, but move to the bullish interpretation, if this strength continues."

The strength didn't continue yesterday and neither it does today. There hasn't been any major underperformance either, so we simply stick to our previous bearish interpretation without stating that we have seen a confirmation and that the decline is very likely to start immediately.

There was another interesting development seen yesterday - the volume was very low in GLD, SLV and GDX ETFs - namely, throughout the precious metals sector. We saw a similar price-volume pattern about a month ago - on April 11. Yes, it actually was the final day right before the massive plunge in the sector. At the moment of writing these words we already have gold $7 lower and silver $0.44 lower than yesterday, so it might be the case that another plunge is just starting.

In other news, we just received a question if we still favor platinum over gold for long-term investments. Yes, we do, and we continue to think that platinum will outperform gold in the months to come (not necessarily on a short-term basis, though).

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