The precious metals market moved lower yesterday. Both: gold and silver pulled back later during the session and it could be viewed as a reversal, but we don't think they should be. The key point is that they declined and that the USD declined as well. In other words, precious metals didn't manage to move higher even when USD declined. We regret to inform (as we like the precious metals market and think that it will move higher eventually, but at the same time must remain as objective as possible) that the precious metals market is very weak at this point.

From the non-USD perspective, gold is currently very close to the April intra-day low. The same can be said about silver from this perspective.

The mining stocks' performance was particularly weak yesterday - also relative to gold. They not only declined on rather significant volume, but they also moved back below the declining support line. If you recall that we wrote about a breakout in mining stocks recently - it was just invalidated.

Consequently, we think that getting back on the short side of the market with precious metals mining stocks is currently a good idea.

Summing up, we suggest keeping speculative short position in gold, silver and mining stocks and being out of the precious metals market with one's long-term capital.

The stop-loss levels for the current short positions are:

• Gold: $1,428
• Silver: $23.55
• GDX: $31.3
• HUI Index: 292

We currently think that gold will temporarily move below $1,285, but pull back soon and close that week (the one in which it moves below $1,285) around this level. How low gold will temporarily go is unclear - perhaps it will form an intra-day bottom close to $1,200 or even $1,100 (yes, the current lack of reaction to dollar's weakness might be suggesting a move that low).

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

1. When gold moves to $1,305 close the speculative short position in gold and get back in the market with half of your long-term gold and platinum investments.
2. When silver moves to $18.20 close the speculative short position and in silver get back in the market with half of your long-term silver investments.
3. When the XAU Index moves to 84, close the speculative short position in mining stocks and get back in the market with half of your long-term mining stock investments.

We will send a separate confirmation to get fully back in.

As far as trading capital is concerned we currently think that placing distant bids is appropriate. They may not get filled, but if we place them too high, we risk being thrown out of the market via stop-loss orders or margin calls if the volatility gets too high (and it's unpredictable how volatile the markets will get as gold is in a reverse parabola right now). If they don't get filled, we plan to go long after gold has pulled back significantly on an intra-day basis on huge volume (thus creating a bullish candlestick - probably a "hammer candlestick").

The distant buy price levels are:

• Gold: $1,120 (stop-loss: $970)
• Silver: $16.20 (stop-loss: $14.4)
• $HUI: 155 (stop-loss: 137)

As we wrote, these levels are distant and will probably not be reached, but if they do, they will present a great buying opportunity, one that will likely disappear almost immediately - that's why we we think that placing orders in advance is appropriate.

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 June, 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