Gold moved higher yesterday, but silver and mining stocks didn't confirm gold's move up. The volume on which GLD, SLV, and GDX moved higher yesterday was also weak - another bearish divergence. If we see gold move higher on low volume once again and we see no reaction in mining stocks, we will quite likely suggest shorting precious metals (with one's speculative capital) once again. For now, it seems that the market can move a bit higher before it declines once again - the situation is unclear.

The important medium-term development was another move lower in the Euro Index. This time the index moved below the neck level of the head-and-shoulders formation based on intra-day lows as well. The price pulled back and closed below the neck level - so far the breakdown held up. Two more closes below the 128 level will confirm the breakdown and then a big drop can be expected in the value of the European currency. We would not be surprised to see the initial part of the move along with a slide in precious metals after which the latter would bottom while the euro would keep declining. This seems quite likely in our view.

We would like to take this opportunity to go over our trading plan once again to make sure that it's clear what our approach is. We think that gold is likely to move to $1,090 or so before the final bottom is reached. The way it gets there is unknown so we are preparing you for two most general scenarios. Assuming that the price will go to $1,090 later this month, the price will either drop sharply very soon and then pull back only to decline once again shortly thereafter, or the price will get to $1,090 in a moderate fashion. The latter might or might not provide a trading opportunity until the bottom is reached (this is also unclear). However, the former case - the quick drop - can provide us with a good risk/reward trade, because if the price drops sharply to the lower border of the declining trend channel, we will very likely get a pullback and it would be this pullback that we would be willing to bet on. We would then close the trade and wait for another move lower to the $1,090 level or perhaps open a short position.

Because of the above strategy, we have two buy levels at this time: the final one based on the $1,090 price target - it's at $1,105 and the second one at $1,140 at the lower border of the declining trend channel for gold.

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

As far as long-term mining stock selection is concerned, we suggest using our tools before making purchases: the Golden StockPicker and the Silver StockPicker

Trading capital: No positions. We suggest placing buy orders for speculative long positions in gold at $1,140 and in silver at $17.40 (the situation in silver is a bit less clear so we would likely suggest buying it based on gold moving to $1,140). We don't have analogous price levels for mining stocks, but it seems that it will be a good idea to buy them when you buy gold based on the $1,140 target.

After the above-mentioned move higher (rally in gold from $1,140) we expect metals and miners to decline once again and move to $1,090 (gold), $14.70 (silver), and 150 (the HUI Index). It seems to us that these levels could be reached this month (July 2013).

These levels could be seen along with the USD Index at 86 - 86.4. At that time (if we see another downswing) we will suggest purchasing metals and miners at the following price levels (speculative trades):

• Gold: $1,105 (stop-loss: $970)
• Silver: $15.20 (stop-loss: $14.20)
• $HUI: 155 (stop-loss: 137)

These levels are slightly above the price targets to maximize the odds of entering the trade (if everyone thinks that gold will move to $1090, they will buy before it reaches this level and ultimately gold may not drop as low at all).

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 July, 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.

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