Gold, silver and mining stocks didn't do much on Friday and we can say the same about the USD index. Consequently, what we wrote in Friday's Premium Update remains up-to-date. Also, stocks soared as indicated in our latest Premium Update and the situation remains bullish.

We now have the weekly closing prices and weekly volume, so let's examine them.

Gold rallied last week. In fact the weekly upswing is the biggest one we've seen in many months. What's not to like about this move up? The volume in the GLD ETF should confirm it - it should be high given this size of the move and it was average. Compared to the size of the move, we could say that it was relatively low, which is a bearish indication.

We can see the same phenomenon in the SLV ETF. A relatively significant weekly move higher on low volume - a bearish indication. In the previous months such weeks (move up, low volume) were indeed good times to enter short positions. The June 10 week which was followed by a $3 slide in silver in the following 2 weeks serves as a good example.

Overall, the outlook remains bearish for the precious metals market in our view.

We are not ruling out the case in which we're going to see a breakout today, and in this case the short position would have to be closed. Consequently, we suggest placing the following stop-loss orders:

• Stop loss for gold's speculative short position: $1,340
• Stop loss for silver's speculative short position: $20.90
• Stop loss for the HUI Index's speculative short position (theoretically, as you can't short the index by itself): 246
• Stop loss for GDX ETF's speculative short position: $26.55

To summarize:

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: Short positions (half) in gold, silver and mining stocks. We suggest placing buy orders for the speculative long positions in gold and silver for gold at $1,140 and silver at $17,40 (and closing the short position at that time - if these levels are reached). We don't have analogous price levels for mining stocks, but it seems that it will be a good idea to buy them (close the short position) when you buy gold based on the $1,140 target.

After the above-mentioned move higher (rally from $1,140 in gold) we expect metals and miners to decline once again and move to $1,090 (gold), $14,70, and 150 (HUI Index). It seems to us that these levels could be reached this month (July 2013).

If we don't see a sharp plunge to $1,140 in gold then we plan to hold the short positions until the final bottom near the $1,100 level. That is unless something makes us change our mind meanwhile - and you - our subscribers - would be the first to know in this case.

These levels could be seen along with 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.

On an administrative note, this week's Premium Update will be posted one day ahead of the regular schedule - on Thursday, July 18.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA