The GLD ETF moved higher on Friday, but the move materialized on relatively low volume once again.

Spot gold ended the week below the 38.2% Fibonacci retracement level based on the April-June decline and at the 61.8% Fibonacci retracement based on the June decline. Recent breakouts above these levels were invalidated. The only breakout that we have is the one above the declining resistance line, which - as we explained in last week's update - is not too reliable as a previous - very similar - breakout was followed by declines.

Gold seen from the non-USD perspective moved higher last week touching its April bottom but finally ending the week not only below it, but also without a breakout above the declining resistance line. Without a breakout, the trend remains down.

Silver closed the week above only its declining resistance line and the volume seen this week was relatively low. The breakout doesn't seem reliable, as we explained in our latest Premium Update.

Unlike gold, silver didn't move to its April low last week. It seems to have topped about $1.40 below the April bottom. On average, silver continues to underperform but this didn't take the form excessive enough to make us think that the bottom is in.

As far as mining stocks are concerned, we have a confirmed breakout above the resistance line based on April and June tops, but no confirmed breakout above the resistance line based on the January and April tops. There was no confirmed breakout above the 61.8% Fibonacci retracement level based on the June decline.

The USD Index seems to be bottoming based i.a. on the cyclical turning point and metals seem to be underperforming once again. On Thursday and Friday metals declined even though the dollar moved lower as well.

Before we summarize, we would like to comment on an interesting piece of information.

The opening paragraph summarizes the article in the following way:

"JP Morgan Chase & Co is exiting physical commodities trading, the bank said in a surprise statement on Friday, as Wall Street's role in the trading of oil tankers, coffee beans and metals comes under intense political and regulatory pressure."

So, no more pushing the prices lower by the big banks or at least not by this one? Not so fast. "(...) the bank remained "fully committed" to its traditional financial commodity business, including trading derivatives and its activities in precious metals."

So, flooding the markets with derivatives like futures "is still ok" and things may not change as much as many might think after reading the above piece of information. However, the most interesting part of the article in our view is the following:

"The Department of Justice and the U.S. Commodity Futures Trading Commission have also both launched probes into the metal warehousing businesses owned by Wall Street banks and other large physical traders, which have been accused of driving up metals prices."

That's right, the above article implies that perhaps precious metals rallied so high as a result of manipulation... We previously wrote that The Powers That Be seem to be doing a lot to push gold lower and to discourage investment in precious metals in general. This is our favorite part of the article because it's a great example of changing the perspective on the issue of manipulation in the precious metals market. There are many allegations and a strong case that manipulation aimed to keep the metals' prices lower is in fact taking place, and now we can read the exact opposite in the mainstream media. It looks like another step in discouraging investment in the precious metals sector and a way to make allegations about suppression of gold and silver prices look pointless. Over the long run precious metals are likely to move higher based on their fundamental situation. In the short run, however, gold can still move lower.

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 in gold, silver and mining stocks.

We are not ruling out the case in which we're going to see a breakout today (which is not likely, even though another small move higher could be seen), 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: $1,356
• 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): 273
• Stop loss for GDX ETF's speculative short position: $29.40

We suggest placing buy orders for the speculative long positions in gold at $1,105 and for silver at $15.20 (and closing the short position at that time - if these levels are reached). The analogous level for the HUI Index is 155. If gold moves to $1,105 but other market don't move to their targets - we suggest closing short positions in gold, silver and mining stocks and going long these sectors anyway. If silver or the HUI reach the target but gold doesn't, we suggest closing all above-mentioned short positions, but going long only the market that has reached its target. In this case you will likely hear from us shortly, but you know what our take is even before that happens.

Entry levels and stop losses for the above rather-soon-to-be-opened long positions:

• 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.

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