Generally, I'm sending Market Alerts when the situation on the market changes significantly AND points made in the latest Premium Update / Market Alert are no longer relevant. This has NOT been the case this time, but I've received a few requests to comment on Dubai's financial crisis, so here we are.

If you are not aware of the Dubai problems with debt - please click here

"The emirate has said it has $80bn of debts (...) Dubai World, the state-owned holding company whose bail-out plans triggered the current crisis, has liabilities of about $60bn, though only part of that is debt. (...) At the most basic level, fears that exposed banks will have to write down losses, and that both Dubai and Abu Dhabi may have to sell worldwide assets, has hit prices everywhere."

My take on the news is that it doesn't change much right now. After all, we knew that the fundamental situation of the general stock market remains weak, and the size of the problem (in $ terms) is not as colossal, as it might appear at the first sight - compare $60 billion to the current $4.6 trillion cost of the credit crisis. Based on the chart analysis I wrote that the main stocks indices are likely to follow the financial sector and move lower in the not-too-distant future. Dubai's problems may serve as a catalyst igniting the abovementioned move lower, however there is no guarantee that it would happen right away. It may take time before investors get "scared enough" to sell their holdings.

Therefore, the implications of current Dubai debt problems are another confirmation of the points raised above, but the consequences for the precious metals market remain as stated in the latest Premium Update. Namely, it is likely that we are near a local top. Should we move higher from here, it doesn't seem that PMs would move much higher. Consequently, I believe it is justified to exit one's speculative positions in the precious metals market.

At this point, it is much too early to say how low gold/silver would go, as there is no proof that this has indeed been a top - yet. Since the price level, at which the top is formed is usually important in determining the size of the correction, it is imperative to be sure that the top is in fact in, before making detailed projections.