Mining stocks moved considerably lower yesterday, once again strongly underperforming gold, which is a bearish indication. Gold formed a "gravestone doji" candlestick which is similar to the more popular "shooting star" candlestick (the difference is that in case of the former the open and close price are very similar or even identical while in case of the latter they are different). Anyway, the implications are bearish for the short term.

The USD Index is right at its medium-term support line and the S&P 500 Index moved back up after declining to its rising medium-term support line. The bearish implications for the precious metals market remain in place.

Based on yesterday's price action the odds for a decline in the precious metals market in the near term increased. At this time we suggest doubling the size of the short position in case of the mining stocks. We'll likely move back to the silver short position or double the gold short position if we see more bearish signals.

To summarize:

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

Trading capital: Short position: gold (half), and mining stocks (full) with the following stop-loss orders:

• Gold: $1,439
• HUI: 289
• GDX ETF: $32.6

Naturally, the "full" position doesn't mean using your entire speculative capital for a transaction. It means using the "full" size of the suggested speculative bet - you will find more information along with some hints how big it should be (it's not investment advice, though) in our gold portfolio report (check out the images at the bottom of the report).

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 September, 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.

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On an administrative note, as you know, several weeks ago we have started publishing free commentaries about the situation on the crude oil market. Today we are taking another step in this direction. The below report is a free, introductional version of the upcoming service: Sunshine Profits' Oil Updates. It includes several charts that feature both: gold and oil.

Oil Update: Oil, Oil Stocks, and Oil-Gold

Thank you.

Sincerely,
Przemyslaw Radomski, CFA