Last week we saw a lot of intra-day volatility but overall the precious metals market is now where it was a week ago. Since the situation didn't change much, what we wrote in the most recent Premium Update is up-to-date.

Please note that gold's move up on Friday materialized on relatively low volume and we can say the same about moves seen in the SLV and GDX ETFs (in other words - in silver and miners). This is a bearish sign.

It seems that the precious metals sector is now waiting for clearer clues - namely, for a bigger rally in the USD Index or the general stock market. The USD Index rallied recently, but this move up still looks, at least to some extent, like a correction after the July - August decline - not a beginning of another rally. Perhaps when we see more strength in the dollar, investors will become more convinced that the rally is sustainable. We can say the same thing about the S&P 500 Index. Stocks bounced off their medium-term support line, but the move has been quite small so far. As stocks move higher and investor sentiment improves, market players will be more likely to sell precious metals to buy stocks with the proceeds (at least that's what the negative correlation between PMs and stocks suggests).

All in all, the outlook remains bearish for the precious metals market for the medium term as we don't think that the final bottom is already in.

As a reminder, we provided you with a "roadmap" for this week as far as the speculative and investment positions are concerned. Right before the summary of the latest Premium Update you can read about several scenarios that could be seen in the following days along with our suggested actions should any of these scenarios materialize.

Click to access the Premium Update.

To summarize:

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

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

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

This is an extra Alert - as we explained in the past 2 updates, your editor is taking some time off - first and probably only time this year - until next week. This alert was written in Genoa, Italy.

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 and except the period between Sep 5 and Sep 13) at least until the end of September, 2013 and we will send additional Market Alerts whenever appropriate.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA