Gold, silver and mining stocks declined yesterday, which is in tune with the medium-term trend and with the presented outlook.

The mining stocks declined just a little, and didn't move below their Thursday's low (we saw the same phenomenon in silver), which may suggest that a small, corrective, short-term rally will be seen, which is something that we described in yesterday's Market Alert as possible, especially given the current True Seasonal tendencies.

The very interesting fact is that the USD Index declined yesterday and it didn't trigger a rally in the precious metals sector, which is another confirmation of the bearish outlook for the precious metals sector in the medium term.

In other news, there was a very interesting poll on finance.yahoo.com. 28% respondents said that "stocks are still the best place to put your money", 41% said that "the economy needs to get stronger" (before stocks rally strongly) and the remaining 31% said that they have "a wait-and-see attitude". This tells us something. It tells us that even despite stocks are very close to this year's highs, they are likely not at a major top. Major tops are formed when everyone and their brother are bullish on a given asset and the survey proves that this is not the case. Less than one third of respondents were really bullish on stocks. This means that there is a lot of capital waiting on the sidelines and ready to jump in the market once it moves above the previous highs and people become more convinced that higher stock values will follow. As they do, they will become less likely to buy precious metals - why buy protection against crises if everything is going so well? The inflation will very likely eventually kick in and precious metals will soar, but it will take time before people realize that. Initially, metals and miners could suffer, which is something that charts and correlations suggest.

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 one - you will find more information along with some hints on 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.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA