Yesterday was a low-volume trading day, which is not surprising as it was the Columbus Day. Still, we saw an initial $10+ move higher in gold which was quickly invalidated. In this way, gold corrected to its previously broken 38.2% Fibonacci retracement level based on the entire bull market ($1,285) and then declined once again. That's simply a small verification of the breakdown, nothing more.

We saw analogous developments in the silver market (after seeing a breakdown below the 2008 high and the 61.8% Fibonacci retracement based on the entire bull market) and in the mining stocks (in case of the GDX ETF, we can speak of a breakdown below the August low).

Consequently, the outlook remains bearish, which is tune with the current True Seasonal tendency. In fact, it seems that precious metals are continuing their decline today.

To summarize:

Trading – PR: Short position (half of the regular size of the position) in gold, silver and mining stocks.

Long-term investments: A 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

As always, we'll keep you - our subscribers - 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 October, 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