The GLD ETF moved back to the previously broken resistance line without invalidating the breakout. In case of spot gold, we didn't see a move to the declining support line, but we saw an invalidation of the intraday move above the 38.2% Fibonacci retracement level.

There was no breakout above the declining resistance line in case of gold priced in Australian dollars, though, and other non-USD gold charts remain bearish as well.

The HUI:gold ratio declined on Friday but closed the week above the previous 2013 high. At this time, we could view the breakdown as invalidated (based on a weekly close) but this is arguable (not even 3 consecutive trading days have passed since the ratio moved back above the previous 2013 lows).

The situation is analogous in case of silver. The white metal closed the week above its 2008 high. The SLV ETF closed at the declining resistance line without a breakout.

Miners (GDX) moved close to their declining resistance line without breaking it, which means that they can move slightly higher and it will still not invalidate the bearish outlook for the short and medium term.

Overall, the breakouts in the precious metals sector have only been "a little" confirmed. Naturally, a single breakout on a chart can be simply either seen or not and a short-term breakout can be confirmed or not based on how long the price of a given asset has stayed above the broken level. However, in today's globalized economy it is quite rare that one market can move on its own - the markets usually move together, even though the directions and shapes of relationships change over time. That's why we're looking at so many charts (actually, much more than we feature) and see if one with a clearer outlook can tell us more about the ones with less clear outlooks. In this case, we have no breakout in mining stocks, a relatively small (when viewed from the broad perspective) move above the 2008 high in case of silver, and a mixed situation in case of gold. The situation is quite unclear, so let's see what other markets can tell us.

Stocks (S&P 500) have broken above their previous 2013 highs without an overbought status on the RSI indicator - the outlook remains bullish, which is bad news for metals and miners. They have rallied together recently, but even the short-term correlation coefficients are still negative.

An important even is that the Euro Index has moved very close to its 2013 high, which is a major resistance level.

Moreover, when analyzing the USD Index in the latest Premium Update, we mentioned that the USD index moved to 2 important support levels based on the 2012 and 2013 lows. It moved to the lower of the support lines on an intraday basis and closed at the higher one. It looks like the bottom is in or very close to being in.

The implications of the above are important because since major support and resistance levels have been reached, we can view the moves to have been stopped in general. While this doesn't necessarily mean that the general stock market won't rally any more as stocks are already after a major breakout, it does seem to suggest that the move higher in metals and miners is over or very close to being over.

Overall, we think that the situation is still bearish enough to justify keeping small short positions in the sector (half of the regular size) and at the same time being in the market with only half of one's long-term precious metals investment capital.

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

The stop-loss orders for the speculative short positions are:

• Gold: $1,330
• Silver: $22.60
• HUI: 240
• GDX: $26

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