Thanks to yesterday's rally, gold corrected half of the preceding Aug-Oct downswing and moved to the 50-day moving average.

Gold's breakout was visible also from the non-USD perspective. Gold priced in the Australian dollar moved higher and closed above the declining resistance line.

The SLV ETF moved visibly above the declining resistance line. It's about to run into its cyclical turning point (as is the USD Index) and let's keep in mind that tops can (and have done so in the recent past) form slightly before the turning points.

The GDX ETF corrected 38.2% of its Aug-Oct decline. Miners may seem to show strength on a very short-term basis, but comparing the above to the 50% correction in gold tells us that this is likely just a temporary phenomenon.

The long-term HUI Index chart shows resistance at the 250 level, which is where we have a declining resistance line based on the January and August 2013 highs.

Palladium is slightly above the declining resistance line - just like it was in early August, when miners topped and gold and silver were about to reach their local highs.

The Euro Index moved above its previous 2013 high. The breakout is unconfirmed so far. We can say the similar thing about the USD Index - it moved below the important resistance line based on the 2012 and 2013 lows, but this breakdown is not confirmed so far. Even if it gets confirmed, we still have long-term resistance very close to the 140 level - based on the major 2008 and 2011 tops.

What can we infer based on all of the above? Let's start with the long-term trends and zoom in. The long-term trend for the precious metals market is up, as the fundamental situation is positive. Gold is a system hedge and the "dollar system" is not performing well despite new (artificial) highs in the stock market.

However, it seems that we are still in a medium- or even long-term correction - it's like 1976 all over again, only this time the price moves take much more time. Earlier this year - in April - gold broke below the rising, long-term support line based on the 2005 and 2008 lows and has verified this breakdown by moving back to this line in August and then declining once again. This breakdown and the subsequent verification were visible also from non-USD perspectives, for instance in case of gold priced in euros and pounds. Mining stocks are underperforming on a medium-term basis and the scale of this phenomenon is huge. The HUI Index - a proxy for gold stocks - is in a medium-term downtrend and the very recent moves to the upside didn't even take miners to the long-term resistance line.

The relative performance of the precious metals sector confirms the above theory even more. The Euro Index is above its 2013 high, the S&P 500 is above its all-time high and at the same time gold, silver and mining stocks are just correcting after a major 2013 downswing. It is the precious metals sector that "should" react in the most significant way to the money-printing indications from the Powers That Be. It's not. It refuses to move visibly higher - from the long-term perspective what we've seen since July is just a correction and in case of mining stocks it's not even clear if this is really a correction, or just a pause.

With the medium-term trend being down, what's a trader to do? Focus on short positions as these positions are more likely to bring profits. Even with a few missed shots, a single correct transaction can make up for them as the moves that are in tune with the bigger trend are simply bigger. You already saw what kind of declines we can see in the precious metals market in April and in June.

We've seen a few breakouts recently - in gold from various perspectives - and some of them have already been confirmed. At the same time, it seems that we could see another move higher in gold - perhaps to the $1,400 level. The HUI could reach its 250 level or even move temporarily (we don't expect to see a confirmed breakout here) above it and silver could move to $23.5 or so. The top could form when the Euro Index moves close to the major resistance near the 140 level.

This move seems likely to happen on a short-term basis and it seems to us that it will be quite quick - perhaps a repeat of the last 5 trading days or so. It seems quite risky, because, as mentioned above, the medium-term trend remains down in our opinion (consequently, the next really big move will likely be to the downside).

It's our duty to report trading opportunities to you and it seems that we now have an opportunity to go long in case of gold, silver and mining stocks. At the same time, it seems to us that the risk-averse traders and investors might want to skip this trade, as it seems quick, the potential is not as significant as one might expect, and the trade is against the bigger - medium-term - trend.

On a side note, when the situation is difficult in a given market, it might be a good idea to look at other markets and take advantage of the opportunities that have emerged there. Even while taking positions in one market, one could get involved in other markets as well in order to spread the trading risk among many sectors. This fits nicely into our approach toward diversification of strategies and sources of signals (the above adds another layer of diversification - among markets). Whether or not you decide to open long position in the precious metals market, it might be a good idea to look at other opportunities to diversify the risk. As you may recall, we've been also covering the stock market for a few months now (intraday Stock Trading Alerts) and the crude oil sector (daily Oil Trading Alerts and weekly Oil Investment Updates). There haven't been many trading calls in case of the oil sector lately as oil has been moving in the opposite way to the oil stocks (which has made the situation unclear but at the same time will quite likely result in a particular opportunity shortly), but there were many decisive Stock Trading Alerts. Since Sep 25 (when the first decisive alert was posted - meaning that it was accompanied by an arrow suggesting the market's possible direction) there have been 4 bullish signals (trading on them one would have gained over 3% based on the closing prices) and 7 bearish ones (short positions based on them would have resulted in an about 1% gain based on the closing prices). That's over 4% in less than a month - unleveraged. The above is based on the pre-market commentary only - the one that you can access freely (follow-up intraday comments are available to Stock Trading Alerts subscribers) and verify on your own. We have also plotted all the signal arrows on one chart as you can see it here.

Moving back to the diversification issue and the current rather risky situation in the precious metals market - keeping the above in mind, we've decided to enable you to use all three services for the next 3 weeks for next to nothing. The situation in the precious metals market should become much clearer within the next 3 weeks (most likely much sooner) and another trading opportunity will emerge (even if you choose to skip the current long trade), and in the meanwhile, you could stay updated on the stock market and crude oil market for a few dollars.

Stock Trading Alerts are available at $3 for 3 weeks, Oil Trading Alerts are available at $2 for 3 weeks and Oil Investment Updates are available at $1 for 3 weeks. Perhaps you will decide to trade one or both of these markets along with the precious metals market, and perhaps not - that's up to you. However, it seems that checking these markets out right now (especially for risk-averse traders who will not be willing to open a long position in precious metals at this time) is a great idea and that's why we've made it so easy. .

To summarize:

Trading – PR: Half position: long 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: $1,280
• Silver: $21.30
• HUI: 220
• GDX: $24

Take-profit levels (it might be a good idea to close the above-mentioned position if the following levels are reached):

• Gold: $1,390
• Silver: $23.30
• HUI: 248
• GDX: $28

Note: At the moment of writing these words, gold is trading at $1,332.

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