In yesterday's Market Alert we wrote that we could see some kind of pause as Friday's and Thursday's sessions had been volatile in case of both: currency and precious metals markets.

The USD Index has indeed corrected to the previously broken declining resistance line, which just served as support. If we have another daily close without an invalidation, the breakout will be confirmed.

Gold didn't do much yesterday (rallied initially, but failed to hold these gains), silver declined modestly and mining stocks moved higher in a more meaningful way (an about 3% increase in the GDX ETF).

Is the latter a show of strength? We don't think so because gold and silver are not confirming it and the rally in GDX took place on relatively low volume (compared to the volume on which it had declined in the previous 2 days). Moreover, miners were the part of the precious metals market that had declined the most in the past days, so it's quite natural to expect the bounce to be more visible in this part of the precious metals sector.

Overall, it seems that what we wrote yesterday, remains up-to-date. The outlook is bearish, but it's still too early to increase the size of the short position, in our view.

To summarize:

Trading – PR: Half position: short 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

Stop-loss orders for the above-mentioned speculative short positions:

• Gold: $1,392
• Silver: $23.90
• HUI Index: 268
• GDX ETF: $28.80

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) 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