In the past few days, we wrote that the situation on the precious metals market was very specific, as the metals and miners were in a long-term uptrend, medium-term downtrend and, at the same time, prone to correct the recent decline.

The correction materialized yesterday as a rally in case of gold and silver and a intra-day reversal in case of mining stocks.

To be precise, yesterday gold and mining stocks (the HUI Index) moved to the declining resistance line based on the August and September highs and then back up, above the key resistance levels. In case of the HUI Index it was the June low and in case of gold we saw a move above the declining support line based on the August and October lows.

In both cases we saw reversal candlesticks that were formed on big volume. The short-term implications are bullish. Gold, silver, and mining stocks remain below the declining resistance line based on the October and November highs, but we wouldn't be surprised to see another move up anyway. Precisely because these resistance lines remain unbroken at this time, we view opening long positions as too risky (the medium-term trend being down is also a factor).

Overall, it still seems that we will see another move up before the decline continues and that we will see a better risk/reward ratio for re-entering short positions than we see right now.

To summarize:

Trading – PR: No positions.

Long-term investments: 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) 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