Gold, silver, and mining stocks rallied on Wednesday, but we warned that the outlook wasn't much better as it remained in tune with what happened back in April, just before a major decline.

Yesterday, gold declined almost $20, silver moved down about $0.30 and the HUI Index moved below Monday's lows - which was the ultimate show of weakness. If the miners' underperformance relative to gold wasn't enough to convince you that the next big move is going to be to the downside, let's focus on what happened with the USD Index.

The USD Index declined yesterday. It moved to 80.28, which is its lowest level in about a month. That "should have been" a trigger for another upswing in metals and miners. Metals declined and the performance of miners was just pathetic - the HUI broke below it's previous low.

The Euro Index moved higher, to its rising resistance line. The breakdown below this line had already been verified, so at this time it's a bearish sign. The resistance was reached without a breakout, so a move back down is likely. The same goes for the precious metals sector.

Thursday's weakness in the precious metals sector confirms that the medium-term trend remains down, and that our current positions (or lack thereof in case of long-term investments) are justified.

Summing up, at this time silver seems to be the least predictable of the gold, silver and mining stocks trio, so we will simply keep the double short positions in gold and mining stocks while waiting for the situation to become clearer for the white metal.

To summarize:

Trading – PR: Short position in gold, and mining stocks.

Long-term investments: No positions.

Stop-loss orders for the speculative short position:

• Gold: $1,262
• HUI Index: 214
• GDX ETF: $22.80

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.

The trading position presented above are a netted version of positions based on subjective signals from your Editor, and the automated tools (SP Indicators and the upcoming self-similarity-based tool). You will find more information by following links in the summary of the latest Premium Update.

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