Tapering is now a fact, and it's not at the same time. Bernanke announced that the QE program will be decreased from $85 billion / month to $75 billion per month, and half of the decrease will decrease the purchases of mortgage based securities.

This is a slight decrease, but overall, it did surprise the market, as most market participants were expecting the tapering to be postponed until 2014.

This kind of surprise was likely to have a negative effect on the precious metals market and it has. Gold, silver and mining stocks declined yesterday after showing some strength on an intra-day basis.

The Fed's announcement and precious metals' reaction simply confirmed the bearish outlook for the sector. Consequently, what we wrote previously remains up-to-date.

Moreover, since the possibly-bullish factor turned out to be bearish and gold is declining, we think that increasing the size of the short position in gold is now justified.

As mentioned previously, "we might see a bounce when gold reaches its previous 2013 low, so we suggest closing the speculative short positions in both gold and mining stocks when gold moves close to this level (at $1,190), but not before that happens. We do not suggest making adjustments to the long-term investment capital when that happens."

To summarize:

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

Long-term investments: No positions.

Stop-loss orders for the speculative short position:

• HUI Index: 214
• GDX ETF: $22.80
• Gold: $1,272

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 is the 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