Just when we were posting the update today, the market was moving considerably lower, and it didn't take long for the PM prices to move very close (or slightly below) levels mentioned in the update.

So, the question is if it is a good idea to get back on the long side of the market now. Generally - yes. Today's price action serves as further confirmation that the self-similar pattern is once again in place for the metals market.

According to this pattern today's action is a reflection of the Sep 24-th session, when gold moved over $20 lower on very high volume. This similarity is visible also in silver and PM stocks. Consequently, the price action in the coming days is very likely to be similar to what we've seen at the end of September 2009. This means that we are very close to the local bottom, and price may move sideways for several days before moving up once again.

Naturally, there's always the risk that the above analysis has just stopped working and PMs move much lower from here, but we don't view this outcome as likely. Therefore, we believe it would be a good idea to go back on the long side of the market, even though gold may move several dollars lower. The risk / reward ratio clearly appears favorable at this point.

Thank you.

Sincerely,
Przemyslaw Radomski