It was only a week ago when we've sent out the previous Market Alert with suggestion to sell a part of your long-term precious metals investments, and gold managed to slide almost $100 lower since that time.

Time is important here, so we'll begin with the most important part - we believe that the precious metals investments that you sold last week after our previous alert, can be safely re-invested in the precious metals market. In other words, this is a "buy precious metals and mining stocks" alert.

The decline has been sharp, quick, and it almost corrected the 38.2% Fibonacci retracement level. Yes, "almost" means that it could go slightly lower, but it does no longer seem justified from the risk/reward perspective to be out of the market with one's long-term precious metals market. Please keep in mind, that with the long-term assets the risk is to be out of market if we're talking about a bull market, and this is surely the case with gold, silver, and mining stocks.

Was this the final bottom? It is not certain, but it does not matter, as far as the long-term capital is concerned, as it is advisable not to have it invested only under particularly unfavorable conditions - that was the case a week ago, but with almost $100 lower price of gold, it is no longer the case.

The above comments are dedicated to the long-term part of your capital. As far as short-term speculation is concerned, we believe that opening a small long position here might be a good way to go. At this point the most probable outcome it our view is that gold would go up quickly for several (1-7?) days, but then again re-test the current low or move slightly below it. At that point we believe we would have more details (for instance coming from the analysis of volume and cyclical turning points), and we could estimate if its a good idea to add to this long position or not.

If you have put options that have just gained value thanks to the increased volatility, it might be a good idea to sell them now.

Again, please note that we might move a little lower here, but it is not that certain. Consequently, we believe that being fully invested with one's long-term capital is a good idea at this point, and only a small long position in case of the speculative capital.

We will keep you updated and let you know if anything changes and we believe that additional action is required on your part.

Thank you.

Sincerely, Przemyslaw Radomski