Gold, silver and mining stocks sold off heavily in early trading. Precious metals appear to have bottomed right after the opening plunge, and are now correcting (speaking about minutes here). The volume is already enormous - it exceeds 50% of the average daily volume during the past 3 months, and the markets did not trade for even an hour (as of writing these words). Consequently, today's session is going to be significant (in fact, it already is). The move lower that we've been writing about lately is very likely underway.

The question is if one should hold, add, or close their speculative position and if anything should be done with one's long-term investments.

Speculative capital:

Enter (or add to the existing ones) speculative short positions right away - in gold, silver, and mining stocks.

Mining stocks have fallen exceptionally today (relative to previous gains), which suggests further underperformance also in the following days. Previously we mentioned that it is not sure how will the miners react toward the decline in metals - and we now see that they have magnified metals' downswing.

If you're using options, we suggest betting most of all on lower mining stocks' values - the volatility in the prices of these stocks was much lower in the previous weeks than it was the case with metals (except today), which means that option's premiums are now relatively low for miners when compared to gold or silver options. In short - if using options, bet on lower values of mining stock options with most of the cash that you plan to dedicate to this particular trade. I

f you're not using options, we suggest diversification between gold, silver, and mining stocks also in this bet.

In all cases - do not enter the full size of your position yet. Leave some powder dry in case metals (and mining stocks) move higher in the following days on tiny volume.

Long-term capital:

We don't suggest selling it yet. If we get the VERY bearish confirmation mentioned above (precious metals sector moves higher on tiny volume) then we might consider suggesting you selling some of your long-term precious metals investments.

We will keep you updated and let you know if anything changes.

Thank you.

Sincerely, Przemyslaw Radomski