Yesterday we wrote about the 60% probability that a local top will be in within the next few days. At this point we believe that these odds have further increased to about 70% or so, and we believe that betting on lower gold, silver, and/or mining stocks' prices is profitable. In other words, this is the "go short" alert that we were referring to yesterday.

Speaking of yesterday's message - we've mentioned several reasons that make us believe that a local top is very close:

- Gold hit the resistance level,
- Gold stocks are lagging gold,
- The volume during upswing was not big,
- The GDXJ:SPY ratio was rallying very strongly recently - more on this ratio in the coming update,

We've also mentioned several things that we would still like to see before we could suggest betting on lower precious metals' prices in the short term. The most important was huge relative volume in the GDX:SPY ratio - which we have today. Moreover, we've mentioned that the resistance level on the silver market had not been reached - it has been reached yesterday (several hours after we've sent out the message to you).

Additional factors:

- Resistance level was hit today in many precious metals stocks (for instance AEM), and also in the GDX ETF
- While the volume in the GDX ETF is not extremely low today, it is very low when one compares it to the size of today's rally - consequently providing us with a bearish signal
- Laggards among big senior stocks (yes, we are using the "Speculation" mode of our Leverage Calculators from the Tools section to define, which of the stocks fall into this category) are rallying today
- Many juniors are rallying rapidly today even if they moved up slowly in the previous weeks when gold rallied.

Please take a look at the recent strong rally in PMs - do you find it difficult emotionally to bet against it? If the answer is yes, then you have another reason to proceed. We have many reasons to believe that the market would at least correct temporarily, and yet it just "doesn't feel right" to bet against it because of the strong momentum. Generally, this emotionality is what makes the coming decline more probable, as it is most likely the time when everyone interested in the sector is already in the market, and there are not many Investors left to add to their positions in order to keep pushing prices higher.

While it might be the case that this decline would not take the precious metals sector as low as we had originally expected, it seems that it will take it at least to the July lows.

All of the above is dedicated to short-term Traders - we still believe that gold, silver, and mining stocks will trade much higher in a few years than they are today. As always - please remember to use only a fraction of your capital for speculation. Please refer to the Key Principles section for details.

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

Thank you.

Sincerely,
Przemyslaw Radomski