This message is going to be short, because time is a factor here. At the moment of writing these words we've seen gold move over $20 lower today to about $1160. The GLD ETF is very close to the $113 level, which is our first target for the decline.

The 150-day moving average, 50% retracement of the previous upswing, multi-month rising support level, lower border of the declining trend channel all suggest that gold is likely to move higher in the short run. Moreover, RSI and Stochastic indicators appear to confirm that. Consequently, in our view it is no longer profitable to bet on lower gold prices if you are short-term oriented - especially if you are betting on lower gold prices by holding put options.

Please take a look below for details:

Please note that the http://stockcharts.com website does not allow us to provide you with intra-day charts, so the above is actually yesterday's chart with a small red line representing today's decline in the GLD ETF. At the moment of sending this Alert, RSI and Stochastic provide us with buy signals even though it is not clearly visible on the above chart. Of course we will provide you with the up-to-date version of the chart in the next Premium Update.

At this moment we still believe that the decline is not completely over, but the counter-trend rally might be big enough to justify taking profits off the table right now. Please take a look at March 2009 and December 2009 bottoms - they did not end the decline, but surely provided good opportunities to close one's short positions.

Moreover, for the most short-term oriented Traders, betting on higher values of precious metals might be a good idea - we'd say that we see a 60% probability of a $30-$50 rally from here.

Points made above are valid for gold, silver and mining stocks as well.

Thank you.

Sincerely,
Przemyslaw Radomski