We have not received any questions about today's price moves so far, but we believe you might appreciate an update as we are probably close to a local top in gold and silver, and today's volatility is significant.

In short, it seems that the significant correction that we are expecting to see in the gold, silver, and mining stocks has not started so far. Yes, metals and miners declined today, but given the extremely overbought status (on a short-term basis), and a history of volatile plunges at the beginning of a decline, we would expect the move lower to be much more significant than what we've seen today. What we're seeing now still resembles a consolidation or a lengthy top, something similar to what we saw in November 2011 or February 2012.

We expect the USD Index to correct to 80.70 level before the decline in this currency continues. This level is where 200-day moving average, 38.2% Fibonacci retracement level (based on the July - September decline) and short-term resistance line intersect. If the USD Index does so and the precious metals don't decline (gold doesn't move below $1,700), then we will no longer be expecting an important correction in gold, silver and mining stocks at all (not before another significant rally). So far, it still could be the case that the USD Index declines and bottoms at the end of the month, which would likely make precious metals rally and form a top at that time.

Summing up, as far as speculative capital is concerned, we don't suggest opening a short position, nor a long one. We don't suggest opening a short position because it's quite probable that the rally will continue without a meaningful correction - the combination of the bearish signals is not strong enough to really make this outcome unlikely. We don't suggest opening long positions, because the short-term situation on the precious metals market is still very overbought and the probability that a decline will be seen before the rally continues is above 50% (say 60%).

As far as the SP-indicators part of the speculative capital is concerned, we didn't see any signals in the past several days, so, again, no speculative position is suggested.

If you are unsure what we mean by the SP-indicators part of the speculative capital, please go over our new portfolio structuring report and focus on the "Trading / Cash" section. In short, after analyzing signals from standard charts (our interpretation) and the signals from the SP indicators (based on the past several years of data) we found that diversifying between both sources of trading signals (PR's analysis and signals from SP Indicators) should improve your profitability while keeping the risk at reasonable levels or even help decreasing it. If you haven't read the portfolio structuring essay, we strongly suggest that you do so now. Reading our definitions of analysts and investment tools should be helpful as well.

I would also like to thank you for your feedback regarding the new website. We are happy that so many of you liked the new version of SunshineProfits.com and I'm particularly thankful for all the suggestions that we received. Some will be introduced shortly (improved printer-friendly mode that will allow for easier reading) and others at a later date, but I reviewed all of them and I added them on our 2-do list. We encourage you to continue sending us your suggestions and ideas.

We work for you and all the improvements / features that we made were done to make your investing/trading activities easier and more effective. If we can do this job better, simply let us know.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA