The whole sector moved strongly higher yesterday and the move took place on high volume. Moreover, the breakout in USD has been invalidated and it seems that a move lower in USD is once again in the cards. It appears that we no longer have a likely-to-be-seen-soon trigger for a substantial decline. However, at the same time we are after a substantial and sharp rally and since no market moves in only one direction all of the time, we believe that at least a small correction is very likely. Consequently, while the big move lower is not likely to begin immediately, a short-term correction is. Consequently, the short-term short positions could remain open at this point and be closed once this correction materialized. Moreover, we will wait for additional confirmations before suggesting getting back in with the part of one's long-term capital that we had previously suggested to take off the table.

At this point we have a sell signal from the RSI indicator based on the HUI Index and a top-is-near signal from the Gold Minders Bullish Percent Index.

This has not been one of our best trades in our trading history, but after re-examining the factors that made us open it, we have once again found them to be sound and thus back then the trade was likely to prove profitable. Unfortunately that was not the case and we're sorry for the inconveniences this may have caused you. Actually, there is one thing that we should have done differently and that is taking our own SP Gold Bottom indicator into account at its face value (flashed long-term buy signal right at the bottom) - it seems that we should modify our approach to our own tools and put more emphasis on them. Please note that we take the same positions in the market as we suggest taking in our updates/alerts (actually we enter/exit the market only after we send out notifications to you, as your interest comes before our own), so we share both gains and pains with you.

Meanwhile, as we will mention in tomorrow's Premium Update, this bull market has much room to go in the long-term (which is no proof that it will happen in the following month or 2) and there will be plenty of occasions to profit, even though some analysts disagree with that (http://futures.tradingcharts.com/news/futures/Gold_to_Fall_Below__1320_i...).

Summing up, the long-term situation changes slower than the short-term one, so we're still waiting with getting back in the precious metals market with a part of the long-term investment capital. At the same time a major decline could or could not happen soon, but a short-term correction is quite likely. Unless the decline from here is accompanied by huge volume or any other signal of particular weakness, we will be closing short positions without waiting for a move toward previously mentioned target levels (150-day moving average for gold and $26-$30 range for silver).

Thank you.

Sincerely,
Przemyslaw Radomski