Once again we decided to send a quick note to let you know that nothing changed in our views on the market.

In the April 28th Market Alert, we explained that gold is preferred speculative vehicle for the short-term bet on higher prices because the risk associated with using silver or mining stocks was much higher. The volatility in silver has been indeed extraordinary (however please note that it was the same in 2006 when silver moved sharply lower only to climb back very soon) and mining stocks declined heavily. Conversely, gold moved only slightly higher and it did not even move below its very short-term rising trend channel. Overall, performance of the precious metals sector still resembles what we've seen ahead of previous major tops. The similarity between 2006 and today is particularly visible.

Summing up, although it appears that the end of the rally is quite close, it seems that betting on higher gold prices in the short-term is still justified from the risk/reward perspective. The decline in silver and mining stocks appears to be over-done on a short-term basis. Examining the coming bounce should provide additional valuable signals. As always, we will keep you informed.

Thank you.

Sincerely,
Przemyslaw Radomski