Gold is up almost $20 today and silver is up about 50 cents today - because of this volatility, we believe you might appreciate a quick update.

Gold moved up but it didn't move above their rising resistance levels yet - it's right at them at this moment. The same can be said about silver. Mining stocks (here: GDX ETF) are above their declining short-term resistance line (marked in the latest Premium Update with a black line), but still below the (more important) medium-term rising resistance line (marked in the latest Premium Update with a red line).

The general stock market, which at this point still has a relevant correlation with precious metals, did not decline yet, although the volume has been declining in a classic fashion. The implications here remain slightly bearish for gold and silver Investors.

Moreover, we have seen a mixed signal from the GDX:SPY ratio. A spike in volume in this ratio is a bearish signal in the vast majority of cases. However, there was an exception from that rule in late July. At that time, we notified you about the possible upturn in the market. That was based on the fact that the ratio itself has moved considerably lower, touching its 200-day moving average, and the RSI indicator based on this ratio moved below the 40 level. The 200-day moving average has not been touched yet, but it's very close, and other abovementioned signals are in place, so the normally-bearish signal appears bullish at this point.

(You might want to open the Dec 10th Premium Update and take a look at the GDX:SPY chart to better visualize the above points)

Speaking of ratios, the SLV:GLD ratio (another form of the popular gold:silver ratio) suggests lower prices - we've just seen a spike in volume for this ratio, precisely as it was the case at the November top and the one seen in early December. The implications are clearly bearish.

Finally, we have just seen an extreme reading from our own indicator (SP Gold Stock Extreme Indicator; you can find it in the Premium Charts section on our website), thus suggesting a move in either way. So far the move has been up, but since the resistance levels have not been broken (as mentioned at the beginning of this message), it may still turn to be a pause within a decline.

Summing up, at this point the situation still remains mixed, but we are watching it closely and will keep you updated, should anything change.

The next Premium Update is going to be posted on Thursday, December 30th, 2010.

Thank you for using the Premium Service.

Sincerely, Przemyslaw Radomski