As we've mentioned in last week's message, the next Premium Update will be posted tomorrow. However, we have received several messages from our Subscribers that given today's volatility they would like us to provide just a very brief update right away, so here we are.

In short - at this point still we believe that being long gold, silver, and mining stocks with a small part of one's speculative capital and being long-term long with ones investment capital is a good idea.

Let's begin with quoting last week's message, as it is very up-to-date right now:

It's not that the US Dollar became more valuable relative to everything else; it's much more that the euro declined against other currencies, which could be at least partly attributed to the new rescue plans (Ireland, Portugal). From the pure currency exchange point of view it doesn't matter if it is the value of the USD that rises or the value of the euro that declines - they both result in higher USD/EUR currency exchange rate. However from gold's point of view the difference is huge. With increased trust in the USD (and thus higher USD values), the demand for gold from US Investors declines. However, given less valuable euro, the only thing that changes is the demand from European Investors - it increases. So, while the USD/EUR currency exchange rate could have a negative effect on the price of gold, it surely does NOT have to be the case. In fact, this is what we've seen this week (and also last week), as the USD Index rose (and this index is mostly comprised of the USD/EUR exchange rate) and gold moved along with it.

As you will see if you check the values (and interpretations) in our Correlation Matrix, the USD Index and precious metals have been trading rather independently from each in the recent month. This could represent the above observation - gold moved higher due to weaker euro, not really because of the stronger dollar. Speaking of correlations, we have rather high values for precious metals and stock indices. Consequently - as you may also read in the Correlation Matrix when putting your mouse cursor over values from one of the "stock market" rows - stocks' highs (lows) are likely to correspond to metals' highs (lows).

The situation in the general stock market appears neutral (we see several bullish and several bearish signals), but metals and mining stocks appear to react more visibly to the upswings in stocks (rising even more) than to stocks' daily declines (metals decline less than stocks on a relative basis), so in the end situation remains bullish for the metals.

As far as gold, silver and mining stocks are concerned, they are all approaching resistance levels, however the action seen in volume is bullish. Additionally, the strength of the precious metals market given rather mild influences from other markets suggests that further gains are at least probable. Finally, we've just seen a buy signal from the SP Short Term Gold Stock Indicator (as seen in the Premium Charts section on our website).

Summing up, at this point still we believe that being long gold, silver, and mining stocks with a small part of one's speculative capital and being long-term long with ones investment capital is a good idea.

Naturally, we will provide you with more details in tomorrow's Premium Update.

Thank you for using the Premium Service.

Sincerely, Przemyslaw Radomski