As we've mentioned in the most recent Premium Update, many important markets will be closed for Thanksgiving and the day after (or the trading will end sooner) and thus the trading week will be quite short. We will therefore not publish our regular Premium Update this week - instead we will provide you with a short summary below.

In the most recent Premium Update, we've stated that the USD Index is not yet close to its next cyclical turning point, which may suggest that the buck is going to trade more or less sideways toward the 80 level or so before declining once again. This is what we've seen recently and USD Index has briefly touched the 80 level today. Generally, the move toward the 80 level could have been a negative factor.

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, 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 on the general stock market did not change much since we published the previous Premium Update - yesterday we've seen another move below the $120 level in the SPY ETF, which was invalidated by today's price rise, just as it was the case last week after prices moved slightly below $118. The volume was higher during downswings, which is not a bullish sign, but the price action here is more important. The implications here are moderately bullish for gold, silver and mining stocks.

Gold and mining stocks - the volume was high yesterday in both parts of the precious metals market, but one of them (gold) rose, while the other (mining stocks) declined slightly. Consequently, at this point we have no "the rally is over" sign. Gold and silver are at their resistance levels, however the short-term trend is still up.

Silver is very close to its previous high (taking closing prices into account) and we know that silver often forms double tops in the final stage of a given rally, but at this point we have no significant confirmation from the volume to suggest closing long positions. As it is the case with gold and mining stocks - the trend remains up.

The final note for today is that we have just seen an "extreme" signal from our SP Gold Stock Extreme #2 Indicator (you can examine it in the Premium Charts section on the website), and in the past few months it was always followed by higher prices. Therefore, it confirms points made earlier. Namely, that the situation remains moderately bullish for the gold, silver, and mining stocks.

Summing up, we believe that being fully invested in the precious metals market with one's long-term capital is a good idea at this point, just like having a small long position in case of the speculative capital. We will keep you updated and let you know if anything changes and we believe that additional action is required on your part.

Just a quick reminder - if you are not sure what we mean by short- or long-term, how much capital should be dedicated to each of these parts of your portfolio (and why), and which stocks are best for you (yes, YOUR portfolio, not just "a model portfolio"), we encourage you to visit Key Principles and Tools sections on our website for details.

The next Premium Update is going to be posted earlier - on Wednesday, Dec 1st, 2010.

Thank you for using the Premium Service. Have a happy Thanksgiving holiday weekend and a profitable week!

Sincerely, Przemyslaw Radomski