Gold, silver and mining stocks moved higher yesterday, which is not in perfect tune with what we consider to be the likely action in the following weeks, so we decided to provide you a quick update on how we view things at the moment.

The facts are:

USD Index is right at the support level - but definitely above it. It declined on low volume yesterday. The situation here remains short-term bullish.

The general stock market is likely to have put a top several days ago. It moved only slightly higher yesterday and the move materialized on low volume. The situation here remains short-term bearish.

The above plus strong negative correlation between USD and metals, and positive correlation with stocks have been the main points behind our suggestion to bet on the decline that is to end most likely in late November. Did the situation change on the dollar or general stock market? No. Did the correlation change its direction? No.

So what changed actually? Price of gold and gold stocks moved higher on relatively low volume. Not extremely low, but visibly lower than during the daily declines seen in the past several days. Silver moved to the previous high, but double-tops in silver are quite common, and the metal is known for being volatile to the downside, so at this point it doesn't necessarily invalidate points made in the recent update.

What would make the soon-to-be-seen decline scenario definitively less probable is a decisive move higher in stocks, a move lower in the USD Index (below its recent lows) or a proof that the correlations are changing. Until at least one of these factors is seen, the short-term decline will continue to be the most likely outcome in the coming days and weeks.

We will keep you updated and let you know if anything changes.

Thank you.

Sincerely, Przemyslaw Radomski