Briefly: in our opinion, full speculative short positions (250% of the regular position size) in gold, silver, and mining stocks are justified from the risk/reward point of view at the moment of publishing this Alert.

Today's Alert is going to be relatively short, as barely anything happened on the precious metals market yesterday and not much is going on in today's pre-market trading.

What particularly interesting about the moves in the precious metals sector is that silver and mining stocks had previously declined profoundly along with the general stock market, but yesterday, they refused to move higher visibly despite a 4%+ rally in the S&P 500.

If silver and miners are willing to act on bearish lead from stocks, but mostly refuse to act on their bullish lead, then we have yet another confirmation that the true direction in which the precious metals market is heading is lower.

Just like PMs, the USD Index didn't do much yesterday, but negligible (0.18) daily upswing was actually the biggest rally since the February 20 top. And it started right after the USDX reached its rising medium-term support line. This means that the bottom for this short-term downswing might already be in.

Consequently, we might not have to wait for another downswing for much longer.

Summary

Summing up, the 2020 top in the precious metals market is most likely in. Gold declined on record-breaking volume, while silver and miners plunged to new yearly lows - and it happened even before the USD's rally resumed. The outlook for the following months is extremely bearish, and the analogy to 2008 is very strong, also in terms of the likely interest rate moves.

The profits on our big short position in the precious metals market are already sizable, but they are likely to become enormous in the following weeks.

On an administrative note, there will be no regular Alerts tomorrow and on Monday as we'll have a company-wide meeting with workshops and discussions. If you have ideas or requests that you'd like to be implemented, this would be a perfect time to tell us (thank you).

If things get particularly hot on the precious metals market, we'll keep you updated through a quick intraday message. The next flagship Gold & Silver Trading Alert is scheduled for Tuesday.

As always, we'll keep you - our subscribers - informed.

To summarize:

Trading capital (supplementary part of the portfolio; our opinion): Full speculative short positions (250% of the full position) in gold, silver, and mining stocks are justified from the risk/reward perspective with the following stop-loss orders and binding exit profit-take price levels:

• Gold futures: profit-take exit price: $1,422; stop-loss: $1,712; initial target price for the DGLD ETN: $33.30; stop-loss for the DGLD ETN: $19.88
• Silver futures: profit-take exit price: $14.63; stop-loss: none (if gold moved to $1,712, we would view silver positions as no longer valid); initial target price for the DSLV ETN: $26.10; stop-loss for the DSLV ETN: none (if gold moved to $1,712 we would view silver positions as no longer valid)
• Mining stocks (price levels for the GDX ETF): profit-take exit price: $20.22; stop-loss: $30.52; initial target price for the DUST ETF: $11.29; stop-loss for the DUST ETF $4.35

In case one wants to bet on junior mining stocks' prices, here are the stop-loss details and target prices:

• GDXJ ETF: profit-take exit price: $28.32; stop-loss: $43.52
• JDST ETF: profit-take exit price: $20.97; stop-loss: $7.88

Long-term capital (core part of the portfolio; our opinion): No positions (in other words: cash)

Insurance capital (core part of the portfolio; our opinion): Full position

Whether you already subscribed or not, we encourage you to find out how to make the most of our alerts and read our replies to the most common alert-and-gold-trading-related-questions.

Please note that the in the trading section we describe the situation for the day that the alert is posted. In other words, it we are writing about a speculative position, it means that it is up-to-date on the day it was posted. We are also featuring the initial target prices, so that you can decide whether keeping a position on a given day is something that is in tune with your approach (some moves are too small for medium-term traders and some might appear too big for day-traders).

Plus, you might want to read why our stop-loss orders are usually relatively far from the current price.

Please note that a full position doesn't mean using all of the capital for a given trade. You will find details on our thoughts on gold portfolio structuring in the Key Insights section on our website.

As a reminder - "initial target price" means exactly that - an "initial" one, it's not a price level at which we suggest closing positions. If this becomes the case (like it did in the previous trade) we will refer to these levels as levels of exit orders (exactly as we've done previously). Stop-loss levels, however, are naturally not "initial", but something that, in our opinion, might be entered as an order.

Since it is impossible to synchronize target prices and stop-loss levels for all the ETFs and ETNs with the main markets that we provide these levels for (gold, silver and mining stocks - the GDX ETF), the stop-loss levels and target prices for other ETNs and ETF (among other: UGLD, DGLD, USLV, DSLV, NUGT, DUST, JNUG, JDST) are provided as supplementary, and not as "final". This means that if a stop-loss or a target level is reached for any of the "additional instruments" (DGLD for instance), but not for the "main instrument" (gold in this case), we will view positions in both gold and DGLD as still open and the stop-loss for DGLD would have to be moved lower. On the other hand, if gold moves to a stop-loss level but DGLD doesn't, then we will view both positions (in gold and DGLD) as closed. In other words, since it's not possible to be 100% certain that each related instrument moves to a given level when the underlying instrument does, we can't provide levels that would be binding. The levels that we do provide are our best estimate of the levels that will correspond to the levels in the underlying assets, but it will be the underlying assets that one will need to focus on regarding the signs pointing to closing a given position or keeping it open. We might adjust the levels in the "additional instruments" without adjusting the levels in the "main instruments", which will simply mean that we have improved our estimation of these levels, not that we changed our outlook on the markets. We are already working on a tool that would update these levels on a daily basis for the most popular ETFs, ETNs and individual mining stocks.

Our preferred ways to invest in and to trade gold along with the reasoning can be found in the how to buy gold section. Additionally, our preferred ETFs and ETNs can be found in our Gold & Silver ETF Ranking.

As a reminder, Gold & Silver Trading Alerts are posted before or on each trading day (we usually post them before the opening bell, but we don't promise doing that each day). If there's anything urgent, we will send you an additional small alert before posting the main one.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager