This is just a quick note that today's rally in the precious metals did not change anything as far as our views on the market are concerned.

Gold and silver moved higher, but they didn't move above their short-term declining resistance lines. In case of the GLD ETF and SLV ETF such lines are created based on intra-day highs of Oct 4 and Oct 11.  

Mining stocks (GDX ETF) moved decisively above their short-term resistance line based on Oct 5 and Oct 17 intra-day highs. 

At this point it still seems that gold and silver will decline once again and the bottom will be formed when gold moves to its 300-day moving average ($1,680). During such a correction mining stocks could move close to their previous lows or might simply verify today's breakout - either way, they are likely to continue to outperform gold during upswings and downswings.

To summarize:
Long-term investments: remain in the market with your precious metals holdings
Trading - PR: Short position in gold and silver (not in mining stocks),
Trading - SP Indicators: long position in the mining stocks.

Our downside targets for the coming decline in the precious metals sector are:
Gold - $1,680
Silver - $30 - $31

We don't have a target for the mining stocks, but it is very likely that they (GDX ETF) won't go below $50.

The stop-loss orders for gold and silver are at $1,750 and $33, respectively. The stop-loss for the long position in the GDX ETF is at $48 and in case of the HUI Index it's at 480. 

As always, we'll keep you updated should our views on the market change - even if it means sending another message in several minutes.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA