The overnight action in the precious metals market may have important short-term implications, so I decided to send out a part of today's Premium Update earlier as a Market Alert. After all, it may influence your trading decisions, and this means that timing is critical.

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Generally, I realize that I'm not the only one calling - a soon to be - top, so… It makes the top less likely to be put immediately. Naturally, I respect my colleagues and their work, but after all analysts are also emotional human beings. The point here is that the top is likely to be reached, when everyone is bullish on a given asset (for how long have everyone and their brother been bearish on the general stock market and meanwhile it still keeps rising?), not bearish. So, if analysts are bearish, then it more or less means that a lot of investors reading their analyses are also bearish. And since that is the case, it means that there are many investors waiting on the sidelines to buy gold. Of course, this is not a decisive signal, but it means that the overnight downswing may not be the beginning of the plunge yet. Still, the move higher from here is not likely to be very big until we see more significant correction.

However, if you are still long gold/silver/PM stocks with your speculative capital (I don't mean the long-term investments that you want to hold for at least a year), it may make sense to exit your positions now. As mentioned above, there is a chance that the PM sector would get higher on a short-term basis, but the overnight weakness in metals (especially compared to the relatively small move in the USD Index) is a strong bearish signal, so staying out of the market for the next several days/weeks (speculative capital) seems justified. There is an old saying that goes "when in doubt, stay out", and the amount of bearish signals certainly makes me doubt if we get much (!) higher in the short-term.

Sincerely, Przemyslaw Radomski