The general stock market moved higher once again which is not surprising. The Fed has been stimulating the economy through money creation and it almost "had to" (there are no sure bets in any market) benefit stocks. It practically has to benefit gold, silver and platinum as well, although we are not seeing it happening just yet. The key word here is "yet" which implies that it's going to happen - in our opinion it's just a matter of time.

Gold and silver are trading back and forth above their long- and short-term support lines, respectively, and mining stocks' performance is disappointing and, as we mentioned yesterday, we might need to see a move to 333 or so in the HUI Index before the bottom is reached - that's the target based on the major, long-term 2008 and 2000 bottoms. We will probably suggest getting back on the long side of the market shortly.

Numerous indicators are extremely oversold, just like they were in 2008 when metals and miners bottomed. Just as it was back then, you are probably discouraged and perhaps you are even considering selling your gold and silver investments. It's very likely that, just as it was the case back then, patience will prove to be rewarding. It seems that we will not have to wait much longer, though, as we read another bearish article in the popular press today about how the bull market in gold is over and that gold is no longer reacting to the QE. The point is - it's not reacting just yet. Along with improved fundamentals, the potential range of the next powerful upleg also increases - improving fundamentals don't mean that the rally must start on a given day. The rising bearishness accompanied by improved fundamentals make the situation more appealing, not less.

Full speculative long positions are suggested for gold and silver and half of the speculative long position is suggested for mining stocks.

Naturally, we suggest remaining in the precious metals market with your long-term investments.

As always, we'll keep you updated should our views on the market change. We will continue to send out Market Alerts on a daily basis (except when Premium Updates are posted) at least until the end of March, 2013 and we will send additional Market Alerts whenever appropriate. In other words, we have decided to keep you informed on a daily basis for another full month.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA