Precious metals managed to hold yesterday's early gains and closed higher and it was the case even though the USD Index reversed and closed the date relatively flat.

The USD Index is moving higher once again today and... so are/were precious metals. When we started writing this alert, the USD Index was up 0.20 whereas gold moved $5.30 higher and silver moved by $0.10 (which was not significant by itself, but combining it with the dollar's small rally makes it more important). Then USD rallied some more - another 0.22 and gold actually moved only $2 lower, and silver moved $0.05 lower.

We think it's worth repeating what we wrote yesterday with the above in mind as it is yet another example of the following:

"We now have a situation in which precious metals move higher when USD declines just a little and when they do nothing when USD rallies (see: last Friday). Of course this is a very positive situation because it means that gold will either go up or do nothing on the next day and that it will overall trend higher. This also means that if dollar declines more significantly - something that is very likely based on its current overbought status - the rally will accelerate."

Full speculative long positions are suggested for gold and silver and mining stocks.

Naturally, we suggest remaining in the precious metals market with your long-term investments. In particular, don't let the bearish analyses, declining prices or sideway moves make you sell your long-term precious metals investments. It's a good time to be adding to the long-term gold & silver investments, not a bad one.

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.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA