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After a brief uptick, gold encountered a significant technical obstacle, confirming the strength of a previously broken support level, and is now displaying signs of a potential downward slide in the near future.

“Nihil novi” is the abbreviation of the Latin name of the 1505 act that was introduced in Poland at the royal castle at Radom (yup, there’s a city in Poland by that name). It literally means “nothing new”, and when implemented, it meant that no new laws should be introduced by the king without the nobility’s approval (with some small exceptions). At that time, quite many Poles were considered nobles by the country’s standards (about 10% of the Republic’s population), so one could say that it was a form of a limited democracy of those times.

The initial effect of what happened in Radom seems to have been positive because after a few decades, according to Brittanica, “in the mid-1500s, united Poland was the largest state in Europe and perhaps the continent’s most powerful nation.”

Why am I writing all this in today’s Gold Trading Alert? Because taking into account yesterday’s and today’s pre-market price action, “nothing new” happened on the precious metals market, and I wanted to share something that might be interesting, anyway.

Yes, everything that I wrote previously remains up-to-date.

Gold price moved a bit higher, but it just formed a daily shooting star reversal candlestick, and while doing so, gold touched its previously broken (upper) support line and verified it as resistance.

It’s moving down again in today’s pre-market trading, and it seems that gold is ready to slide once again soon.

Junior miners moved higher yesterday, and they too moved to their previous support and verified it as resistance. In GDXJ’s case, it was the horizontal support/resistance zone created by the previous highs and lows.

And – just like the price of gold – the price of the GDXJ is down in today’s London trading.

It looks like yet another small corrective upswing is over.

In the meantime, stocks moved below their recent highs but not yet below the original medium-term highs, above which they have been trying to break.

Given the similarity to 2008, it seems that this medium-term breakout will be invalidated soon.

Please note that we have a combination of support levels right now (the rising support line and the medium-term high) and we have another, analogous one at about 4,070. This might be where stocks pause after the initial part of the decline, before moving much lower, and taking mining stocks with them.

The above also means that the profits from our short position in the FCX are likely to increase shortly, and I think that the bearish potential in junior miners remains enormous as well.

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