So far, so good. We saw the Dollar Index reverse on Tuesday from within 0.02 points of a hidden-pivot target at 85.37. It subsequently traded down to 84.89 yesterday, but it’s still too early for me to assert confidently that this so-far very modest, half-point decline is the beginning of a significant downtrend. It might be, is about all I can say at the moment. The most compelling argument to the contrary is that Comex gold has yet to reach an important -- and unmistakably clear -- targeted low. The April contract settled at 414.50 yesterday, nearly three percent above the projected 403.20 bottom.

The good news is that speculative long positions we recently established in some gold stocks, notably DROOY and Canyon Resources, have reversed very precisely from hidden-pivot lows and so far held above them. A more important mining-sector bellwether, Newmont, has yet to confirm by reaching its downside target, 39.73, but the fact that it has reversed from a fractionally higher bottom could indicate that a presumably impending rally in bullion shares will be especially strong.

Bottom line, we are cautiously optimistic that precious metals may have reversed their steep slide from early December’s peaks. Regardless, to the extent we’ve put our money on the line to leverage this assumption, we’ve used very tight stops amounting to just a few pennies per share. I’ll leave you with this chart of the continuous euro, which suggests that its weakness relative to dollar was due to end, at least temporarily, with Monday’s low. The low at 1.2737 fell fractionally shy of my projection, a hidden pivot at 1.2649, but it came close enough that we can give the bull the benefit of the doubt for now.

(Click on image to enlarge)