As the short sellers continue to crowd the gold and miners trade to the downside, watch for a violent snap back within a day or two.
A well positioned entry could prove to be quite profitable, particularly in some of the beaten down mining stocks and ETFs.
Our view remains that gold has been hit hard repeatedly in front of options expiration, and the recent news that China allegedly only increased its gold reserves by 57% since 2009. We believe this is likely disinformation by China in front of negotiations with the IMF to have their renminbi currency included in the SDR this fall.
We suspect this fall with be a time when values are more clearly revealed, and that China suddenly proves it has gold reserves large than the United States. But the time for truth is not now. It comes later after much turmoil.