Briefly: In our opinion, a speculative short position (half) in gold, silver and mining stocks is justified from the risk/reward point of view.
The situation in the precious metals market is quite specific at this time. We have gold moving higher on low volume and moving lower on increased volume (which is bearish), but during the last few weeks miners have outperformed gold which seems to indicate strength. One of the signals that help to decide what the outlook really is comes from silver stocks.
As mentioned above, the price of gold moved back and forth and the corresponding action in volume was bearish. Volume very often confirms the direction in which the market is going and it allows to differentiate between true rallies (that are likely to be followed by even bigger rallies) and corrections (that are likely to be followed by declines). In this case, we saw the latter type of action.
Gold is after a confirmed breakdown below the rising support line and after reaching the 50% retracement based on the February – March decline, so it’s been likely to decline and the price-volume action makes this even more likely.