...If we get a Melt-up, more $$ would flow back into equities, ditching the Fear trade (i.e Gold) which has overstretched short term; Gold stocks which enjoyed recent sterling gains would get sold down as $$ return chasing the tech names
...If we get a Major Breakdown, everything gets sold off, including Gold which becomes collateral damage as traders sell winners to cover losses
...Unless of course, we continue to see more central bank and retail purchases. Gold's decline under each scenario could be limited to 5-10% because most who buy physical Gold would not be trading them but to hold, unless they are forced to raise liquidity.
...As I mentioned many times, it is only in the aftermath of a crisis that we get a huge run in Gold and gold stocks, after the Fed has reduced rate significantly and undertakes QE. What we have now is not the 'crisis' but catalyst/driver that is leading to the crisis. And recent Gold run is seen as a pre-emptive signal of the forthcoming crisis.
...Lower interest rates and QE are tailwinds to Gold's trajectory. If you believe they are coming, you should have the conviction that Gold's trajectory remains northbound.
