This post was just published on ZYX Short Sell Change Alert

India is the world’s largest coal importer.  Contrary to the rumors being spread by the gold momo crowd data from publicly traded gold instruments in India shows aggressive selling.  Anecdotal evidence shows that the demand for the physical gold and silver metals is very weak.

When gold and silver prices are high, instead of buying gold and silver, Indians tend to recycle the gold and silver they own for purposes of marriages and festivities.  Estimates are that scrap sales of gold in India may reach 300 metric tons from 130 metric tons in 2011.  Our estimates are the total demand for gold in India will fall 4-10% in 2012.

What To Do Now?

Hold the gold silver arbitrage trade.  

Hold  PAAS and SLW arbitrage trade.  

Our rating on gold and silver remains neutral with a negative bias.  Negative bias means very very short-term in the context of a longer period that is rated neutral.  This rating is for short-term experienced traders only.  

For long-term investors, the probability is still very high of gold approaching its fair value of $1250 to $1400.  However long-term investors should not consider short selling or buying inverse ETFs because gold and silver can explode to the upside temporarily if there are indications of leftist party winning in Greece.