Good sentiment and ideas, both of you.  Goldman Sachs has a much larger futures position than all the gold that exists in the world - they dominate the market.  The industrial use of gold is minor, and India is pretty savvy about buying gold - they buy when it's cheap.

Both of your overall ideas have merit.  Goldman Sachs usually causes gold to move (e.g. down perhaps now) just because they say so (issue a recommendation), and that being the case because traders know that they have such a huge position that one is a fool to bet against them.

However, there is always reversion to the mean.  There is an old banker's expression, "Financial Panics return assets to their Rightful Owners" (worth remembering when someone tries to steal your KXL shares) - i.e. when the markets are shook up, the very rich get the assets back cheap.  "And thus ever it has been."  2000 years ago same thing.

Goldman will very quietly go heavily long BEFORE they give the market marching orders to go back up again.  They won't tell us when they're accumulating.

I mentioned it before - there is a very illustrative story as to Goldman Sach's "approach" in their trading in asset backed securities (i.e. garbage mortages) - it's hilarious and extremely mercenary.  At the SAME TIME that they sold a vast raft of these things to their clients, they were taking a short position IN THEIR OWN SECURITIES in the "credit swaps" market.  They made out like bandits, e.g. a $7B boost to the bottom line, and they just testified to that effect before Congress.

So you are both right.  Gold may likely go down, Goldman will quietly go massively long for cheap, and then they will push gold back up.  Wash, rinse, repeat.  Enjoy the show!

I figure KXL is in a good position no matter what gold does in the short term.  There is a secular change (long-cycle) in the interest in gold exploration - it is building up again after years of slumber.