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Gold didn't have a good day yesterday (Feb 20, 2013). The yellow metal (NYSEARCA:GLD) fell by 2.5%, and the miners (NYSEARCA:GDX) were down 4.9%. As I have been recommending for sometime, investors who bought the Direxion Daily Gold Miners Bear 3x Shares ETF (NYSEARCA:DUST) were richly rewarded with a 14.7% up day. Year to date, this is the best performing ETF, up some 76%.

76% gain is a lot of inflation protection. At the historical 3.3% inflation, that's ~15 years of inflation protection. At the current 2% inflation, that translates to ~30 years of inflation protection. Gold investors typically look for inflation protection. They could have bought 15-30 years of inflation protection by buying DUST this year.

One usual dream without any basis in reality that often circulates in the gold bug ranks is how gold will go parabolic if all fiat currency holders exchanged their Dollars, Yens, and Euros for gold, to seek inflation protection. I sometimes wonder about a counter dream. Where would DUST be if all the gold in the world were exchanged for DUST?

Anyway, I digress.

So what happened to gold yesterday? The Federal Open Market Committee made its January meeting minutes public. A group of members expressed strong concerns about the wisdom of continuing QEternity, the $1 Trillion annual program of money printing that the Federal Reserve is currently engaged in. Reports Seeking Alpha:

Opponents of the Fed's QE program are increasingly outspoken, but there's no apparent swaying of the minds of the majority. Several argue for a tapering of purchases before the employment situation substantially improved. Those expressing concern about the costs/risks from further asset purchases are upgraded to "many" from "several." A "number" said a close look at the data might well lead the FOMC to "taper or end" QE before a substantial improvement in the labor market occurred. "Several" argue the risks of ending too soon are also significant. Status quo for now, but the monetary law of the land can clearly no longer be called QE∞.

The market went down and took gold with it. Curious, isn't it? Gold is supposed to be a hedge against market meltdowns. Of course, in reality it isn't, but that surprised the gold bulls.

Gold bulls, it seems, are easily surprised.

So why did gold and the market go down? If indeed QEternity is going to end, then the US market wouldn't be swimming in liquidity any more. The bull market from the 2009 bottom has been liquidity driven. No continuous injections of liquidity, and the market collapses. At the same time, gold goes up due to inflationary expectations. No continuous injections of liquidity, and lower are inflation expectations. With that, down goes gold.

So what's going to happen in future? Of course, we have seen this movie play before. The hawks in the Federal Open Market Committee are by and large non voting members. The doves have all the power. 10 out of the 12 voting members are dovish, the only true hawks being Bullard and George. So, there is no real worry of QEternity stopping anytime soon. The non-voting members can make a lot of noise, but as the bard said, it all amounts to "a tale told by an idiot, full of sound and fury, signifying nothing". As noted by Seeking Alpha, the majority remains firmly in support of QEternity.

What will happen in the coming weeks is what has happened in the past. (Yes, we are talking déjà vu, all over again.) The voting members will be out talking to the banks proclaiming how they plan to keep the non-voting kids in line and under control, and that QEternity will continue till unemployment is at 6.5%. That will come no earlier than 2015, if that, per earlier Federal Reserve and CBO estimates. So the liquidity injection will continue, stocks will rally, and, as a side effect, gold will have a bounce.

This is the key point. Gold actually may have a bounce after all the beating it has taken. The miners may well bounce in sympathy. The question is how to play it. My recommendation, of course, would be to short the miners at every bounce by buying DUST. Gold bulls must be feeling pretty demoralized by now, especially those on margin. Add in hedge fund managers like Paulson sitting on massive paper losses. They are likely to sell at every bounce.

This will keep the downward pressure on the miners. As gold prices soared, miners invested in a lot of mines that would have been unprofitable at 2003 prices of gold. Now those chickens will come home to roost. So, DUST continues to be the right play. However, the massive gain in DUST in the past week has made me a bit wary, so I am out of DUST for now, replacing the exposure with calls. I will be fine if I lose the money on the calls, as that will still leave me a very nice gain overall, but I do not feel it is prudent to hold the ETF outright.

Be careful out there. It is not easy to go long after a massive run up.

Disclaimer: This is not meant as investment advice. I do not have a crystal ball. I only have opinions, free at that. Before investing in any of the above-mentioned securities, investors should do their own research, consult their financial advisors, and make their own choice.

Disclosure: I am long DUST. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am long DUST calls