What is happening here, I believe, is that traders are concerned that right after the supposedly impending revaluation of the yuan by the Bank of China, there will be an economic slowdown in China caused by the higher currency price.

That means less demand for natural resources and processed commodities like crude oil, steel, copper, and so forth. And hence the big hit to stocks in the Basic Materials sector (GICS sector 15).

That very well may be the economic landscape that unfolds in China, which if true would depress most of the Basic Materials sector. Even the prospects of lower commodity prices are pushing up the price of the USD.

But here's the key point. I am not changing my forecast for gold " even though it is a component of the Basic Materials sector. The reason is that if, as and when the yuan is revalued, the USD is almost certainly headed lower (for a time), and that will push up gold prices, probably substantially (for a time).

I think now is the right time to be looking at buying (not selling) gold stocks and options. Long options; not ones shorter than six months.

Nobody knows the timing of a yuan revaluation. It is likely to happen because the PRC authorities, including the governor of the Bank of China have acknowledged that. If only he would tell us when.

But, Zhou Xiaochuan doesn't have to tell me to buy or sell gold; he's already signalled what to do. I'm buying.