Gold saw speculative longs stay flat while short positions grew 8%. George Gero, senior vice president at RBC Capital Markets, believes that silver's rally is not only short covering but also repositioning by traders ahead of options expiration next week. There are also "a lot of momentum traders after highs." Gold prices have also been subject to this rebalancing. The medium term snag for gold and silver, however, comes in June when the Federal Reserve's quantitative easing program comes to an end. Next week the Fed will meet and no changes to interest rates are expected, but the market will be listening for hints on whether monetary policy will be tighter or loser in the future. Steve Ayer, managing director and partner at HighTower's Strata Wealth Management, believes that the Fed will have no choice but to continue a lose money policy by either QE3 or by reinvesting its profits from QE2. " We are not going to see liquidity go away anytime soon," argues Ayer despite calls from certain hawkish Fed presidents to raise interest rates to fight inflation. "Bernanke and the doves are certainly not" concerned about inflation and "they have more sway." It is generally known that the Fed, like other central banks, is in a bind. Tighten too soon and risk cutting off growth, or keep pumping money into the system and create massive commodity inflation. Ayer thinks if markets see a QE3, gold will hit $2,000-$2,500 later this year and silver will spike to $75-$80. If the Fed simply reinvests existing funds, gold could hit $1,750 - $1,800 and silver goes to $60. If loose money stops, it will be "extraordinarily painful for commodities as well as stocks" Ayer prefers buying Market Vectors Gold Miners ( GDX), Market Vectors Junior Gold Miners ( GDXJ) and Global X Silver Miners ( SIL) despite the fact that the silver ETF is up only 6% for the year and the gold ETFs have rallied no more than 3%. "Stocks are undervalued," says Ayer. "They could rally 50%-70% and not be overvalued with respect to their historic ratio of gold ... right now it is the most undervalued stock sector in the market ... as the sector comes more into vogue .... it won't really matter the trivial underperformance of one company versus another." Gold mining stocks, a risky but potentially profitable way to buy gold, were trading mostly higher. Kinross Gold ( KGC) was losing 0.20% to $15.34 while Goldcorp ( GG) was up 0.98% at 55.47. Other gold stocks, Agnico-Eagle ( AEM) and Eldorado Gold ( EGO) were trading at $68.05 and $18.04, respectively.