Cut your losses, buy back in when you see a confirmable upward trend developing.
The unfortunate thing is that there is so much volatility in the market, but it could drop another 200 or it could shoot up to 1000. Who can tell.
Nobody expected the USD to go through the roof either. Personally, I'm long JPY and USD and short EUR and GBP, but I'm just trading with the trend. I want to short some HUF and PLN tomorrow as well. If gold starts an uptrend, maybe I'll buy in.
I remember a friend of a friend that was a daily reader of www.dailyreckoning.com
He changed all his money to gold, lost heaps, lost his girlfriend, and went slightly mad and dropped out and lost contact with everybody. There is madness and illness in this approach.
I think it's a very dangerous road to tread. I have been umming and ahhing for years about getting some exposure in gold, but in truth, you can't beat a balanced portfolio of currency, commodity, equity, bond trends - where ever there's a discernable trend building up some steam, then trade the trend, through futures, spread-bets, at appropriate leverage only of course.
Don't put all your eggs in one basket. That's my advice.
The second thing is : cut your losses, and let your winners run. I don't see any evidence that deflation has finished. Gold might bounce up, but I don't see any reason for it, I can see gold dropping some more to be honest. It's a bit too volatile however, and I'm not going to put my money on it either way.