The markets seem to be nothing but disappointed recently with Fed announcements and minutes. The pundits seem to talk about the disappointment that we don't get QE. So, might we see "hints" in the language?
If you want to take a punt (with gold) I would suggest the long side. There are a few reasons
1) While I still don't understand why the Fed would do QE with the stock market where it is, if they are to do it, they might provide hints that it will come soon. The Fed does not want to appear to be political, and waiting to do QE....say close to November, might be seen as collusion between a supposedly "independent" Fed and the Obama administration. I don't think they will instate QE, but in the minutes, they might make it clear that there is a possibility to do it at the next Fed meeting, assuming things get worse.
2) My friend, who was watching the bonds, pointed out that the 10 year yield dropped 5 basis points in 1 print about an hour ago (this means they were buying hte bonds). Quantitative easing, or the buying of bonds/financial assets further out on the curve, is bullish for bonds (moving yields lower). This unusual action could be indicative of something to come soon.
3) Yesterday, when gold gave up all of its gains and then some, the metal held, and rallied back to settlement. We sit now down only 3 dollars from yesterdays settle (we had been as many as 15 dollars lower). If a market manipulator was trying to smash gold, they would've likely used the momentum on the down move to stop out all of the longs.
If I were to try to hedge myself, I couldn't pick a worse time. The market reaction to these numbers are about as unpredictable as it gets, but if there is to be an extreme move in either direction, up is more likely.
-Ben
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