Quick Pre-Fed Announcement Run down

We are currently hovering around the 1600 level, over 20 dollars below yesterday's settle. It is a bit confusing to me that I keep hearing that the consensus is that QE WILL be announced, yet most people I talk to seem to think that it won't. I wrote last Friday that barring a disaster in Greece, I would not expect to see QE today. Since Greek elections went well from a market perspective, I continue to think we will not see QE.

I have proposed that the Fed will wait for worse times to do QE if they are to do it at all. But there is an even simpler reason to think that it won't happen. Bernanke does not want to surprise people. That's not the game he's in. Bernanke's generally calm and professorial disposition is important for the post he holds. When markets are easily spooked, it generates volatility, which tends to limit the degree to which people feel comfortable taking risk. Having not given hints for the possibility of QE (even though the market expected him too), Bernanke would be in essence telling people that he was capable of surprising them at any time. To do that, would ruin his ability to serve as a calming agent for markets. I do not know about whether operation twist will be extended, but QE to my mind is an extremely unlikely. Big announcements like this usually provide the opportunity for the manipulators to smash the gold market right before the announcement when liquidity dries up. That is what I anticipate as the likely move. If, however, it gaps up (regardless of what the announcement is) expect gold to break out above 1635, which has been resistance of late.