Ok, so Ben gave the markets its shot of heroin that it needed/wanted in the form of a .50 rate cut. In addition, like any good drug dealer, he added that he would be happy to give the markets another snort if necessary. And given the current economic climate, it will be, it will be.

The markets, at first, enjoyed the incredible high it got when the drug hit its veins. But, like any good high, it must end (or so, I'm told, as I wouldn't know about things like that (wink)). Charlie Gasparino, on CNBC, broke the story that S+P might down grade both bond insurers, MBIA and Ambac, and then a little after that, Fitch downgraded FGIC, another bond insure to AA from AAA.

Before you could say "the CB's are losing in their attempt to suppress gold" the markets gave up 140ish dow points and closed lower on the day. Gold, at one point, was up $11 in the after hours, but was up about $6 around 6pm. The HUI which was up also 11, closed up 4.5. Whaddya, know gold is still attatched to a down S+P and the gold stocks are hopeless.

Around 5pm tonight, S+P did downgrade a small amount of mortgage bonds. Small, meaning, half a trillion dollars worth. Nothing cutting rates won't fix, even though when I left the office tonight at 6pm, the S+P futures were down 16. FWIW, I think we rally tomorrow, as usually the day after a Fed cut is usually a good day.

As Jimmy "Goldenboy" Sinclair, frequently says, "This is it!!!!" For Ben, to have cut 1.25 in a weeks time in the face of incredibly inflationary pressures, shows how worried he is about the economy. He is clearly sacrificing inflation, and the dollar for growth. Couple these cuts, with the $156 billion stimulus package that is coming, and you have the perfect storm for gold. But, you already knew that.

Speaking of the dollar, after the cuts, the dollar index hit 75 and bounced slightly. This was the second lowest closed in the index on record. The dollar low is 74.75, do we hit it tomorrow? It's quite a possibility we do.

Spot gold is quoted up a little less than $3 at slightly over $924. Earlier today spot hit over $931 for a new record. The April contract went over $940. But, then the Fitch news, gave DA BOYZ, plenty of reason to come in and sell the market, and sell they did; cutting the gains in half from the highs. I was not impressed with the action after hours, nor am I impressed with action in Asia. It would not shock me to see gold down tomorrow, which I think would be a huge joke.

One thing that I thought was pretty funny was at some point in the CRIMEX session, gold was down as much as 9+. Who the F' is dumb enough to sell or short gold down that much in the face og a Fed announcement? The shorts, that's who. Will they ever learn?