Will Today's Fed Action Drive Gold Higher?

Ok.I decided to hold my breath until I'm convinced the Fed will cut rates or resume some kind of quantitative easing.Exhale . . .That didn't take long.

Some believe today, as the FOMC meets, the Fed will announce some kind of rate cut, perhaps more quantitative easing or at least express their intent to do so quickly.

This meeting comes with added anticipation after a significant Ben Bernanke comment last month stating the outlook for the economy and the markets remains unusually uncertain.

Uncertain is putting it lightly.Despite claims that jobs are being created, by some measures the unemployment rate is said to be nearer 10.4% and not the touted 9.5%.According to Dave Rosenberg, Chief Economist and Strategist for Gluskin Sheff, the number of discouraged workers has ballooned 50% in the last year.

Discouraged workers are those who no longer are accounted for in official statistics because they've become discouraged and left the labor force.Now, calculate in a gradual decline in census workers and the outlook for more jobs ahead is indeed uncertain.

I hear the term jobless recovery and frankly, I just don't get it.More people are out of work and more people are going to be out of work.And, those corporations who are said to be sitting on mountains of cash, are caught between a rock and a hard place.They have cash because they have less workers.Bring back workers and your cash goes away.So where are more jobs going to come from?

These things considered, many believe the Fed has no choice but to resume some sort of stimulus.Why would you start down the path of stimulus and then just months later, after accumulating a few extra trillion dollars in debt, admit you were were wrong and abandon the strategy?How it will come is the only surprise that awaits - at least as far as I am concerned.

So, what does this mean for the dollar inflation and gold?Obviously, printing more money puts downward pressure on the dollar.Then, as the dollar weakens, inflation rises.All this is positive for gold and a resurgence in gold demand is anticipated by many.

The next couple days will be very interesting.Keep an eye on the gold charts ahead.Let the fun begin.