Apparently this time the deal is sealed. $1 trillion of cuts to the people that need the money most, while Wall Street can continue to pimp DC into perpetuating the fiat ponzi. The first reaction was a sell off in gold and silver and a rise in the dollar. I think that tomorrow will see precious metals pull back a little further, and the dollar will consolidate. I think a brief rally for equities is in store, but only to the top of this recent range (Dow 12,800). Then it will be time for QE 3, and then into the final stage of this prolonged inflationary depression.
The first thing the Major Banking Houses will do now that they have their credit reestablished is short metals. It is a good shorting opportunity with them being at these prices during summer, and they want to bring the prices back down for political reasons. Because GDP was so horrible, Bernanke will issue QE 3. For anyone who thinks Bernanke needs equity prices to come down to issue QE 3, think again. He can use any talking point he wants, and the paltry GDP number is a good one.
Once Bernanke makes his announcement equity will fly through Dow 13k like a bat out of hell. He needs to keep prices on T-bills/notes/bonds high to fund his ponzi, and a rise in interest rates would also do his cartel in. He needs QE 3.
After precious metals test support tomorrow and the days following we will see exactly what is in store for August. This test is the important one. If PMs test and bounce, look for them to break out. If they fall through support, we are going to an old range. Silver's support is between $38.50 and $39. Gold's is $1585. Key trigger points there. Platinum broke out after the raise was announce which makes me think the breakout is at hand, but wait for support. Third times a charm.