Well now, with the news about the impending Greece debacle seeming to reach a tipping point and with higher ups beginning to acknowledge the inevitability of default, what ripples can we expect to be sent through the juniors?
The Fed has left the door open to QE3. QE3 isn't expedient politically just yet but rest assured if the contraction continues, if Greece defaults, TPTB will turn on the printing press and try to inflate their way out of the mess. If things get bad enough everyone will beg they resort to printing.
Last year everyone was crying inflation and the contraction was allowed to resume.
Now the reality of recession is sinking back in so they have to manage the expectation of inflation.
The HUI seems to have held support @500 and is creeping higher...check out the candlestick from the FED announcement:
Right now it all depends on whether the move in metals is based on short covering or whether specs are moving back into the market.
I'd say at this point we've reached a bottom or are nearly at it. The metals are picking up momentum again.
The deflation genie cant be let out of the bottle NO MATTER WHAT. It cannot be allowed to happen and they'll fight it tooth and nail until the very end. But the key is the management of expectations. They cannot allow hyperinflation either. Perhaps the error is their belief that it can be controlled or contained. Contagion is a risk and may cause a temporary pop in the Euro/Dollar but both are dying and any gains will only be temporary. The flight to safety back into the metals/shares will continue.