Paul Volcker chairman of the federal reserve during the last episode of stagflation in his memoirs said, "Letting Gold Go to $850 Was a Mistake."

The Fed has learned and is attempting to interfere at key inflection points such as just before a rate cut and in coordination with. THEY ARE TRYING TO SEND THE WRONG IDEA TO THE MARKET THAT GOLD IS NOT A SAFE PLACE TO HIDE. The effects of the manipulation are becoming shorter in duration as time goes by. More people are catching on to the inflation that is baked into the system.

The market was however caught a little off guard by the cut being only a 1/4 point. This to me just means that they will have to get more aggressive later if they want to avoid a serious recession next year. 2008 is an election year. The market by some strange coincidence has historically done well in election years.