The deal will be approved by Congress before the end of this month. I doubt it will do anything but put a bandaid on a mortal wound, and far more serious issues will still be waiting, but it will restore short term confidence in the market. It will also be enormously inflationary and put a lift into gold and commodity markets.

All that is going on now is window dressing and posturing. I think the action in stock trading today and the gold market is all driven to send a message prior to the announcement that the bailout is a done deal. Paper traders can hold gold down and give the morons on CNBC something to talk about today, but I do not for a minute believe that any intervention on earth can cap gold after that package gets approved.

Look up the behaviour of gold immediately before every significant FED announcement. It always gets driven lower. Just a few examples are the day a rate cut is announced (which is gold bullish), and when the rescue packages were announced for Bear Stearns and the GSEs (which was gold bullish). Gold was driven lower off these announcements due to intervention in the markets.

The discussion on this latest bailout package is the exception, which sparked a huge rally in gold and silver. I think that is going to continue now. They can cap it for a day or two, but cannot halt or drive it down indefinately. The amount of money that is being discussed is huge, and even then it probably greatly undestimates the total costs that will ultimately be paid by taxpayers. Where will the money come from? This is going to be the signature event that is talked about 30 years from now when people refer to the gold price.

KXL will do just fine.

cheers!

mike