We want QE II on 3 November. No, we demand that the U.S. Federal Reserve announce QE II, quantitative easing second act, on that day. We want confirmation. No, we demand confirmation that Keynesian economics is both intellectually bankrupt and a complete failure!

For those living outside of the U.S., on 2 November the most important U.S. election since 1932 will take place. On that day, U.S. voters may repudiate the Keynesian liberal model of government. For nearly 80 years Keynesian liberals have been on a path of wealth confiscation and destruction not seen since the Mongol hordes unleashed their terror across Asia and Europe. On 2 November we may, hopefully, witness the beginning of the death of Keynesianism. If not, we still have Gold.

With $Gold in a clear parabolic movement, perfection is now required. Markets are fully anticipating that QE II will explode onto the scene on 3 November. Federal Reserve is expected, by near all market participants, to begin a massive second round of liquidity injections into the U.S. financial system. This action is universally expected to crush the U.S. dollar, and send $Gold into the stratosphere. Nonsensical forecasts for $Gold are the primary byproduct of these expectations, with the latest being a ridiculous one of $8,000.

QE II is widely forecast to arrive on 3 November, at the conclusion of the FOMC meeting. However, events of the day before may prevent that from happening. Lost in the forecasting is that the U.S. will hold elections for Congress on 2 November. While the polls generally suggest a crushing defeat for the minions of the Obama Regime, we can safely make only one good forecast for 3 November. Most likely consequence of the U.S. election is that on 3 November Washington will awake to political turmoil.

Certainly we can reasonably expect that the full results of that election will not be known on the following day, 3 November. And some are already giving the Federal Reserve an indication of what they might expect with the new Congress. A nominee to the Board of the Federal Reserve is being held up in the Senate. The next U.S. Congress will be openly hostile to the ongoing mismanagement of U.S. monetary policy. We know it, and so does the Federal Reserve.

Given politics of the day, expectations that the FOMC would announce a policy that, one, acknowledges the complete failure of Keynesian economics, two, confirms expectations of the Great Obama Recession II coming in January, and, three, could lead to a massive depreciation of the U.S. dollar is quite unlikely. With the parabolic formation in $Gold well extended, considerable disappointment on 3 November could reign in the Gold markets.

Parabolic formations are not kind to disappointment. With FRB Vice Chairman Janet Yellen attempting to dampen expectations, AP Business Wire on 12 Oct, disappointment on 3 November is increasingly likely. As a consequence of that possibility, downside risk for $Gold out of the parabolic formation must be considered. Downside risk out of the parabolic is to US$675.

Given the dismal history of hedge funds, following them into the Gold markets at this time seems unwise. Perhaps the only investors that should be buying at this time are EU-based investors due to the massive over valuation of the Euro. For most though, buying is an activity better deferred to a time when frivolous forecasts of $8,000 Gold are not being tossed about.

GOLD THOUGHTS come from Ned W. Schmidt,CFA,CEBS as part of a joyous mission to save investors from the financial abyss of paper assets. He is publisher of The Value View Gold Report, monthly, and Trading Thoughts, about weekly. To receive these reports, go to: www.valueviewgoldreport.com