Fed's Constant Missteps: Bad for Financials, Great for Gold

So gold goes down virtually every day for a month, no doubt after some silly ETF that ran them up coupled with some silly thesis that gold's done going up forever because the dollar's bottomed.

And people lose their minds and dump it despite the fact that the big picture is that the world is re-inflating, and every time it has re-inflated, you have to buy gold.

It is almost as if the people think we are actually working our way out of the financial crisis, something that Hank Paulson and John Thain think -- two guys who if you have trusted so far you wouldn't be able to afford the subscription to read this.

As anyone who sees where Citigroup (C - commentary - Cramer's Take) and Lehman (LEH - commentary - Cramer's Take) and Washington Mutual (WM - commentary - Cramer's Take) are trading -- let alone Fannie Mae (FNM - commentary - Cramer's Take) and MBIA (MBI - commentary - Cramer's Take) -- knows, the only solution is to print hundreds of billions of dollars, because we failed to take action when something could still matter. The whole government plan is to turn the floodgates with dollars.

That means buy gold.

Last night Yamana (AUY - commentary - Cramer's Take) reported a dynamite number. Just fantastic. The company has been on an acquisition binge. Now it is going to monetize the acquisitions. The stock is down from $19, traded at $12 during this insanity period where "hard" assets went out of favor and gold "peaked."

I reiterate that the only way out of this jam is for the Fed to do the opposite of what it wanted to do -- get the printing presses going -- because when things were falling off a cliff, it was still fighting inflation. The Fed did nothing to stop the madness of the exotic mortgages other than encourage them, Ben Bernanke being one of the worst offenders after Greenspan.

When they had a chance to take rates down so that you could rebuild capital through net interest margins, they didn't take it.

Now, everything they are going to do is good for gold, and nothing good for paper assets.

The good news, as I told Action Alerts PLUS subscribers yesterday, is that the Yamanas of the world have gotten cheap.

The bad news is that the financials just still can't be owned, except Hudson City (HCBK - commentary - Cramer's Take), JPMorgan (JPM - commentary - Cramer's Take) and Goldman (GS - commentary - Cramer's Take), and the latter two are going to take a bit of pasting before they bottom because they went up on a short squeeze that ended in the wake of the existential crisis over Fannie Mae.

Random musings: Devon (DVN - commentary - Cramer's Take) was really great, but it reported on some weird, bad day, and should be bought aggressively.

At the time of publication, Cramer was long Yamana Gold.

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