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Eulogy to the Fed

Stocks in this article: GLD SPY USO UUP DBA UDN

Now this is truly sickening.

I dislike Barack Obama and Mitt Romney equally. It's not about them individually; I'm sure they both are great guys. It's about the party establishment and politicking. As long as it's not George Bush or Sarah Palin.

And I understand the Fed's independence can never be 100%. But there is a meaningful difference between a clandestine lover and a streetwalker; the former pretends to have a sense of shame and tries to protect the partner's ego.

OK, now we got the ranting part taken care of, let's get back to trading. RIP Fed.

In the short term, risk-on seems quite certain. Long gold, e.g., via SPDR Gold Trust ETF (GLD), stocks, e.g., via SPDR S&P 500 ETF (SPY), commodities, e.g., via United States Oil Fund ETF (USO), PowerShares DB Base Metals ETF (DBB), or PowerShares DB Agriculture ETF (DBA), short USD, e.g., via PowerShares DB US Dollar Index Bullish ETF (UUP) or the bearish version (UDN) and long every other major currency.

Long Gold

I was a bit nervous with my speculative gold long before; now I added to it right after the announcement and remain quite comfortable with it. Of all the possibilities I think gold is the safest and purest QE3 play. And this time it's about both inflation risk and the unmitigated lunacy of fiat currency care takers. There may be dips in the short-term; consider them gifts for adding on the cheap.

In the medium term (after election to a year out), I expect inflation to actually take root this time. Even though the U.S. has the most capacity in the world to avoid inflation, we're not immune. As all commodities go up, and import price rising along, we will have to eat the bitter fruit of inflation export.

Nominal GDP may pick up (funny how FOMC predicted slower growth in 2012 but improved growth in 2013, taking into consideration QE3 I suppose) but real GDP may not. It's a long way from lower mortgage rates to more jobs. In fact, if QE has any effect on employment, there must be a time lag of at least four years since we still haven't felt the effect of QE1 yet. Get rid of cash and stock up toilet paper if you must; at least it will hold value better.

In the longer term, I expect QE3 to bring mayhem to our little planet. Commodity inflation, especially food, has a devastating effect on developing world. In the developed world, it polarizes the rich and the poor. Think Arab Spring all over the world. Don't kid yourself, it's not a democracy movement. It's a revolution based on nothing more than raw anger and frustration. Buy guns.

But here's hope Mr. Bernanke gets fired soon. Maybe I should care about the election.

At the time of publication, the author was long gold.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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