If so, then I would also expect the euro and some of the other major currencies to rally against the dollar, and for asset prices to rally in general, with the gold complex likely outperforming given the obvious inflationary nature of what the Fed is doing.

Despite the long-term inflationary nature of such a Fed move, Treasury bonds would no doubt also rally on the news of such an announcement, as shorts get squeezed, much like they did both back in November when the Fed merely hinted at buying the long end and more recently in the UK after the BOE announced its QE program. For anyone still long the Ultrashort 20 Plus Treasury ETF (NYSE: TBT), I'd be very careful.

Speaking of shorts, given the size of the short interest in gold on the COMEX, any rally that develops in the yellow metal could be sizable, especially for the gold stocks both because that sort of thing is long overdue given how cheap they still are relative to the metal. Also, we have a pretty clear trend of dollar weakness developing, which typically coincides with the gold stocks outperforming the metal and vice versa.

Regardless of what the Fed does tomorrow, one has to seriously wonder how much longer can the shorts in the COMEX futures hold back a rally in the yellow metal when investment demand for physical continues rise? Note the GLD ETF inhaled another 12 tonnes yesterday on top of the nearly 30 tonnes it sucked down last week to bring its total holdings up to 1069 tonnes of bullion.