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"However, with gold prices already back near their pre-June FOMC level, COMEX net speculative positioning already back at its April level as well as growing pressures on EM gold demand, we believe that this upside will ultimately prove limited (see Neutral gold prices near- term but still expecting new lows in 2014, September 17, 2013). We believe this is well illustrated by today's more muted rally in gold prices when compared to the significant rally in 10-year TIPS yields, helping close the significant valuation gap that had occurred between both assets over the past month.

"As a result, we reiterate our neutral stance on gold prices and continue to expect that gold prices will resume their decline heading into 2014 when we expect economic data to solidly confirm a re-acceleration in U.S. growth and warrant a less accommodative monetary policy stance."

Goldman is reacting and covering their backsides over the FOMC minutes. We think that the broad consensus in higher financial circles tells us not only about wishful thinking but about how far out of touch mega-millionaires are with the real economy.

Here are some key passages from the minutes that should tell us where the Fed's collective mind is positioned:

"The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished, on net, since last fall, but the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term."

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"The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. In judging when to moderate the pace of asset purchases, the Committee will, at its coming meetings, assess whether incoming information continues to support the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective. Asset purchases are not on a preset course..."

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"Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Charles L. Evans; Jerome H. Powell; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations."

It is important to note that only one member voted against the decision to stay the course. It takes 6 members of 10 present to pass resolutions and create programs for implementation.

A few additional observations should be made about what transpired yesterday in Washington.

The Fed actually cut its growth forecast on Wednesday for this year and next, citing obliquely badly conceived budget cuts and rising interest rates.

In addition, Fed Chairman Ben Bernanke said, the Federal Open Market Committee (FOMC) was wary of possibly "very serious consequences" from the brewing political battle in Washington over a new budget and the U.S. debt ceiling. 

During one of the interminable "Cod Wars" of the 16th and 17th century along the Eastern Seaboard of the American colonies, one member of the Virginia House of Burgesses cried out: "We're not talking about fish here. We're talking about men's souls."

A word to the wise in Washington.