Neither Rain Nor Sleet Nor...

News of a vigorous rebound in second quarter growth in the U.S. mildly deterred gold prices today, while silver prices slightly regained upward momentum. Usually, 4% growth in a quarter would indicate that an economy is not just on the launch pad, but headed well into orbit.

But the expansive growth of the second quarter has to be balanced against the contraction of the first quarter (-2.9%), leaving the U.S. with an overall growth rate of 1.1% for the first six months of 2014. That means that the third and fourth quarters will be minutely scrutinized as to both the quantity and quality of growth.

But, there are danger signs in the world's largest economy. The statement issued by the Fed after today's FOMC meeting indicates as much. The statement pointed to underutilization of the workforce; depressed or stagnant wages; and the on-again-off-again nature of the housing recovery.

In the bits and pieces of interviews with the executives of large corporations, Aetna and Marriott, two different world-views emerge. First, Aetna says that the first quarter was even worse for healthcare than expected - some of the damage done by the harsh winter we've heard so much about. Aetna expects that the second half will be very beneficial to the sector because of the deeper implementation of the ACA, or Obamacare. Marriott says that its bookings are terrific, that its cup is running over.

The views among the theorists is mixed as well, as the New York Times reported:

"The latest numbers prompted a debate among economists looking to the future, some of whom consider the gains as merely corrections for an unusually bleak quarter. They noted that while inventories improved significantly in the spring and contributed to the rise in G.D.P., those gains can be extremely volatile. Other economists are more optimistic and see the second-quarter growth as a sign the economy is finally set to shake off the post-recession sluggishness and expand at a healthy clip for the rest of the year. Among those with a sunnier outlook are economists at Barclays, who are forecasting 2.5% growth rate for second half of 2014. "

Interesting to note is that last time the FOMC met, its approach was unanimous. This time, Charles Plosser of the Philadelphia Fed, who holds one of the rotating seats on the committee, dissented. Nevertheless, the vote to stay the course on interest rates well into the future was very, very strong.

At 4 PM in New York, gold is well off its lows of the day, about midway between those and today's high. Silver is working hard to maintain a gain of about 0.20%.

Although the battle in Gaza rages and the situation in Ukraine is far from resolved, the economic news in the U.S. overshadowed all else. However, the international problems have to be seen as underpinning the price of gold. It is noteworthy, though, that oil, which saw its year-to-date high of $106.64 on June 25th, is poised to close at 99.43.

Possibly more emblematic of market appraisal of the geopolitical situation is the fact that natural gas - Russia's primary diplomatic cudgel - will close around $3.80, more than $1.00 lower than its high so far for the year, which came in early June.

As much as Europe is in a tight spot, Russia is in an even tighter one. Without Europe as its enormously thirsty customer, Russia has nowhere to sell natural gas, and even if it did, it does not have the infrastructure to transport it. Russia literally cannot survive without the sale of gas.

As always, wishing you good trading,