Old Magic And New

Some things can be anticipated fundamentally.

When ADP, a private employment data organization, reported that the U.S. created 281,000 new jobs, we could be certain that the official Department of Labor figures would be in the same neighborhood.

Indeed, the DOL's number was 7,000 higher, giving the American economy its biggest boost in job creation in almost two years. More important to precious metals traders, the growth, combined with people dropping from the job market, pushed the unemployment rate down to 6.1%, nearer one of those magical numbers economists and analysts tremble at - the 6% threshold.

Meh. That magic is old magic. Fed Chairwoman Yellen is looking for something more fundamentally powerful during her tenure. She's looking at a figure that goes under 5%, although not directly stated.

More on that in a moment. But, certainly the jobs report helped push gold and silver down.

A bit of profit taking also helped, understandably since we are headed into the Fourth of July weekend. Some people don't like to be holding a lighted cherry bomb for three-plus days. A safe holiday is a happy holiday.

Back to Janet Yellen. In a rather withering retort to a statement issued by the Bank For International Settlements - the central bank for national central banks - Yellen took the economists (and by extension the directors) to task for not comprehending what monetary policy is really for.

Yellen essentially argued forcefully for low interest rates and against higher ones with this viewpoint:

"Monetary policy faces significant limitations as a tool to promote financial stability. Its effects on financial vulnerabilities... are not well understood and are less direct than a regulatory or supervisory approach; in addition, efforts to promote financial stability through adjustments in interest rates would increase the volatility of inflation and employment."

She told the BIS to go supervise fraud, money laundering and other international banking chicanery and leave the heavy lifting to the field generals.

Moreover, she wants a steady, controlled growth in both inflation and employment.

Yellen is a populist who understands that full employment, (everyone who possibly can getting a paycheck and fewer people on government assistance), is what really drives a modern economy.

If a little inflation comes our way because of it, Yellen thinks it's fine. Just as long as it doesn't leap about like a cat on a hot tin roof.

Enjoy your independence, everyone.

As always, wishing you good trading,