Post-Holiday Uncertainty

Gold and silver began digesting the meaning of the 288,000 jobs added in the U.S. in June. As they say in Italy, the number is giving them agita. That means acid reflux in both a literal and figurative sense. So, among other things, we've seen a nearly $10 swing between highs, lows, and back again (only down 60 cents in afternoon trading in New York).

The traders and investors who actually came back to work in New York keep ignoring Janet Yellen's speechifying over where interest rates are headed (hint - nowhere), and instead busy themselves with nonsensical interpretations of what has gone before.

One of the best pieces of advice, whether within the context of trading or any other human endeavor is this: confront the world as it is, not as you wish it to be.

Yellen and her chief allies on the FOMC seem to actually be stiffening their stand on keeping rates low. This is partially because as QE3 ends its final tapering phase, no one wants to preside over a catastrophic slowdown in the American economy, which would spell doom for the rest of the world.

And, as we have been banging the drum on, Yellen - who is ultra liberal - wants an unemployment rate well under the the touted 6% target. Regardless of unemployment, the U.S. is way off its inflation targets.

A softening dollar has kept gold from sliding too much.

All major stock indices are off today except Shanghai. Oil is down, the 10-year yield is down while price is up.

The real bell-weather for what's coming for rates is not just the unemployment rate but the rise rise in wages that is so far absent but can be anticipated as the economy perks up.

There are many cross currents right now fundamentally, but pay close attention to Yellen's views on what in other quarters would be called the "political economy." elections in November, remember.

As always, wishing you good trading,