A Quickening World Economy

The keys to the current bearish pressure seen in the precious metals markets as well as the commodity complex are twofold. First we have a major rally globally in the equities markets, which has caused many traders and investors to reallocate funds that were formally in the precious metals and commodity complex, moving them into the equities markets. This is due to the second reason gold is under pressure: a real improvement in the world's economy.

The U.S., in particular, and China, as well as other parts of Asia, Brazil and certain regions of Europe, are seeing significant quickening of their economies.

Some of this is, of course, cyclical, but some of it is due to innovation, new products, pent-up demand and actions by central banks, the U.S. Federal Reserve assuming a leadership role in that instance.

We are also faced with end-of-year squaring of books, primarily for tax purposes. Right now, for instance, if you are an investor and have taken a loss on a financial product but on the other side of the ledger have made a profit (loss in gold vs. gain in the equities side of your portfolio, to wit) today and tomorrow are the last days to lock in the offset for tax reporting purposes.

There is a lot of speculation that in the first month or so of 2014 that gold and silver will find their floors and trading will return to "normal," however one might might define normal. 

This may well be. We do, though, have another Fed meeting come late January and eyes will be upon it, to see not so much if there is more tapering, but how much. Investors and traders will want to see if the amount will signal merely more confidence in the strengthening U.S. economy, or if the tranche will be so large that it could possibly inhibit that same growth.

We will hear and read more speculation on that in the coming weeks, once the dust - or swirling snows of a harsh winter - settle.
 
As always, wishing you good trading