Re-Thinking Yellen

The opening day jitters that accompanied Fed Chairwoman Janet Yellen's news conference remarks yesterday seem to have settled out a bit today.

All three major U.S. equities markets were up, Treasuries were stable, and oil is down as the immediate threat of disruption in Ukraine subsides.

If it weren't for a muscle-flexing dollar, gold would be up a trace. As it is, it's down 2.60 with the stronger dollar accounting for all of that decline.

ARight now, as we seem to be in the midst of a breather from powerful news stories that might drive gold prices, we should consider some structural fundamentals concerning gold.

U.S. government debt, money market accounts, upper tier equities, and plain vanilla savings acount all promise a return for your investment dollars.

Are any particularly strong? Of course, equities are. Dividend rates seem to appear in a patchwork pattern. Some companies offer very fine dividends. Others - whether they are under or over-performing - won't give you 1%. But, although the market is growing trickier, there is still good growth down the road.

Treasuries seem to offer a good, steady income, as bonds or government-backed securities often do. Let's say that we're at about a 2.7% yield on the 10-year right now. That's not a bad deal for someone who wants to protect assets and grow them a bit but is not willing to take a lot of risk. Older people who want a nest egg they can count on fall into that category.

The dollar is always an interesting play. The only problem with currencies is even the best are volatile. Trading currencies is best left to professionals.

Gold, meanwhile, in 2014, has gone from roughly 1200 to about 1330, although it was trading at its highest around 1390. Once again we have to say that we like tapering for bullish movements in gold.

Another sign that the economy at large is improving? The Fed finished its "stress test" on major banks. The results are glowing except for Zion Bank of Utah.

The 30 banks have a total of $13.5 trillion in assets, nearly 80% of the U.S. industry. (We don't necessarily like that disproportion.)

Under the Fed's "severely adverse economic scenario," the top 30 banks would lose about $501 billion over a theoretical 27 months.

The scenario was designed to replicate a smashup similar to the 2008 financial crisis and recession that followed. The "test" involves a sharp rise in the unemployment rate to 11.25%, a 25% decline in home prices and a nearly 50% drop in the stock market (again all theoretical).

Volatility within stability is a good friend of gold bulls. However, the Fed's harping on a 2% inflation rate is not. Is gold actually undervalued? Let's see in our next few fundamentals analyses. As always, wishing you good trading,