The Uncommitted

While certainly selling was limited by world tensions, nonetheless the precious metals are troubled by a number of other issues that are not of a short-term nature.

The first is that physical demand in China is drastically down - 19% below last year's buying levels. There are two ways to read this.

The middle class in China, which has seen a lot of growth in the last 15 years, has saddled itself in the good ol' American way with lots and lots of personal debt. That curtails appetite for traditional investments like gold. The other way to read it is that we simply are seeing the effects of a much more drastic slowdown overall in the Chinese economy than official data projects.

We are also staring in the face expiration of options, which begins on Monday. Because gold is unsure of itself, those options have become dicey and the price is being driven down. After the options expiry period is past, we should see a little more gas in gold's tank.

The option price point seems to be right around $1300. And, absent any big new news from Ukraine or Gaza, the price will tend to get "pinned" to that level. Granted, we are talking about options, but naturally those affect the price of spot.

Looking farther out in time, this study and its conclusions by the IMF are a bit jarring for the U.S. economy. However, it may bode well for gold and silver since it will keep low interest rates and possibly another round or another type of stimulus alive.

The IMF is essentially saying that there is too much income inequality, that the lack of affordable child care is keeping women out of the work force in greater numbers and that the U.S. needs urgently to address infrastructure issues.

As always, wishing you good trading,