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The narrative seems to have changed a bit today, either a temporary slight nod and a wink, or something more profound.

Even though job numbers were up more than expected as compiled by ADP, the private survey group that examines labor conditions, gold held its own quite nicely.

It had an able assist from a weakening dollar. But why, if there is such good news floating around would the dollar weaken? The employment figures are not all that dandy, in fact. The "true" service sector of the U.S. economy is actually weakening. That means banking, law, computer services, advertising, accounting. Those are places where the real money jobs are.

The service slowdown is probably "the tail of the adjustment to fiscal drag," Ken Mayland, president of ClearView Economics said before the report. "At some point you reach a new equilibrium, and that becomes a springboard for expansion." 

His assessment seems overly optimistic to us.

Housing prices are also up solidly. 12%. Again, though, one has to look at where that increase is coming from. There is explosive price growth in high-end housing. A $10 million home that jumps up in price by 10% raises the (conceptual) price of all homes. That's the same as fifty $200K homes going up $20K apiece. 

We might also begin to worry about the rise in mortgage rates as being yet another drag on the economy. Once all the low-rate mortgage buyers and new-home builders are scoured out of the pipeline, who, if anyone, will be left to come to buy in the market? There is an enormous difference over 25 years when one buys a home at 4.6% interest versus 3.1%. And young people may very likely say, "Hi again, mom and dad."

Friday will give us the Department of Labor's employment stats, which will probably be hovering around the ADP figures. However, one has to look at the impact the growth in new jobs makes in the unemployment rate. We can't sit at 7.6% forever without some serious misgivings about our leaders in Washington.

Another factor influencing the rise in gold today is the unrest in Egypt. We do not want to see this turmoil spread. Egypt is tense, Syria has already exploded, Lebanon is defunct as a society. Guess who is in the middle of this ring of fire?

Barry Ritholtz of Fusion IQ wrote that gold "has fallen so hard that a counter-rally is overdue." In Time magazine he went on to describe the mechanics of such counter-rallies:

"How do the typical countertrend rallies work? Well, the forced selling by margin clerks and futures traders becomes exhausted. A distraction may capture the investing community's collective attention, allowing some stabilization to occur. As prices stop falling, the fear falling asset holders have been living with dissipates. A little bit of good news, a small reversal in price, and the prior [now discredited] narrative reasserts itself."

Trading was slow Wednesday because of the Fourth of July holiday in the U.S., and promises to be slow again Friday. A long weekend. 

It's hot all over America, but maybe, just maybe the cooling off of gold is taking a break for the summer. 

A final thought on liberty, from Abraham Lincoln: