What's A Wen?

Some years ago, a friend of ours had a soft bumpy growth thingy on his shoulder and was worried to death. He finally got to a doctor. The worst was going through his mind. In about three seconds, the doctor said, "Don't worry. That's a wen." It's a harmless under-the-skin secretion that goes away usually.   

Although sad and absurdly unnecessary, in the larger picture, the shooting down of the Malaysian airliner over eastern Ukraine is a wen for investors. There was a momentary ripple of fear and sense of dire consequences but the next day... business in the financial centers of the world was back to normal. (Unless you're holding a lot of Russian stocks or securities, in which case, watch out for.)

At the same time, Israel is pushing further into Gaza, the Gazans are tunneling into Israel, and that mess is getting messier by the hour.

But it, too, has been digested and rejected as having large-scale implications.

So there was profit-taking today. Gold was hit modestly but silver took a shellacking, down well over 1.25% in late trading in New York. Both metals have come off their lows for the day, which had distinctly made support look shaky.

We can only speculate on this, but it seems as if this being Friday, with its attendant desire among traders to cash out before another summer weekend, was an extenuating factor.

Another bell weather, crude oil, slipped today. That tells us that world markets are not looking at long-term disruptions to oil flow from the Middle East because of the Israeli-Palestinian conflict.

In economic news, consumer confidence in the United States fell unexpectedly in July and leading economic indicators rose less than expected.

Renewed interest in equities sapped money from gold and silver. Much of the action can be attributed to a sell off earlier in the week into which stepped bargain hunters.

While it's not accurate to call next week a "light data" period, it does not have material that could lead to wild swings, unless one indicator moves aggressively. The consumer price index data is the possible sore spot for precious metals traders. Existing home sales figures are due out Tuesday, new home sales will come out on Thursday, and durable goods orders are to be issued on Friday.

We all still should be thinking about the Fed and its outlook on interest rates. It's the fundamental behind all other fundamentals.

If we were to venture a guess, without any fresh news or a strange tick in the CPI, we would say that next week is shaping up to go sideways in gold and silver alike, although silver will probably rally a bit on bargain hunting after today's whack-a-mole action.

As always, wishing you good trading,