Charles "Still Waters" Evans

A new week has begun - fortunately or unfortunately - for the U.S. government. Gold was treading water today, while silver picked up a tidy rise of 1.3%. 

Gold is waiting for a few reports, chief of which is the delayed September labor report and its various subsets. They were held up by the shutdown. The notion is that a better labor market will push the Fed to taper, while a weaker type of report would leave QE3 bond buying intact. 

The Fed is not a terribly reactive agency. Regardless of what little strength might be shown in the labor report, if any, the Fed knows exactly what happened during the shutdown. As much as a full percent in GDP growth was shaved off the economy. And it is that 2-1/2 week period will determine the actions of the FOMC, meaning that QE will stay in place.

Nevertheless some of the unbelievers are betting strictly on the jobs picture, which, even if it hits the consensus mark of 180,000 jobs created in September, won't budge the unemployment meter. 

"For now all eyes will turn to U.S. non-farm payrolls data tomorrow with markets anticipating a print near the 180K level," said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York. "If the numbers are close to expectations the greenback could see a relief rebound as the week proceeds." 

If that weren't enough for gold to digest, consider this. The National Association of Realtors said today that total existing home sales declined 1.9% to a seasonally adjusted annual rate of 5.29 million units in September from a downwardly revised 5.39 million in August, mainly due to home prices outpacing income growth. 

Crude oil quietly slipped below $100 per barrel in today's trading, mostly on a bit of dollar weakness, but also on what could be an approaching energy glut. We know it sounds odd to say with gasoline running still at over $3 per gallon, but many petroleum products are being replaced by natural gas, in particular, and other alternatives. 

American stock markets were mixed across the three major indices, also reflecting the subdued atmosphere concerning the economic outlook and concern over what the FOMC might do. The Dow was down, the S&P unchanged, NASDAQ up.  

Silver is another story, since it, too, is a store of value, the junior partner in the precious metals we examine here. Demand is up in India because of their tight import laws on gold, although there are some restrictions and taxes on silver. The U.S. mint has been selling double eagle silver coins at the second-highest rate in history. That should continue. Third, as industry picks up in Asia and North America, there is increased demand on the physical market.

Back to the Fed for a moment. Federal Reserve Bank of Chicago President Charles Evans, an advocate of monetary stimulus, said fiscal strife in Washington will probably delay the central bank's tapering of its monthly bond purchases.

"October's a tough one," Evans said in a CNBC interview today. "We need a couple of good labor reports, and evidence of increasing growth, GDP growth, and it's probably going to take a few months to sort that one out."

Evans also had some food for thought for the ideologues who can't imagine how the current monetary policy can sustain itself. 

"If we saw a different kind of outlook, or if inflation started turning down, we'd have to ask ourselves whether we could add more," Evans said, adding that he favors providing as much monetary accommodation as is needed. He said he doesn't see a clear limit to how far the Fed's balance sheet can be expanded. 

Wishing you as always good trading,