While analysts vacillate back and forth over data, market direction and the economic outlook, Gold seems to be whispering, Hey nothing has changed. There is no evidence of an emerging bear market in precious metals.
Today, non-farm payrolls came out and it appears as though we have added 103,000 jobs. The panel of talking heads I watched this morning, tried like heck to make it sound like this was a good number. Was it really an improvement?
According to some Bloomberg data gathered, this number should have investors in the markets running for the exits toward the theater now playing, The Revenge of Gold. The Bloomberg data I refer to was released in a report dated August 1, 2011, in anticipation of a July payrolls report. July payrolls came in at 117,000. This number brought the average of newly created jobs to 53,000 per month for May, June and July, down significantly from the average of the three months prior of 215,000 jobs.
At that time, this was interpreted as a bad number. Bloomberg reported then it would take an average of 125,000 new jobs created every month to keep the total unemployment rate steady. To shrink the unemployment rate by one full percentage point would require payrolls to rise an average of 200,000 per month for an entire year. So, as the data today (103,000) may have been better than expected, it is still not even enough to maintain the current unemployment rate of 9.1%.
The immediate response in the markets saw stock indexes rise along with gold and silver. As I write, reality seems to be setting in as a sell-off is underway. Yes, Gold is also off on the day as investors are forced once again into a profit-taking mode. The last 2 days saw gold prices rise $56 an ounce by early trading this morning. That's a 3.5% gain in virtually hours, a percentage gain that can easily set off a flurry of profit-taking trades by those now scrambling to show annual profits.
Regardless of gold's recent pull back it is still up 25% from its January lows while stocks are down. The S&P is down 10.5%, the Dow 6.7% and the NASDAQ is down 8.5%. Time is running out for fund managers to show an annual profit if they intend to rely on stocks to report gains.
All this begs the question, where to from here? Where will you place your next savings and retirement bet? With jobs on the decline, housing mired in residue mortgage scandal for the next 10 years and the markets indicating over and over again that they cannot rise without printed money, what can we reasonably anticipate for the future of our economy and the markets?
The Fed has already indicated its willingness to print more money if economic data remains weak. There's that little voice again, nothing has changed. As we head toward election year, we can reasonably anticipate some measures to be taken to stimulate the economy. Printing money is at the top of the list. Whether it be called quantitative easing or measured dollar default my bet is that Europe's economic troubles will translate into more printed European currencies. This will indicate dollar strength in the short term and open wide the door for the Fed to print its guts out. How dare anyone try to foil the Fed's plan to inflate our debt away. While this may be bullish for stocks in the short term, it is explosively bullish for precious metals.
But, don't take my word for it, there are some pretty high-powered analysts that also see much higher gold prices ahead. In another Bloomberg report just this morning, we read, “Gold and silver are our top commodity picks heading into 2012.” Targeting gold as high as $2464 and silver at $50 an ounce in 2012, analysts credit the European Debt Crisis as being a major catalyst driving both gold and silver prices higher.
There's that little voice again, nothing has changed. Still, investors remain paralyzed. Even as we watch stocks disintegrate, and real estate implode even further, it is hard to put faith in anything. Do I believe Morgan Stanley, who sees another 35% rise in gold over the next 12 months? Do I trust the data that no matter how you look at it screams, own some gold. Or, do I yield to the emotions invoked by the parade of media experts that cling to the stock promise and never broach the subject of total financial collapse.
I would submit, not knowing is dangerous. It can only lead to another 2008-like surprise. I say dig dig dig until you have enough information and enough data to feel like you can make an informed decision instead of an emotional one. Now is not the time to stick your head in the sand. Open wide your eyes and dig up the data on gold demand, see that it is rising. Find evidence yourself that indicates whether the Fed is about to print more money. Then answer for yourself the question, Is inflation more or less of a risk than we are led to believe?
At LearCapital.com you can find hundreds of articles and special reports that can put you in touch with data provided by dozens of experts. A brand new FREE video is also now available at the EndOfTheDollar.com that shows why our dollar may be breathing its dying breath as inflation destroys the purchasing power of our paycheck and our savings and retirement accounts.
Listen to the little voice, Nothing has changed.