Just as a swimmer finds himself gasping for air just moments before rescue, so did today's markets. How desperate must the markets be for good news (air), when not-as-bad-as-expected news is looked at as good news.
Today, according to a Bloomberg article, Overall employment, including government agencies, fell 54,000 for a second month, compared with a median forecast for a decline of 105,000 in the Bloomberg survey. The decrease reflected a 114,000 drop in temporary workers hired by the government to conduct the 2010 census.
In response, markets headed higher, precious metals drifted lower and cheers rose from the heart of Wall Street. It didn't take long, however, for investors to realize they better not give up their life vest as gold came off a $10 dip to regain a level near $1250 an ounce. Silver totally didn't miss a stroke as the spot price now flirts with $20 an ounce.
Since the end of July, silver has risen from $17.60 an ounce to as high as $19.90 today. That's 13% in just over a month. Nonetheless, a performance uncelebrated, as the good bad news has marketeers simply happy to be alive.
Along with this good bad news today, came news that the unemployment rate rose to 9.6% from 9.5% in July. This too was looked upon as good bad news as it was attributed not to job losses, per se, but to a wave of once discouraged workers who are no longer discouraged. Not employed yet, mind you, just not discouraged anymore. My question is, what would the unemployment rate be if all the jobless were no longer discouraged? Is there also a measure of the happy level of those under-employed? As the happy level rises should stocks rise along with it?
Let's face it, the markets and the economy are swimming through a sea of debt. Now, even more stimulus and more debt are being considered. If the markets deserve anything, it is special attention from the market lifeguards. And, if gold and silver deserve anything, it is a sharp eye on the gold price and the silver price too.
Gold demand is not shrinking. Silver prices are on the verge of a major breakthrough of the $20 an ounce level and the trend higher for precious metals has not been broken, despite news you may hear to the contrary.
It is hard not to imagine more stimulus and higher inflation. Think of inflation and gold as buddy swimmers, one generally just not leave the other. And, as is usually the case, silver follows in the wake of gold. However, don't be surprised if silver sprints to the lead as more investors scramble for an affordable hedge against inflation, more uncertainty and a weaker dollar ahead.
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