No New Jobs = Precious Metals Spike
The jobs report today showed no net jobs created by the U.S. economy in August. The projected number of new jobs was about 70,000. The unemployment rate remained the same as it was in July at 9.1%. Moreover, the figures from the previous two months were revised down, thus showing weaker jobs growth than originally figured. Ahead of the number, global stock markets had been weak, only to fall further after publication of the new figures. For instance, the Dow Jones Industrial Average in New York opened down 2%.
This marks the first time since 1945 that there has been a zero payrolls figure. Now, the United States and the world await a speech by President Obama next Thursday, in which he will outline a new plan for boosting growth and creating jobs. Many see this as the kickoff to the 2012 Presidential Election. In essence, the speech will signal continued spending on the part of the Federal Government, furthering the official policy of dollar devaluation.
With further downward pressure on the Dollar, not only gold and silver, but also platinum started off a strong Friday, with gold up more than $50 and silver up about $1.50. Platinum was up for the day $27.50 by the end of trading.
This represents the largest jump in nearly a month for gold, and continues its trend of more than doubling since the end of 2008, during the market crash and so-called banking crisis.
“Today is one of a series of data points that, when taken in aggregate, continue to show a weakening U.S. economy and a lack of confidence in our government’s ability to do something about it,” Steve Shafer, who helps manage $300 million as chief investment officer of Covenant Investors, told Bloomberg. “Combined with the problems out of Europe, there’s a depreciating confidence in fiat currencies. All of those funnel into a heightened demand for gold.”
Recently, Bernanke announced that the Federal Reserve will do what it can to keep the costs of borrowing at almost zero percent at least through mid-2013 to support the economy. And so, whilst multinational financial institutions are lent money at near-zero costs, they still cause deflationary scenarios, at least in the near-term, by not lending to consumers. Yesterday, Switzerland decreased interest rates, while the Bank of England and the European Central Bank left their rates unchanged.
That interest rates will not be increased is a bullish sign for gold. This year, the yellow metal has already increased 32 percent, looking towards its 11th straight annual winning streak. In short, gold has had its 50% correction after the last run-up, and now it looks prepared to, once more, target $2,000 in September.
Also, silver is up for the day 171 cents, which represents about a 5% gain. After consolidating in between the $32.50 range and $36 range, having tested that number upwards of ten times, it looks as those silver is ready to target $50. Usually, when a stock tests a price range more than 5 times, and tests it’s about seven times, that signifies a price jump of about 100-150%.
