The Employment Report on Friday was bad – but it wasn’t the unmitigated disaster that the consensus seems to have spun it into. It is true that there were no bright spots. It is true that the net number of new jobs added was worse than consensus and indeed worse than some of the more pessimistic expectations. But 142k new jobs is not a recessionary collapse (yet). Let us remember that one or two months every year fall below that figure (see chart, source Bloomberg).
 By the way, you might want to check out this NFTRH 363 excerpt in which we go through some of Martin Armstrong’s views on gold and talk probably a little too much about my own. Macrocosm Revisited
I have had a target on the gold-silver ratio of low 80’s to 90. Then on Friday the GSR did this, putting that target in question (it hit 81, but I was thinking higher).
Here it is today, converted to GLD-SLV…
Silver Prices Spike, But What Demand?
For a few frenzied minutes, while everyone was sleeping, the price of silver spiked 56 cents. Well, at least the West Coast of America was sleeping. It began at 8:30 in New York, where presumably most traders were not sleeping. And of course, it was afternoon here in London (where Monetary Metals just held a seminar). The catalyst was a news release: the non-farm payroll numbers.
$0.56, or 3.8%, is a big move for a whole day. It happened in 15 minutes (and most of the move occurred during 3 distinct minutes).
In addition to the big price move, there is one other fact silver analysts are pondering. There is a real shortage of silver coins.
Let’s digress for a moment. We are not exactly known for our belief in the rumors that often swirl around precious metals. How do we know for sure that coins are scarce? We watch spreads. There is always a spread (called a premium in this market) between coins and spot silver. Here’s a graph of the Eagle premium asked by Monex.
We have been successfully managing an ‘in motion’ market since the August festivities kicked off. It is October and Money Managers (NAAIM), Newsletter Writers (Investors Intelligence) are thoroughly spooked and Small Speculators are thoroughly short the market. It’s a perfect contrarian setup.
Meanwhile, over in Goldbugsville there is a lot going on as well. NFTRH 363 is 30 pages of commentary and in depth analysis on all of this and also gets its geek on (with the aid of FloatingPath.com‘s awesome graphical breakdowns) and gets inside the September Payrolls report in order to flesh out the dynamics in a flagging economy.
NFTRH 363, a very helpful market management report if I do say so myself… out now.
Which one should you heed?
Volatility, volatility, volatility. It’s all the financial world can talk about lately… and, well, for good reason. In the past few months, the world’s stock markets have endured some of the most gut-wrenching price swings since the 2007-2009 financial crisis.
But for many investors, it’s still not clear what this volatility means for the status of the bull market in U.S. stocks.
The reason why said status remains unclear is in large part because the mainstream pundits haven’t exactly been consistent with their punditing. (Note: NOT a real word!)
Take, for example, this summer. Before U.S. stocks fell off the cliff this August, the market was about as volatile as a yoga retreat. The trend was a slow, calm, and steady ascension to a higher self. In fact, the ultimate “fear gauge” known as the CBOE Volatility Index (VIX) had dipped below 12 for the first time since 2014.
Now, according to the usual experts, this extended period of market calm was a bullish sign, as these news items from the time explain:
We have been using the Tinder Box theme in NFTRH lately. As in, stock market sentiment is so bleak, so depressed as to be a Tinder Box with the elements to ignite a flame that bounces the market, to clear the over bearishness at least.
We have successfully followed a plan every step of the way… 1. down from the August breakdown, 2. up on the bounce to SPX 1975 or 2040 (hit 2020) and now 3. down to a test of the October 2014 / August 2015 lows, which is a decision point between a bounce or an entry into a bear market (by making a lower low to October 2014).
We arrive here amid an over bearish sentiment backdrop that is all out of whack with what has actually just been a twitch by the market in the big picture (with bull parameters still intact). So whether this is the bounce, as it seems to be – and we are getting some follow through despite the volatility – or it comes from a lower level, it is going to happen.
There were the small speculators way too short the market and Investors Intelligence data showing newsletter writers having totally abandoned the trend they rode for eons (well, since 2011 anyway). They are now advising extreme bearishness to subscribers. Here’s the latest graphic on that, courtesy of Doctor Ed and the Daily Shot.
No ifs, ands or buts… Junk Bonds (high yield) have entered a bear market as they just broke down below the October 2014 lows, which is the bear parameter for the stock market as well. JNK is similar… worse actually.
Never mind 20% rules about bear markets, this is now a downtrend on an intermediate basis and cyclical bear market (barring some sort of reversal stimulant, like policy making designed to take us further down the Rabbit Hole of debt, leverage and speculation). Even if this bounces, it would have to get all the way above 89 to neutralize the trend.