With all this talk of Hindenburg Omens, market crashes and QE taper, you just knew that ‘jobs’ would come in okay. US Generates 175,000 Jobs in May.
Source: Labor Department via MarketWatch.com
Gold immediately gets hammered on the ‘news’, which really should not be news. ‘Jobs’ is on a little trend and came in just about right.
The problem for gold is and has been the massive world wide obsession with US QE policy. Greenspan is in the media talking about how the Fed should begin tapering now.
I happen to agree. Taper the damned thing already; job well done Ben! Now you can let the banks ‘carry’ the load the rest of the way. It’s a real and sustainable economy and stock bull market after all, isn’t it? Sarcasm aside and strong potential for a summer correction aside, the makings of a bullish (and inflationary) phase are in place. The banks (‘carry’ beneficiaries) may even be an investment target sooner rather than later.
Gold is going to have to go it on its own, less the QE hype, which has obviously not helped the monetary metal/value retainer thus far. Gold is just a currency alternative in a world full of screwed up currencies.
Yet the USD is relatively strong (and still unbroken despite yesterday’s hard drop to support). As for the gold stock sector, I am constructive there but the pumpers of this sector’s tires have got to understand that QE and the obsession with inflation are hurtful, not helpful in the big picture. Economic contraction is the counter cyclical gold sector’s key. Right now, policy makers are not letting the contraction take hold. A void between ‘QE taper’ and when the would-be ‘carry’ scenario comes about might be the time for the gold sector’s fundamentals to actually get a boost.
Today’s okay ‘jobs’ report puts a short-term cap on things in the precious metals but it is due to be a long, hot summer. One ‘jobs’ report does not change anything really. The economy is tepid at best despite the systematic bond purchases. The stock market is due for relief and the precious metals, which have become nicely inverse, are getting hit.
The Fed needs to taper and many inflation boosters seem to think they will not dare do so. I have doubts about that. I think they will if the ‘carry trade’ scenario is at all near being on base. Interesting stuff.
 A long time reader notes that I was heavily on the ‘QE and gold relationship and that what I wrote above is not consistent with that. i.e., I am trying to look smart or have it both ways. But the reality is that the money supply broke up and out and yet gold got clobbered. The dynamic changed and so did the analysis, which was proved wrong. The analysis is not bigger than the market. The market is bigger than the analysis and indeed directs it. If readers want a booster of one ideology or another, said readers should look elsewhere.