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Friday’s jobs report brought a mixed bag of news, with most of it being disappointing. While the official unemployment rate went down, many underlying figures left much to be desired: the rate of job growth has slowed, the labor force has shrunk in size and more new jobs are going to low-paying industries. It was enough to convince the markets that the Fed would continue to flood the economy with its $85 billion in bond purchases each month, perhaps even beyond the latest timeline that calls for tapering to potentially begin in September.

Can you guess at what point in this chart the gold market responded to the release of the jobs report?

august 2 new york spot gold

Yes, Friday was a solid day for gold, as many others have been in recent weeks.

But going back to April, gold has certainly had its fair share of bad days. In this connected, 24-hour news world in which we live, the wind can shift at a moment’s notice: One day the Fed says it’s going to taper its program of Quantitative Easing, the next day it says it isn’t. One day the jobs report brings glowing numbers, the next day those numbers are quietly revised, and then at the next report the numbers are dismal. And with each of these flinches – whether they’re from Bernanke & Co at the Fed, from the Labor Department, from Wall Street, from Capitol Hill – the markets flinch in reaction.

For those who trade bullion on a daily basis, they obsess over this daily madness; it’s their lifeline. They obsess over the market’s flinches – in fact, they prey on them – because that’s where they make their returns.

Our clients, on the other hand, don’t obsess over the market’s flinches. They don’t sweat the latest announcement from the Fed. (They may not even know that there is a latest announcement from the Fed!)

Our clients don’t obsess over gold and silver’s every rise and fall. They don’t panic if precious metals go through the occasional correction.

Our clients don’t obsess over today, or next month, or next year; they’re in it for the long haul. They know that with the Fed continuing to print, with the stock market bursting at the seams with artifical liquidity, gold and silver are one of the best ways to protect their savings portfolios and ensure that they can continue to maintain their lifestyles well into the future.

Are you like our clients? If you too are in it for the long haul, if you too want to secure your savings for the future, now is a great time to get started with precious metals. Give us a call today and we’ll be happy to discuss the best way to protect your savings: 800-355-2116

Precious metals on the move

London Fix PM price at week’s end, and change over previous Friday:

  • Gold: $1,309.25, down 1.6%
  • Silver: $19.46, down 2.8%
  • Platinum: $1,436.00, up 0.6%
  • Palladium: $730.00, down 0.1%

In the news

The next leg of gold bull market to be “pretty wild”
“The world believes in Goldilocks, and when the world believes in Goldilocks they don’t feel they need gold. But the dynamics of the gold market are kind of extraordinary in that we’ve had this near-term backwardation for 17 straight business days, so there is real tightness in the short end of the market. There still continues to be plenty of shorts (in gold). I think a lot of guys got out of the market, so I think the next leg of the bull market could be pretty wild once it actually starts to respond to news in a positive way.” – Bill Fleckenstein (link)

Why own more physical gold?
“I think there are many other things that can enter the narrative as to why people would want to own more physical gold: One of them could just be inflation. Another could be rising interest rates which is certainly in the cards. This would become problematic not only for the economy, but also for the financial markets as well. The bottom line is that all of this will provide substantial underpinning for higher gold prices over time.” – John Hathaway (link)

Physical demand will dictate gold’s rise
“At the long term the gold price will rise. What you’re seeing is a dissonance between the actual demand, real demand, and the derivative market. And derivatives have been causing quite a lot of volatility in the market, but from a demand – actual physical demand point of view – it’s rising. When you have this kind of situation, at the end of the day, it’s physical demand that will determine the price. So we believe that from a longer-term point of view, gold prices will trend upwards.” – Mark Mobius, Templeton Emerging Markets Group (link)

Gold a strong performer even with rising U.S. interest rates
“Gold is not only a store of wealth but it is also bought around the world in periods of higher income growth as we have seen in emerging markets.” – Juan Carlos Artigas, World Gold Council’s head of investment research (link)

Spotlight on Silver

Is Silver the “Precious Metal King”?
“At some point in time, the availability of physical gold bullion will dry up, forcing large and small investors to purchase the next best precious metal… silver. Because the price of silver is currently 65 times less than gold, any sizable amount of currency to flow into this metal will push its value significantly higher in percentage terms compared to gold.” – Fabrice Drouin Ristori (link)

The week ahead

  • American embassies around the world remain on edge following closures
  • Several Fed presidents (Dallas, Chicago, Cleveland) to speak to press this week; may any provide new hints of bank’s direction?
  • Weekly jobless claims to be reported Thursday
  • Bank of Japan policy makers to meet