Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

U.S. Unemployment Rate Drops, Should You Sell Gold?

Economics / Employment Feb 05, 2012 - 06:59 AM GMT

By: Eric_McWhinnie

Economics

On Friday, the U.S. jobless rate dropped unexpectedly in January to 8.3 percent, the lowest level since February 2009. According to the Labor Department, the economy added 243,000 jobs. Furthermore, today’s report includes revisions adding a total of 60,000 jobs to payrolls in November and December. The Labor Department also revised December’s gains to 203,000, from an initially reported 200,000.


The data comes one week after the Federal Reserve voiced concerns over the economy, but with the unemployment rate falling, doubt has been raised on how much additional easing the Fed will provide. As a result, gold and silver both declined more than 1 percent in morning trading. However, a closer look at the unemployment data reveals plenty to be concerned about. The labor force participation rate, which is the percentage of working-age persons in an economy who are employed or unemployed, dropped to 63.7 percent, its lowest level in 30 years. A record breaking 1.2 million people dropped out of the available labor pool used in the unemployment calculation. According to Zero Hedge, using the average long-term labor force participation rate of 65.8 percent, the real unemployment rate actually increased in January to 11.5 percent. In fact, the spread between the reported and implied unemployment rate just hit a fresh 30 year high of 3.2 percent.

Another concerning data point in the unemployment report is that the number of part-time workers is quickly rising, as many people are having to settle for employment opportunities. In January, the number of part-time workers surged by almost 700,000, representing the biggest jump on record. Meanwhile, full-time workers only increased by 80,000. If the unemployment picture was truly showing a great improvement and no need for further Fed action, gold and silver prices would most likely see a greater decline than what is taking place today. The decrease in the headline unemployment rate is welcomed, but it does not signal a stable economy. With sluggish economic growth and money-printer happy policy-makers, investors will continue to see a continuation of stimulus programs and deficits.

Kyle Bass, the Hayman Capital fund manger who correctly predicted the credit bubble, recently urged the second-largest U.S. college fund to keep its $1 billion investment in gold bullion. According to Bloomberg, Bass told the mangers of Texas’s state university endowment, “I’m against selling any of the gold.” He cited the need to hedge against government deficits in the United States and Europe. “As every day goes by, I see deflation in the things you own and inflation in the things you need.”

Earlier this week, the Congressional Budget Office said the U.S. is on pace for its fourth straight year of a $1 trillion-plus budget deficit. In its baseline scenario, the CBO projects that the 2012 federal budget deficit will be about $1.1 trillion, with unemployment remaining above 8 percent both this year and next. In January, the number of planned layoffs at U.S. companies also climbed to 53,486, its highest level in four months, and up 28 percent from 41,785 in December.

For more analysis on our support levels and ranges for gold and silver, consider a free 14-day trial to our acclaimed Gold & Silver Investment Newsletter.

By Eric_McWhinnie

http://wallstcheatsheet.com

Wall St. Cheat Sheet : Only days after the S&P 500 crashed to the depths of hell at 666, the Hoffman brothers launched Wall St. Cheat Sheet: one of the fastest growing financial media sites on the web. Like a samurai, our mission is to cut through the bull and bear shit with extraordinary insights, a fresh voice, and razor-sharp wit. We provide the highest quality education and information for active investors, financial professionals, and entrepreneurs.

© 2012 Copyright Eric McWhinnie - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in