It’s looking like the volatility in the gold market won’t be calming down any day soon as traders keep jumping in and out with each new financial release.
Posted by Adam King on April 01, 2011
Gold investments keep looking better over the long haul.
April 01, 2011 – It’s looking like the volatility in the gold market won’t be calming down any day soon as traders keep jumping in and out with each new financial release. But for the life of me I can’t understand all the hoopla about the non-farm payrolls report. I thought by now folks would have figured out that the underlying problem is way to big for a couple of hundred thousand jobs to make even a dent in it.
Even if you consider only those who are actively looking for work, the numbers mean that only one and a half out of every 100 job seekers will finally get a paycheck. But the real problem runs much, much deeper. When you add in all of those who are vastly underemployed and stuck forever in low paying jobs and the millions who have given up and fallen off the radar, the numbers are totally insignificant. And let’s not forget the tens of thousands that enter the labor pool each day.
Still, for the sake of argument, let’s call the job report a good thing, albeit a very tiny good thing. How’s the rest of the recovery doing these days?
Let’s see. Bernanke printed up gobs of cash, flooding the global market with excess liquidity so exports could get our economy rolling. That sent food and energy costs through the roof. Not our fault, Bernanke says. The weakened dollar threatens inflation abroad. Their problem, not mine, he says.
So nations everywhere started to implement capital controls and put up trade barriers left and right. Global trade put on the brakes, causing the sharpest decline in trade as a percentage of global GDP since the 1930s. There goes the exports responsible for what little progress we have made.
Lest we forget, the fallout (pardon the pun) from Japan’s catastrophe has yet to rain down on the rest of the world. Ireland and Portugal are fanning the flames of the eurozone’s debt crisis, and political unrest is spreading all over the Middle East and Northern Africa.
And with QE2 slated to end in just a couple of months, what’s Bernanke going to do for his second act? Word on the street is – you guessed it – QE3.
The long-term drivers of the gold market aren’t getting any better, but the long-term prospects for gold investment are.
Stewart Lawson
Senior Staff Writer – Certified Gold Exchange
Categories:
US Gold Market
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