Gold Rallies Through $700 as U.S. Payrolls Fall
September 7th, 2007WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
We all know that this is what gold “should” be doing. That’s what scares me. I wonder what’s different about now?
Yeah, I know. Take your pick.
Can we get some Central Bank selling in here, please, so we can all buy more at lower prices?
For now, hats off to all Cryptogon gold bugs.
Via: FXStreet:
Gold rallied sharply in afternoon trade, breaking through the 700 usd level for the first time since May 2006, after US payrolls fell for the first time in four years, sparking a drop in the dollar.
The precious metals surged through 700 usd per ounce within minutes of the data being released, and later set a fresh 16-month high of 704.60 usd.
…
“People were looking for cash, but now people are looking for a safe haven for money. They are not happy with currencies, they are not happy with the banks, so gold is providing them with that opportunity,” said Simon Weeks, an analyst at Scotia Mocatta.
One wonders how it comes about that the investor class should respond so suddenly to some report that incomes are declining. Do they not KNOW that the starting pay for entry level jobs has fallen–over the past few years? Do they not know that it’s become very difficult to find a job that doesn’t involve waiting tables, running a cash register, or cleaning hotel rooms?
Epiphany: The investor class relies on these goofy reports because they don’t work for a living, and they don’t know anyone who works for a living. This is all a big surprise to them.
I suppose it is for a similar reason that the investor class believes government inflation figures: They don’t notice any inflation–or, at least, their incomes are rising exponentially faster than inflation, so it’s all good.
The inability of the investor class to understand the weird and dangerous distortions of financial markets, to perceive that WERE headed for a housing crash, and are now headed for a dollar crash and an economic crash, is related to their complete insularity from any kind of reality on the ground.
We’ve got a bunch of Marie Antoinettes running this country, both politically and financially. We have had a bunch of ecomonic pundits telling us how great the economy is for the past several years. I’m sure the French economy seemed to Marie Antoinette to be doing quite well, too, right up to the French Revolution.
Friday’s market action was significant in one important way. This was the first time this year that a significant stock decline was accompanied by gold rising past an important psychological mark. The brief stock panic at the end of February resulted in a gold sell off. The July/August stock panic saw gold fall to support. This time is different.
IMO, the weak hands that sold gold to meet margin calls are either out of the gold market now or pumped up with liquidity from new discount loans. Gold is now in stong hands, and the 16 month consolidation might be complete. Some gurus (Jim Puplava, Deepcaster) are expecting another takedown of gold prices by the monetary cartel before a fed funds cut. I don’t think so. The cartel is more concerned about saving the stock and credit markets at the moment. The cartel looks to be capitulating both the $700 mark to the gold bulls and the $index 80 level to the dollar bears. They are going to fall back and retrench in more defensible positions.
Of course, I could be wrong.