Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 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