Gold Higher On Blowout Jobs Numbers
A commentary on recent events by National Gold Group’s Chris Poindexter – December 7, 2012
A blowout jobs report showing unemployment dropping to 7.7 percent boosted investor optimism and put a positive spin on market action to close out the trading week.
Gold was up $4.38 to $1,704.52 in early trading Friday and silver was up $0.25 to $33.23, lowering the silver/gold ratio to 51.2. Platinum and palladium joined crude oil and copper in trading higher as a stronger jobs market bodes well for global manufacturing.
The dollar was higher against the euro, keeping a damper on gold prices in overseas markets as commodities continued to muddle around in a narrow trading range but moved higher in the wake of the U.S. jobs report.
I expect most of the optimism will be evident in the equities markets as trading turned positive in the wake of the jobs numbers. This sudden downward tick in the unemployment rate is not totally unexpected as retailers add staff in advance of the holidays. The real test of the strength of the recovery will be how many people they keep on after the holidays.
Excessive celebration may be premature as there is still an excess in global manufacturing capacity and it will take several quarters of positive growth to work through the backlog of commodities. The jobs numbers in January and February will almost certainly provide a reality check as retailers trim staff after the holidays.
For gold and silver the price recovery is a positive sign but keep in mind there really wasn’t a good reason for the selling in the first place. Certainly there is some motivation now for a move toward risk-on investments, but that motivation was not in evidence earlier in the month when the big contracts were pushing prices lower.
Regardless, when the market puts gold and silver on sale, take advantage of the opportunity. With gold still dancing around $1,700 and silver at $33 an ounce, you could do worse for pricing on a small buy.
I’ll be more optimistic about the recovery when I see wages start to rise and I still don’t trust Wall Street or the stock market. I’m not going to adjust the percentage of my wealth that I keep in metals until equity investments are a better deal for retail investors.
The above commentary is for informational purposes only and is not a solicitation by National Gold Group or Chris Poindexter. It is the commentator’s opinion only and not intended for investment recommendations, and does not necessarily reflect the views of National Gold Group. Any references to outside sources are believed accurate. Past performance is not a guarantee of future results. All commodities involve risk. Investors should consult their financial advisor before making any investment decisions.