Job Cuts Loom Over Recovery
A commentary on recent events by National Gold Group’s Chris Poindexter – August 4, 2011
Employment numbers coming out this morning are likely to show that even though the economy created 85,000 jobs in July, most of those gains were offset by a new round of layoffs as the economy slowly slides back into recession.
Layoffs in the pharmaceutical, retail, non-profit and government job sectors account for 37 percent of announced cutbacks as cash-strapped governments eliminate services and jobs.
News of the deteriorating U.S. economy weighed on the dollar and prompted speculation that the Federal Reserve would be forced into another round of monetary easing as countries race to the bottom on currency valuations. Japan sold yen today and the Swiss National Bank cut interest rates after a currency run of almost 36 percent in the past 12 months.
The currency news added more lift to gold and silver prices today with gold up another $16.41 to $1,676.76. Silver was up another $0.51 to $42.10.
Gold set new highs against the euro, the Canadian dollar, and the U.S. dollar as news that South Korea’s central bank has been buying gold for the first time in 13 years. Thailand also added 15.5 percent to their gold reserves in June to bring their total to 4.07 million ounces as they quietly divest themselves of dollars.
Although Congress squabbled their way to a deal to raise the debt ceiling and averted a default on U.S. bonds, a growing number of central banks and investors now perceive the United States of America as a country in decline both economically and politically. The run on gold prices is at least partially the result of countries seeking to diversify their bond and currency portfolios away from the U.S. dollar.
The Institute for Supply Management’s factory index dropped to 50.9, just above the 50 mark that separates expansion from contraction.
The few bright spots in the economic news show unemployment claims dropped to 400,000 in the latest week and GM profit nearly doubled on stronger pricing.
While most investors focused on the dysfunctional U.S. Congress, the European debt crisis has continued to smolder.
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.