The Implications of Friday's Unemployment Report on the Dollar and Gold

goingbroke

the U.S. dollar has a certain special status: That of being the world's reserve currency. The economy of the United States is the largest single-country economy in the world, with vast ties to nearly every other major economy on the planet. If the U.S. economy is slowing, it may be a bad sign for the rest of the world.

If world economic growth slows, investors may seek shelter in the U.S. dollar. Therefore, even if the U.S. economy is weakening, the dollar could strengthen. In fact, quite paradoxically, the weaker the U.S. economy becomes, the more the dollar could rally. Investors should remember seeing this scenario play out in the fourth quarter of 2008.

Traders looking to keep their Gold and instead profit from their investments should consider the future implications

roadrunner

Investing in the dollar, even if it should strengthen relative to other currencies seems like a sucker's bet in the long term as all currencies are being over-printed. And in the near term, a confidence crisis in fiat could occur overnight. A devaluation could occur overnight. In that scenario I'd rather be sitting on gold vs fiat. Of course, having a stash of cash for a few months is a good idea should electronic systems go down for any length of time.

People are already heavily invested in dollars just by owning homes, cars, stocks, bonds, treasuries, etc.

roadrunner

derryb

All markets, including PMs, are about to see a major correction. Now is a good time to get into dollars. The Fed is going to allow all markets to undergo a sell off before it seizes the opportunity it created with the end of QE2 to save the day. Cash will be a good place to be when the dust settles.

Bear

derry, you are a contrarian, but I do believe that you might

well be absolutely correct.

mhammerman

"Cash will be a good place to be when the dust settles."
Yeeeppppppp, people been preachin' and preachin' but I believe the time is not too far off for folks to have a good stash of frns if they want to stay in the mix. There are not too many actual physical frn's actually circulating on a per person basis and in the second place damn few people have any at all 'cause it's all electronic now, baby. We may actually come to the point soon where it's going to take a bonifide, frn, physical buk to buy something that cost a buk...just like the old days. Derry seems to have a bizarre habit of nailing it.

Got CASH?

derryb

<< <i>derry, you are a contrarian, but I do believe that you might

well be absolutely correct. >>


The long term outlook for PMs is better than ever when one keeps an eye on the fundamentals. However, just as we saw in 2008, PMs will take a hit when mainstream investments undergo their very soon to come major correction. Cash is where you want to be BEFORE PMs reach their short term bottom. Taking profits now on easily liquidated forms of PMs with full intention of buying back in later at lower prices is a good immediate strategy with that will provide long term rewards.

ksammut

<< <i>All markets, including PMs, are about to see a major correction. Now is a good time to get into dollars. The Fed is going to allow all markets to undergo a sell off before it seizes the opportunity it created with the end of QE2 to save the day. Cash will be a good place to be when the dust settles. >>



I would agree with you that PMs may see a major correction if the FED could control other countries and citizens of other countries as well as individual investors here in the US. I believe that each time we see a drop in PM prices, a lot of buying will come in from all over the world and keep the price of PMs in a narrow range.

Once the FED announces QE3 or it becomes obvious that they remain the major buyer in all of our future debt, PM prices will jump. That could easily happen by the end of the summer. Maybe sooner if there is some type of trigger (oil shortage, continued negative economic numbers, much higher inflation numbers).

goingbroke

<< <i>

<< <i>All markets, including PMs, are about to see a major correction. Now is a good time to get into dollars. The Fed is going to allow all markets to undergo a sell off before it seizes the opportunity it created with the end of QE2 to save the day. Cash will be a good place to be when the dust settles. >>



I would agree with you that PMs may see a major correction if the FED could control other countries and citizens of other countries as well as individual investors here in the US. I believe that each time we see a drop in PM prices, a lot of buying will come in from all over the world and keep the price of PMs in a narrow range.

Once the FED announces QE3 or it becomes obvious that they remain the major buyer in all of our future debt, PM prices will jump. That could easily happen by the end of the summer. Maybe sooner if there is some type of trigger (oil shortage, continued negative economic numbers, much higher inflation numbers). >>

If world economic growth slows, investors may seek shelter in the U.S. dollar. Therefore, even if the U.S. economy is weakening, the dollar could strengthen. In fact, quite paradoxically, the weaker the U.S. economy becomes, the more the dollar could rally

jmski52

Heck, we haven't even seen how the budget spending and tax priorities are going to be decided. I think that the next year will become "Never Let a Good Crisis Go to Waste, Part II" and therefore the economy WILL probably be pushed off a cliff by both parties.

And if there is a market crash, it'll be a brief one. Bernake has promised to drop FRNs from the sky if need be. Doesn't anyone here believe him? How much weeping and gnashing of teeth do you imagine will happen when QE2 stops and the markets take a dive? Does anyone really believe that the 2012 election will come & go without tons of liquidity injected into the markets?

There will be a HUGE election at stake. QE3 will come hard and fast, with bunches of new rules for individuals and maybe even rationing and price controls if there are supply breakdowns or wild market moves. This is a classic set-up. Pretty soon, the politicians will have the public howling for relief and they will race to the Capitol in the dead of night to pass a few 1000-page quickie bills to "save the day".

I really hope that I'm wrong. Someone please tell me that I am wrong.

After the 2012 election, all bets are off - of course.

P.S. - if you sell any of your core positions in order to buy back in later, you'd better be very sure to be very nimble.

gsa1fan

For the record I'm 100% more concerned with putting America back to work. We been in this mess 3.5 years now.

Have had 2 nation wide elections. IMHO, we can have 10 more and nothing will get done by the 2 party's in power.

I hate to think what it will take to get economy straighten out but status quo ain't a getting a durn thing accomplished.

derryb

<< <i>For the record I'm 100% more concerned with putting America back to work. We been in this mess 3.5 years now.

Have had 2 nation wide elections. IMHO, we can have 10 more and nothing will get done by the 2 party's in power.

I hate to think what it will take to get economy straighten out but status quo ain't a getting a durn thing accomplished. >>


the only hope for real employment is the private sector. Priority must be given to easing government stranglehold over private business.

gsa1fan

Well, dberry my question is why? Why have they not dropped the "strangle hold"?

derryb

<< <i>Well, dberry my question is why? Why have they not dropped the "strangle hold"? >>


because a free market will not line their pockets in the same manner as an economy that they think they control.

1jester

<< <i>All markets, including PMs, are about to see a major correction. Now is a good time to get into dollars. The Fed is going to allow all markets to undergo a sell off before it seizes the opportunity it created with the end of QE2 to save the day. Cash will be a good place to be when the dust settles. >>



Are you referring merely to the so-called paper markets, or do you include all physical bullion in your prognostications?

derryb

<< <i>

<< <i>All markets, including PMs, are about to see a major correction. Now is a good time to get into dollars. The Fed is going to allow all markets to undergo a sell off before it seizes the opportunity it created with the end of QE2 to save the day. Cash will be a good place to be when the dust settles. >>



Are you referring merely to the so-called paper markets, or do you include all physical bullion in your prognostications?

>>


Unfortunately, when the price of paper drops, so does the price of physical. All markets, including PMs, are about to see a major correction.

goingbroke

<< <i>

<< <i>

<< <i>All markets, including PMs, are about to see a major correction. Now is a good time to get into dollars. The Fed is going to allow all markets to undergo a sell off before it seizes the opportunity it created with the end of QE2 to save the day. Cash will be a good place to be when the dust settles. >>



Are you referring merely to the so-called paper markets, or do you include all physical bullion in your prognostications?

>>


Unfortunately, when the price of paper drops, so does the price of physical. All markets, including PMs, are about to see a major correction. >>

(AGREED)

edmundfitzgerald

<< <i>

<< <i> In fact, quite paradoxically, the weaker the U.S. economy becomes, the more the dollar could rally >>



What would you say to Jim Sinclair who is 75% gold, 20% swiss, and 5% Canadian ?

jmski52

<< In fact, quite paradoxically, the weaker the U.S. economy becomes, the more the dollar could rally >>

I think that they know how to get the herd to run in one direction, or the other. It's the same game, different day. One guy who decided to sit it out is Bill Gross. I think that they are trying real hard to punish him and his clientele.

1jester

<< <i>

<< <i>

<< <i>All markets, including PMs, are about to see a major correction. Now is a good time to get into dollars. The Fed is going to allow all markets to undergo a sell off before it seizes the opportunity it created with the end of QE2 to save the day. Cash will be a good place to be when the dust settles. >>



Are you referring merely to the so-called paper markets, or do you include all physical bullion in your prognostications?

>>


Unfortunately, when the price of paper drops, so does the price of physical. All markets, including PMs, are about to see a major correction. >>



I've noticed that too. And it is quite unfortunate for holders of physical. Please do tell what steps you're taking to profit from this move you see looming. Are you unloading all or part of your physical to get more liquid (FRNs) or to be able to buy it back when the prices crash? If so, how will you react to these possible scenarios: 1) the paper price drops but bullion doesn't, or 2) neither paper nor physical experiences the drop you forecast, and prices simply continue to rise? Are you hedging for either of these scenarios, i.e. are you selling all your physical to put your money where your mouth is, so to speak, or only part of it? Mind you, I am curious because I'm a big fan of yours and you have a remarkable understanding, even prescience, of what's going on in the world so I'm intrigued by your resolute conviction that prices are about to crash. And I appreciate your sharing your thought processes and information with us, sir.

edmundfitzgerald

Now, now jester...everyone is entitled to their opinion and way of thinking.
No reason to get sarcastic with him just because you disagree

derryb

Hard core physical holders don't let the short term bumps affect their long term strategy; the fundmentals continue to say "buy/hold gold and silver." My point is that the price of physical is soon to be temporarily hammered in a flight to cash and treasury bonds, justs as it was in 2008. Paper players should look for a good exit and move to the sidelines cash heavy. Inexperienced speculators in physical should probably do the same since they will eventually panic and sell lower.

A quick resurrection in QE (which I don't foresee in the near future) would change my outlook completely. Lack of QE is going to be the driving force in short term market turmoil.

goingbroke

Silver, even though it exceeds gold on the upside and the downside, is still being pulled along by gold. Gold is clearly the stalwart of the complex

1jester

<< <i>Now, now jester...everyone is entitled to their opinion and way of thinking.
No reason to get sarcastic with him just because you disagree >>



No, no, sir! You mistake my intentions. No sarcasm really, just an honest desire to have one of the gurus of this forum enlighten us as to the whys of his convictions. And I don't necessarily disagree with them, because I'm aware of the power of the banksters and how they manipulate the market. I too witnessed how they crashed the paper price of silver not long ago from the brink of $50 to around $32 in a matter of a couple days. That's power, and I don't deny their ability to inflict tremendous damage to people's ability to invest honestly. That's exactly why I'm curious about what Derry said and would like him to answer the questions I posed.

"A quick resurrection in QE (which I don't foresee in the near future) would change my outlook completely. Lack of QE is going to be the driving force in short term market turmoil." It seems that you believe there will be no more QE in any form. I don't personally see that as a possibility because I believe it will result in an immediate fatal crash of our economy, and perhaps the world economy too. However, I also believe that the more paper they print, the worse the crash will be eventually. I just don't believe they will be able to stop the printing on their own accord, like I don't see a hard-core junkie just one day up and say, "I'm going to stop shooting up today".

goingbroke

History repeats itself in regular cycles. This truth is well known among our principal men who are engaged in forming an imperialism of the world. While they are doing this, the people must be kept in a state of political antagonism...
By thus dividing voters , we can get them to expand their energies in fighting over questions of no importance to us, except as teachers to the common herd. Thus, by discrete action, we can secure all that has been so generously planned and successfully accomplished."
exerpt from The Bankers' Manifesto of 1892

edmundfitzgerald

....and some people followed the Bernie Madoff's of the world. To each their own. Some would say the United States still holds the cards when it comes to the price of gold. Some say that our banking institutions can manipulate it any way they want. I believe in 2008 we
finally passed that threshold, as the POG didn't take a hit the way the stock market did. Fast forward to 2011 and we have China that no longer fancies our dollar. We did not have that in 2008. Think about this thought for a second...gold has established itself as the supreme monetary ruler of the financial world. Every bankster and politician (especially in China) will end up bowing to its luster, for reasons they can not even understand, except the fact that it is the only thing in the monetary world that they can trust. If anyone here thinks that they will be able to buy physical gold in the 900 oz range in this lifetime, then I applaud their convictions, but I doubt their ability to ever do it.

jmski52

Has anyone been catching up on what the unemployment numbers from last week really were, after the adjustments from the birth-death accounting model are taken into account? I've read two different pieces now that say the actual job numbers were about 150,000 jobs lost.

Overdate

<< And if there is a market crash, it'll be a brief one. Bernake has promised to drop FRNs from the sky if need be. Doesn't anyone here believe him? How much weeping and gnashing of teeth do you imagine will happen when QE2 stops and the markets take a dive? Does anyone really believe that the 2012 election will come & go without tons of liquidity injected into the markets?

There will be a HUGE election at stake. QE3 will come hard and fast, with bunches of new rules for individuals and maybe even rationing and price controls if there are supply breakdowns or wild market moves. This is a classic set-up. Pretty soon, the politicians will have the public howling for relief and they will race to the Capitol in the dead of night to pass a few 1000-page quickie bills to "save the day".

I really hope that I'm wrong. Someone please tell me that I am wrong. >>

Okay, you're wrong.

Seriously, there are two factors that could derail QE3. One is that the Fed is on an increasingly short leash, mainly courtesy of Ron Paul. Bernanke now has to deal with the political fallout from the unfolding revelations of massive bailouts of foreign banks during the 2008-09 crisis. The other factor is congressional resistance to raising the debt ceiling. If the treasury is unable to issue new bonds, how will the Fed be able to buy treasury bonds in order to print new (electronic) FRN's?

Coyn

<< <i>The other factor is congressional resistance to raising the debt ceiling >>



IMHO thats pure show. With the exception of just a few "true believers" the entire congress is either there on the "bankers" funded election or will want to pump money to get re elected while posing as "austere" When to show is over they will pass it.

cohodk

And if there is a market crash, it'll be a brief one

If there is a market crash, I dont think it will bounce back so quickly next time.

derryb

Bernanke has been dropping cash from the sky for the last two years. It hasn't been getting to the people that can make it beneficial to the economy. It continues to end up in the hands of speculating gangsta's. More money only creates higher prices on what people are willing and able to pay.

What is needed is more incentive. More incentive to save (higher interest rates). More incentive to invest (Business and captial gains tax breaks). More incentive to avoid debt (higher interest rates). More incentive to be honest (justice for Wall Street and corrupt politicians). More incentive to be productive (less government payouts to not work or not grow corn).

The current economic and political forces in this country have all of its wonderful resources being completely wasted or misdirected. There is no reward for working harder, being honest or increasing savings. Not only are these things not rewarded, they are openly discouraged.

The fix? It's simple, go back to what works best. We have been there before, it doesn't take rocket science. It will however, come at a great cost to those who benefit with things the way they are. Once these people become a majority of the voters, there is no going back. Once there is no hope that the vote can change things, hope will be lost.

Baley

You know, I could start to agree with your last sentence, if you could change/soften the ABSOLUTE words like ALL, COMPLETELY, and NO that make your statement false at face value.

edit: second to last sentence

derryb

<< <i>You know, I could start to agree with your last sentence, if you could change/soften the ABSOLUTE words like ALL, COMPLETELY, and NO that make your statement false at face value.

edit: second to last sentence >>


There is ABSOLUTELY NO way that I can COMPLETELY provide you with ALL of my opinion the way you would like to hear it. Then it becomes your opinion, not mine.