Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.
Well, investors continue to face wild, unpredictable gyrations in markets. This week, crude oil prices swung wildly, closing back above $50 per barrel on Thursday. The Dow Jones Industrials surged more than 700 points. And with investors piling back into the stock market in a big way, there was little in the way of a safe-haven bid for gold and silver ahead of the monthly jobs report due out today.
As of Friday morning the metals are selling off. Gold shows a weekly loss of 3.5%, more than half of that coming so far today and trades at $1,240 an ounce. Silver prices were little changed through Thursday’s close but are down sharply so far today and currently come in at $16.93 per ounce for a weekly decline of 2%.
The performance of gold and silver this week seems disappointing, especially considering that the U.S. dollar moved slightly lower. But the downturn in the dollar coincided with renewed enthusiasm for stocks and hopes of a pickup in global economic growth. As a consequence, industrial commodities including crude oil and copper are getting more of a boost – as is palladium, which is the only metal in positive territory for the week. Palladium, even though it’s down today like all of the other precious metals, sports a 1.5% weekly gain and a spot price of $786 per ounce. Its sister metal platinum, which was up on the week through yesterday’s close, is now off 1.3% to trade at $1,227 thanks to this morning’s sharp decline.
Economic indicators continue to come in mixed. For every “good news” report that gets released, there’s another that shows things really aren’t so good. As the optimists tell it, the fall in oil prices from above $100 last summer to below $50 this month serves as a stimulus to consumers and manufacturers. But it may also be a warning sign of an economic contraction spreading from the energy sector. Coinciding with a generally rising dollar over the past few months, the Commerce Department released a report on Thursday showing that the trade deficit widened unexpectedly in the month of December to $46.6 billion. That’s the widest deficit since November of 2012.
Even though the stock market has recovered fully from the depths of the last recessions, the realities that affect most people in the real economy show that things haven’t returned to pre-2008 levels. Real incomes are still down. Home ownership rates are way down. And despite some signs of modest improvement in job growth, labor productivity is actually on the decline.
The employment data that the government feeds to the financial media is incredibly misleading. The official unemployment rate of 5.6% is an arbitrary figure produced by the arbitrary assumptions government economists feed into their formula. The official unemployment rate misses millions of unemployed and underemployed people who have either dropped out of the workforce completely or aren’t counted as unemployed because they have a temporary or part-time job. In short, the official unemployment rate doesn’t come close to reflecting the actual rate at which working-age people in the economy are out of work. The number of full-time jobs as a percentage of the adult population is down to 44%. The total workforce participation rate sits near lows last seen in 1978.
This week, the Gallup organization’s top pollster called the government’s unemployment numbers “a Big Lie” -- a stunning rebuke of government statistics from a highly credible source. Yet the financial media pooh-poohed the issue, particularly CNBC’s Steve Leisman, who even suggested that any understating of numbers doesn’t matter, because it’s already factored into the market.
The question for investors is: Which employment numbers will the Federal Reserve pay attention to in future meetings as it weighs the decision of whether to raise rates? Will it use the official numbers as a rationale for tightening? Or will the less rosy real-world numbers give Fed policymakers pause?
Our bet is that the Fed will find reasons not to raise interest rates. The dollar’s relative strength against other fiat currencies will give them reason enough.
In any event, risk levels are running high in the stock and bond markets, which are pricing in low interest rates and low inflation for as far as the eye can see. Physical gold and silver offer investors a counterweight to downside gyrations in financial assets, which will manifest sooner or later. And in ways that will catch most investors and financial commentators off guard.
Here at Money Metals Exchange, we’re proud to play a part in helping more people become more financially resilient through precious metals ownership. Our educational programs and top-notch customer service have made us one of the country’s leading bullion dealers.
In fact, we were recently honored with the distinction of “Bullion Dealer of the Year” in the United States by a global ratings organization called Bullion.Directory. In balloting conducted over the last two months with the participation of over 20,000 investors and industry insiders, Money Metals Exchange topped a field of 422 eligible dealers! The UK based Bullion.Directory noted our “positive reviews across the web” and commended us for “consistently good advice, fair pricing, and proper customer service.”
We couldn’t have achieved this recognition without all the great support and feedback we get from you, our customers. So thank you for helping to make Money Metals Exchange the top rated bullion dealer in America!
Now, before we go, I want to remind you that February is Freebie Month at Money Metals Exchange. Simply buy $500 or more in precious metals this month, and we’ll ship and insure your order for free. Buy $5,000+, and we’ll also throw in a free 2015 Silver Eagle coin.
Well that will do it for this week, thanks for listening. Check back next Friday for our next Market Wrap Podcast. Until then this has been Mike Gleason with Money Metals Exchange reminding you that we remain fully committed to getting you the most value for your depreciating dollar… with speed, with accuracy and with top notch service. Have a great weekend everybody.
About the Author:
Mike Gleason is a Director with Money Metals Exchange, a precious metals dealer recently named "Best in the USA" by an independent global ratings group. Gleason is a hard money advocate and a strong proponent of personal liberty, limited government and the Austrian School of Economics. A graduate of the University of Florida, Gleason has extensive experience in management, sales and logistics as well as precious metals investing. He also puts his longtime broadcasting background to good use, hosting a weekly precious metals podcast since 2011, a program listened to by tens of thousands each week.