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Comex Gold Rallies on Weak U.S. Jobs Report; Fresh Safe-Haven Buying

Friday June 1, 2012 8:43 AM

Comex gold futures prices have moved above unchanged and are trading near the daily highs Friday morning in the wake of a much-weaker-than-expected U.S. jobs report that has quickly put U.S. quantitative easing of monetary policy back on the table. U.S. non-farm payrolls rose by just 69,000 in May, which is much less than the 150,000 rise expected by the market place. U.S. stock indexes slumped, U.S. Treasury bond and note futures prices soared and the U.S. dollar index vacillated but did back down from its daily high in the wake of the jobs data. Friday morning’s gains in gold come on short covering, bargain hunting and fresh safe-haven investment demand. The weak U.S. jobs data combined with the very uneasy status of the European Union and a weakening Chinese economy have played right into the hands of the gold market bulls. Look for volatile trading in the precious metals and other markets as the trading sessions progresses Friday. August gold last traded up $9.30 an ounce at $1,573.30.

By Jim Wyckoff, contributing to Kitco News; [email protected]

Here is a FLASH ALERT from our friend Bill Murphy at LeMetropole Café!

RARELY do I send out an email alert, but since I have not seen anything like this in 13 years, I thought it advisable.

The US jobs report was a disaster, not even aided by a substantial increase in the birth/death model. The

DOW is called 180 lower, the euro is tanking, but gold is SOARING and has the general investment world stunned.

Will get into this in MIDAS later. The point is this is the time to be paying attention to what is going on out there. What is occurring in gold in terms of its action of late, and today, is  unprecedented, at least in terms of me watching the price action every day for over a decade.

Chaos not only looms, you can smell it. The Muppets on

CNBC are as dour as they can be.

When I graduated college, I thought my first job, and second and third, would be for life.  Life ain’t always what you think it is!

When I was an assistant buyer for Target in 1972, I had a conversation with the toys buyer.  He told me his goal was to make $10,000/year for every year old he was.  Geeze, I thought!  To be 30 and actually make $30,000 a year or 40 and make $40,000 a year – that would be unbelievable!  That was a lot of money then.  Our new colonial four-bedroom house in the suburbs cost some $30,000 then.  My new 1972 yellow corvette cost around $5,000.  $30,000 was a lot of money!  What did I know?  Well, I certainly didn’t know anything about inflation.

In the late 70s, a friend told me that he had purchased a 100-ounce bar of silver.  Silver!  Why would anyone need any silver?  That sounded as crazy to me as his statement that in the future, every home would have a computer.  What for, I wondered?  Looking back, it seems there was a lot I didn’t know.

But I’ll tell you what I do know.  I now know that silver is a pretty good thing to own.

I know that gold is “money” and you can count on gold to hold its value, over time, and you can also count on the $100 bill in your safe deposit box not holding its value over time.

Hey, in 1972 that $30,000 a year was a lot of money but here we are 40-years later and a family of four will have a hard time getting by on that number.

Another thing I understand – we have passed the point of solving our fiscal problems in America.  That’s not just an “opinion,” it’s a mathematical fact.  There is not even the slightest possibility that we can “grow” the economy to the point where tax revenue will pay off our national debt – or for that matter ever balance an annual budget.  We are falling BEHIND around $5 trillion every year, when you factor in the off-budget liabilities such as Social Security, Medicare, etc.  We are drowning in debt and the end result will be inflation that will melt away the debt.  If you are betting on deflation and default, you are making a big mistake.  That’s not what governments do.  Not in Europe and not here.  What they do is kick the can down the road and they call the process Quantitative Easing.  Easing, as in easing us towards the poor house.

It is disgusting that neither presidential candidate honestly discusses the problem.  Neither party is willing to drastically cut spending and government.  If we can’t cut enough to make a difference and no amount of increased taxation will make a difference either, then simply put, we’re screwed.  And that included those of you who refuse to believe it.  All of us will pay the price.

Today, gold is up just $15 from where it stood one year-ago today.  Most of last year, gold was up between $200 – $300 from its year-ago number.  But fear not.  I predict that 2012 will be the same as every other year in this 11-year bull market and gold will finish the year ahead of where it finished the previous year.  And it will continue to do so for years to come.  The bull market is far from over, but that doesn’t make it easy to ride the bull out.

When you can look at all the things that make gold ownership “necessary” now and see that they have changed, then the bull market will be over.  As of now, nothing has changed for the better, nothing.  Not even a “strong dollar.”  The dollar is not strong, it is simply a better alternative than the euro, but being the best of the worst is nothing to bank your future on.  The move is on to oust the dollar as the world’s reserve currency.  Demand for the dollar is on the wane, though short-term it is holding up due to hedge funds going long the dollar and massive shorting of the Euro.  Sinclair has issued a warning to those who are short the Euro.  They will lose big-time on this bet.  Once the dollar starts its inevitable slide toward 70 on the USDX the gold bull market will resume with a vengeance.  It will happen this year.

All that stands between us and hyperinflation is an increase in the “velocity” of money.  When the masses decide they can no longer hold onto dollars, then inflation will roar into the open and it will be too late for those of you who still have not positioned yourself out of paper and into physical metals.  It’s coming, it really is.

Anyways, I just felt like talking about what is important and $10,000 gold is NOT on the top of my list, though my accountant probably would disagree.  Your family, your health, your ability to enjoy life every day (even if gold is down for the day) are what count.

Trust what I am telling you.  I clearly understand the important issues and the big picture, and am not sidetracked by the day-to-day noise of the markets.  In life, you don’t have to know everything, just pick your teachers carefully.  I have – and I share them with you every day.  What you read for free in these pages five days a week is priceless – but only if you ACT on what we present to you.  After all, it only your financial well-being that’s at stake here.

Blessings and best of everything to you all.  See you on Monday.