GoldSilver & WealthCycles Research
APRIL 11, 2013


The New York Times is out again with the typical gold piece that always seem to appear just prior to a break-out in the dollar price of gold. They claim that “now, the worst of the Great Recession has passed. Things are looking up for the economy and, as a result, down for gold,” says the Times.

We will explain why things are not looking up at all for the economy, and then give a few bullish points for the precious metals.

The big deal is that the employment picture is far worse than at anytime in the past, and on top of that, the outlook is not one of improvement, quite to the contrary as we will see.

Present Employment

The federal government’s own numbers charted below show that the “recovery” has created over 6 million mostly part-time (can you spot the recent post-holidays dip in the grey line?) jobs for seniors. The federal government also reports 8.1 million jobs have been lost for 16-55 year olds since the crisis; Flat-line for the majority, there is no recovery.

Cumulative Jobs Added Since the Great Recession Began

The unemployment rate has fallen, but this is simply because the unemployed too discouraged to look for a job are not counted in the denominator (the “labor force”). If these unemployed are added back in by setting the labor force to the long-term average, the unemployment rate is up to 11.6% for March from 11.3% in February, the highest since 2012 when it was 11.7%.

We can clearly see that the employment picture has not improved for the core demographics, and seniors are postponing plans for retirement, scooping up a majority of the part-time jobs offered. Real incomes are also lower as prices rise at the grocery store and pumps, 8% less disposable income since the crisis means a worse economy for those with a job still, not a “recovery.”

Future Employment Outlook

The New York Times also says “things are looking up for the economy,” however this is also not true according to the 350,000 small businesses polled by the National Federation of Independent Businesses (NFIB). Everyone agrees employment and income drives everything in an economy. Small businesses, widely recognized as the drivers of full-time employment are expecting to hire absolutely… nobody:

NFIB Reports Hiring Plans for 350,000 Small Businesses

So don’t buy the propaganda that re-ocurrs everytime there is gloomy sentiment. Emotions are being taken advantage of; preventing the public from backing up the truck to buy far more creating a new demand for physical gold and silver.

Bullish Gold and Silver

This year, for the first time, physical demand increased even as though the metals went down in price. Showing many are not falling for the illusions. In fact, notable fund managers who understand monetary history and state propaganda channels agree.

  • Marc Faber: “I love the fact that Gold is finally breaking down, because that will offer an excellent buying opportunity
  • Jim Rogers bought gold under $1,600, as he reported in a March 1 interview.
  • Kyle Bass said recently to buy gold.
  • Jeffrey Gundlach announced his hedge fund was going long silver in March. (the bond king also correctly called the AAPL short in 2012).
  • E. Rothschild said to investors, at around these same prices, that “if you are very safety conscious you hang on to your gold bars.”

But, don’t just take these individual well known money managers at their word, as a whole traders are buying up contracts in anticipation that the price of gold will rise. There are reports (i.e. The Commitment of Traders) that represent professional funds (excludes bullion banks) that show professional funds are more bullish than ever on the price of gold:

COT other Commitment of Traders Report CFTC

There has also been very abnormal physical demand (who can blame the buyer at these prices), with two different sources of physical bullion being tapped, the COMEX and GLD.

Over February and March, JP Morgan removed 33 metric tons (mt) of gold that was eligible for sale on the COMEX market. This means less supply, and perhaps this is why they maintain their bullish call, saying on March 21st that “now is the time to buy gold.”

In the same two month period 104.7 metric tons (mt) were bought from GLD (the ETF). So far in April, another 37.7 metric tons (mt) were purchased. The sizes of these physical gold purchases are unprecendented, occurring over a very short period.

So, who to believe? The New York Times, wrong correction after correction, or proven fund managers and hard data?

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