Gold, Silver Explode on Non-Farm Payroll Miss

The U.S. Bureau of Labor Statistics came out with their latest fictional assessment of the changes in the labor market on Friday before the opening bell.  The U.S. economy added a pitiful 103,000 jobs, well below the consensus estimates of 138,000.  This was enough for the BLS to massage the unemployment number down to a headline (and vote-getting) grabbing 8.1%.  This is, of course, nonsense as U-6 unemployment stayed steady at 14.7% and labor force participation dropped 0.2% to 63.5%.  This continues the trend that all we have to do is get that number down to around 55% and we can lick this problem of sticky unemployment.

Whee, ain’t this math stuff fun?

I’m leaving out the biblically high birth/death adjustment of 87,000, because when you do that you realize that the BLS isn’t actually computing anything, but rather throwing darts at a board and seeing which result will most likely be allowed to be passed onto President Obama’s desk.

In response to this, Gold (AMEX:GLD) and Silver both took off like they were on crack with traders believing that the NFP number means QE from the Fed sooner rather than later.  With both metals languishing below last week’s close, if only just barely, they immediately ramped higher on the news.  Gold closed the week at $1735.45 on the October contract, up $43.80 per ounce.  Silver (AMEX:SLV) closed at $33.72 per ounce on the December contract up $1.95 per ounce.  Both of them reacted strongly after the initial surge due to the announcement by Sprott Asset Management that the Sprott Physical Gold Fund (AMEX:PHYS) would be offering up another 23 million shares at $14.84 per share to buy ~$341 million worth of physical gold, or 197k ounces at today’s closing price.

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Tom Luongo

About Tom Luongo

Tom Luongo is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.

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