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nightfighter · 01-11-2014, 05:18 PM

Interesting take on the jobs number and the Fed

Gold loved today's awful US jobs data. It could love Fed tapering still more...
WELL, this throws a monkey wrench in the works, writes Adrian Ash at BullionVault

The very same month that the US Federal Reserve took its cue from lower unemployment to start tapering its money-printing program, US unemployment fell to a 5-year low of 6.7%.

So far, so good. That's below the 7.0% level by which Fed chairman Ben Bernanke said tapering might be all done in mid-2014. It's also a good way towards the Fed's 6.5% line-in-the-sand for daring to think about raising interest rates from their half-decade flatline at zero, too.

Higher rates, lower gold, or so things typically run (net of inflation). Yet gold prices jumped on Friday's news...reversing the week's earlier 1.5% drop to close London at $1245 per ounce, its best weekly finish since November...back before the Fed finally found its bottle and made good on the tapering it had promised it would do in September.

Why? Because net hiring sank last month, down to just 74,000 for an 18-month low...less than half the past 4 years' average...and the worst December since 2009.

Hiring down, joblessness down. How about that?

"A few participants," said minutes from the Fed's December meeting, released this week, "noted the risk that the persistent weakness in labor force participation and low rates of productivity growth might indicate lasting structural economic damage from the financial crisis and ensuing recession."

Participation in the labor market fell in October to a 35-year low of 62.5%. It fell there again in December's data as job seekers quit seeking, just as the US Fed started trimming $10 billion from its monthly QE money-printing.

Fact: Ten billion is a lot of money. All the software developers in all the world made a total of $10bn from all the app sales on Apple's App Store in calendar-year 2013.

Fact: That still leaves $75bn to be printed and spent in January...greater even than the entire underground mineral wealth of Peru, the third-largest producer of copper, silver, zinc and tin, and the sixth-largest gold mining nation.

Indeed, at its most valuable in late 2011 and 2012, the entire SPDR Gold Trust (NYSE:GLD), the New York-listed gold trust, was briefly worth some $75bn. Back then, the GLD was the most highly valued ETF in the world. The US central bank is now creating that much money, from nowhere, and spending it to support US debt prices this month alone as 2014 begins.

And they call it tapering...

01-11-2014, 05:18 PM	#18
nightfighter Seldom Seen iTrader: (0) Join Date: May 2001 Posts: 10,397	Interesting take on the jobs number and the Fed Gold loved today's awful US jobs data. It could love Fed tapering still more... WELL, this throws a monkey wrench in the works, writes Adrian Ash at BullionVault The very same month that the US Federal Reserve took its cue from lower unemployment to start tapering its money-printing program, US unemployment fell to a 5-year low of 6.7%. So far, so good. That's below the 7.0% level by which Fed chairman Ben Bernanke said tapering might be all done in mid-2014. It's also a good way towards the Fed's 6.5% line-in-the-sand for daring to think about raising interest rates from their half-decade flatline at zero, too. Higher rates, lower gold, or so things typically run (net of inflation). Yet gold prices jumped on Friday's news...reversing the week's earlier 1.5% drop to close London at $1245 per ounce, its best weekly finish since November...back before the Fed finally found its bottle and made good on the tapering it had promised it would do in September. Why? Because net hiring sank last month, down to just 74,000 for an 18-month low...less than half the past 4 years' average...and the worst December since 2009. Hiring down, joblessness down. How about that? "A few participants," said minutes from the Fed's December meeting, released this week, "noted the risk that the persistent weakness in labor force participation and low rates of productivity growth might indicate lasting structural economic damage from the financial crisis and ensuing recession." Participation in the labor market fell in October to a 35-year low of 62.5%. It fell there again in December's data as job seekers quit seeking, just as the US Fed started trimming $10 billion from its monthly QE money-printing. Fact: Ten billion is a lot of money. All the software developers in all the world made a total of $10bn from all the app sales on Apple's App Store in calendar-year 2013. Fact: That still leaves $75bn to be printed and spent in January...greater even than the entire underground mineral wealth of Peru, the third-largest producer of copper, silver, zinc and tin, and the sixth-largest gold mining nation. Indeed, at its most valuable in late 2011 and 2012, the entire SPDR Gold Trust (NYSE:GLD), the New York-listed gold trust, was briefly worth some $75bn. Back then, the GLD was the most highly valued ETF in the world. The US central bank is now creating that much money, from nowhere, and spending it to support US debt prices this month alone as 2014 begins. And they call it tapering...