“Like liberty, gold never stays where it is undervalued.”
– John Morrill
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June 10, 2024 – Friday’s jobs data reflected how out of touch financial markets are with reality right now. Markets originally sold off on news that job growth accelerated in May compared to April.
So what happened?
In markets right now, bad news is good news. If the economy deteriorates, investors cheer. That’s because the worse the economy gets, the more likely the Federal Reserve will lower interest rates.
The conventional wisdom of day traders often appears, well, silly. But like the CPI, however tortured the data is they do move the market.
After all, if the Fed feels that it has to cut rates, it’ll only be because of an imminent or actual disaster hitting the economy. At which point, stocks will likely have slid into a brutal bear market.
With gold’s price taking a hit last week, Grey Swan Investment Fraternity member John Rubino looks beyond that short-term move and the deteriorating nature of the labor market.
The good news? The long-term thesis for investing in gold now – even near its all-time highs – remains intact.
Enjoy ~~ Addison
CONTINUED BELOW…
New Trump Bombshell
Louis Navellier just issued a shocking election prediction for 2024. “I believe Donald J. Trump will go down as America’s last Republican president. But NOT for the reasons you may think… |
CONTINUED…
Gold Hit With a One-Two Punch
John Rubino, John Rubino’s Substack
On Friday, two announcements combined to hit gold and silver about as hard as they’ve ever been hit.
First, the US jobs report, as usual, came in far hotter than expected, which led credulous headline readers to conclude that the economy is booming and interest rates will have to stay higher for longer. If true, that’s bad for gold and silver, which don’t do well in a high-real-interest-rate environment.
But it’s not true. The US government is all about narrative management, especially in an election year. And the jobs report is where it runs its biggest scam.
Zero Hedge does a public service by dissecting each monthly jobs report to show, basically, the following: The number of full-time jobs is shrinking and all net jobs growth is in part-time work. And the number of jobs held by workers born in the US is shrinking while net new jobs are going to people who were born elsewhere. These are not signs of a healthy economy and definitely don’t point towards monetary tightening.
The other announcement was that China’s central bank, the biggest buyer of gold for the past few years, didn’t buy any in May.
Gold Price Sinks to 1-Month Low as China Stops Buying
As BullionVault reports, gold prices sank in all major currencies on Friday, dropping $80 an ounce in 6 hours on the news that the People’s Bank of China didn’t buy any bullion for its official reserves last month.
That snapped 18 months of continuous gold buying by Beijing as May set a new record-high gold price for the 3rd month running in US Dollar terms.
Now For The Good News
China scaling back its gold buying is an issue if it’s the start of a trend. But much more likely, it’s just the PBOC trying to engineer a slightly cheaper price before resuming purchases.
Meanwhile, another trend that’s gaining steam and might be huge going forward is retail gold buying. Costco selling $200 million of gold bars per month got a lot of recent press here and elsewhere. But aggressive retail buying isn’t limited to just one store chain in one country. Demand is suddenly booming in a lot of places, including Korea and Vietnam.
CNBC reports that gold bars are selling like hot cakes in Korea’s convenience stores and vending machines.
The country’s largest convenience store chain, CU, has been collaborating with the Korea Minting and Security Printing Corporation (KOMSCO) to offer customers mini gold bars — and they’re selling like hot cakes.
Priced at 113,000 won each, 1 gram bars were sold out within two days, according to local news reports. The bars come with congratulatory messages, birthday wishes and even designs for personality types.
People in their 30s were most active in purchasing these gold bars, accounting for over 41% of the total sales since their launch, according to CU’s commerce phone app Pocket CU. Those in their 40s make up 35.2% of the sales, followed by people in their 50s at 15.6%.
Demand for bars and coins in South Korea rose 27% year on year to 5 tons in the first quarter of this year amid rising prices of the yellow metal, the World Gold Council said in a recent report.
In Vietnam, meanwhile, the central bank had to sell some of its gold to cool off the retail buying frenzy. Vietcombank reported as many as 50 customers lined up at one time.
The State Bank of Vietnam (SBV) sold gold bars directly to four state-owned commercial banks at 78.98 million dong (Vietnam’s currency worth around $3,107.00 USD) per tael (37.5 grams). The banks then made the gold bars available to the public for no more than 79.98 million dong.
The State Bank of Vietnam is trying to drive down local gold prices that have soared in recent months. The price of gold in dong terms is up over 11 percent through the first four months of the year and has pushed significantly above the global price.
Bull Markets Have Big Corrections
The bigger and longer the bull market, the bigger and scarier the corrections. So use these events to add cautiously — via low-ball offers, dollar cost averaging, and put writing — to the stocks listed in our portfolio. The next leg up is coming.
~~ John Rubino, John Rubino’s Substack
So it goes,
Addison Wiggin,
The Wiggin Sessions
P.S. Having some of your wealth stored outside of a bank is a good idea, given the increased risks to the banking system right now. While gold’s price may take a hit in a global crisis, in the aftermath, which is likely to prove inflationary, gold could come out even stronger. Plus, it’s wealth that isn’t held by an intermediary like a banker or money manager.
(How did we get here? An alternative view of the financial, economic, and political history of the United States from Demise of the Dollar through Financial Reckoning Day and on to Empire of Debt — all three books are available in their third post-pandemic editions.)
(Or… simply pre-order Empire of Debt: We Came, We Saw, We Borrowed, now available at Amazon and Barnes & Noble or if you prefer one of these sites:Bookshop.org; Books-A-Million; or Target.)
Please send your comments, reactions, opprobrium, vitriol and praise to: addison@greyswanfraternity.com
