Gold To Retest Lows

December 5, 2008 Gold Stocks, Market Updates, Silver Stocks No Comments

Gold took a step down after the unemployment numbers for November were released. It is curious to me why gold would retreat on terrible unemployment numbers. Employers eliminating jobs is signaling a downturn in the economy, so gold should be moving up. I guess not in this world where up is down. More on that later, but first the DOW is currently down 171 at 8204, the NAS down 34 at 1,411 and gold is down 15.30 at $750.

Let’s look at the unemployment numbers from Bloomberg.

Dec. 5 (Bloomberg) — Gold fell in London after a report showed U.S. employers eliminated jobs in November at the fastest pace in 34 years.

The U.S. Labor Department said payrolls shrank by 533,000 workers last month, exceeding economist’s estimates.

Gold for immediate delivery lost $14.79, or 1.9 percent, to $752.21 an ounce by 1:44 p.m. in London. It traded at $764 immediately before the release of the report.

Half a million jobs in one month! This recession is deepening rapidly with no end in site.

Jobless Me Keep Going Gold To Retest Lows

Recession Or Depression?

Wall Street and Washington have thrown trillions at banks and corporations for bailouts to try to keep the system afloat. Every week, if not every day, the Fed keeps sending up new test flags, but no one is saluting. Nothing is working as the money is just sucked down the rat hole of good money after bad, while the lenders lenders gladly accept it, but refuse to lend it, thereby stifling any chance for growth. The cash is being used to bolster the banks balance sheets.

The real estate meltdown continues to worsen, feeding off one fore-closer after another. The market will not recover until the glut of foreclosed houses are removed from the market. The next wave of mortgage defaults and fore-closers should hit in the March, April 2009 time range and will exacerbate the problem at the beginning of the spring buying season. The Fed keeps floating new proposals every week which don’t help the market. Why would you take a loan out now at 5.4% when there is talk about pumping enough money into the system to lower the rates to the 4.5% rate withing a month or two? The uncertainty is so counter productive.

I feel like I am starting to sound like a broken record, but at the risk of repeating, free markets correct themselves. Government intervention delays the corrections that the markets require. Remove taxes and unleash the power of the market. Independence from foreign oil could be achieved in three to four years if a ten year moratorium on taxes were placed on new discoveries of oil.

Came across this joke while reading Jim Willie CB on the net. It’s funny and it has a lot of truth in it.

Lawrence Livermore Laboratories has discovered the heaviest element yet known to science. The new element, Governmentium (symbol=Gv), has one neutron, 25 assistant neutrons, 88 deputy neutrons, and 198 assistant deputy neutrons, giving it an atomic mass of 312. These 312 particles are held together by forces called morons, which are surrounded by vast quantities of lepton-like particles called peons. Since Governmentium has no electrons, it is inert. However, it can be detected, because it impedes every reaction with which it comes into contact. A tiny amount of Governmentium can cause a reaction that would normally take less than a second, to take from 4 days to 4 years to complete. Governmentium has a normal half-life of 2 to 6 years. It does not decay, but instead undergoes a reorganization in which a portion of the assistant neutrons and deputy neutrons exchange places. In fact, Governmentium’s mass will actually increase over time, since each reorganization will cause more morons to become neutrons, forming isodopes. This characteristic of moron promotion leads some scientists to believe that Governmentium is formed whenever morons reach a critical concentration. This hypothetical quantity is referred to as critical morass. When catalyzed with money, Governmentium becomes Administratium (symbol=Ad), an element that radiates just as much energy as Governmentium, since it has half as many peons but twice as many morons.

Now let’s see what all this is doing to gold. Gold is aiming for the biggest weekly loss since mid-October, while the dollar strengthened. The dollar’s strength is putting downward pressure on gold, since the two are currently joined at the hip. This relationship will change, at some point, as the economic situation worsens. Soon the funds will no longer have to liquidate because there will be nothing left to sell! On that date, which is coming sooner rather than later, gold will start to act as a currency and move dramatically higher. It appears that gold is headed for an annual loss after seven straight yearly gains while the dollar is pointed towards it’s first advance in three years.

Gold is going to retest it’s lows. Whether this down leg stops at the $720.00 support level or it ventures down into the $600.00 range only time will tell. I feel confident that this will be the last downward test before gold starts it’s next major leg up. All of the stars are aligning and something is going to give soon. Watch this down leg carefully and pick up some physical gold and silver while this opportunity lasts.

The gold stocks continue to take a beating and in so doing offer up a once in a lifetime buying opportunity. The situation remains extremely volatile and everything can change on some unexpected news, so don’t let this opportunity pass you by. Money is made when there is “blood in the streets”. The world’s current financial situation certainly fits into this category.

Do your due diligence and try to buy quality gold and silver stocks. Your extra effort will be amply rewarded!

Till next time, good luck and good trading!