News as big as Bin Laden getting his comeuppance was bound to hit the gold market with a wave of emotion. Posted by James Randolph on May 04, 2011
Don’t wait for the gold market to regain its senses.
May 04, 2011 – News as big as Bin Laden getting his comeuppance was bound to hit the gold market with a wave of emotion. After all, even the dollar had a brief respite from its slide. Euphoria of that long awaited news is already wearing off, however – it just can’t overpower the obvious decay of our economy. The window of opportunity to capitalize on this emotional dip will close very quickly.
Using the Billion Prices Project’s inflation figures and the near stagnant growth in our GDP adjusted for population growth, it is patently obvious that our economy is shrinking. New job figures aren’t enough to absorb the new entrants into the labor pool, let alone put people back to work. And if the Fed lets interest rates rise, any progress we have seen will grind to a halt.
Mark Johnson notes in the Wall Street Journal that “the Institute for Supply Management’s nonmanufacturing index fell to 52.8 last month, much less than the 57 expected … the latest [indicator] in a recent series showing how far the U.S. economy has to recover before the Federal Reserve can resume monetary tightening.” The other option to resuming monetary tightening? You got it, QE3.
Bernanke put the Fed between a rock and a hard place. There is nothing the Fed can do at this point to turn things around. That is now up to the politicians and the American people. Either we take a bitter reality pill and get to work on the big issues or we go down. There is no other way. But surprisingly, we are still not ready to follow the example of more rational minds.
For a few days we Americans had something we could rightfully feel good about, but we should not let it cloud our thinking. Other than providing us with a little relief, nothing whatsoever has changed to make the economic outlook any better, and it can be argued that the martyrdom of the iconic leader of the world’s most extreme terrorists has made us less safe today.
The dip in gold prices is not hard to explain, nor will its rebound come unexpectedly. The wise investor looks for times like these to invest in certified gold.
Senior Staff Writer – Certified Gold Exchange