Forgot to hit publish yesterday. Thank Glen for the early morning phone call to let me know.
We got what we expected with the unemployment report on Friday and gold is now heading towards its 52 week low which it got close to on Friday. I said the following before the report came out; “Dollar closed at 98. It will shoot to 99 then 100 on a good jobs report. Gold will test its 52 week lows.” The dollar shot up over 99 and closed at 99.24, gold fell to as low as 1084.50 and closed at 1090.40, down $14.20 for the day. Silver fared a little better only falling 20 cents to close at 14.84.
The first time we hit these prices in gold was 6 years ago, Nov. 4th, 2009 but it was when gold was rising in price, not falling. Gold is in the grasp of a pretty strong bear and I still stick with the theme that the bear won’t release its grip on this market till we are under the psychological, back breaking mark of $1,000.
One of my predictions is coming true. Germany’s economy (the engine that could for all of Europe) is just beginning to crumble. This is Euro negative (57.6% of dollar) and dollar positive.
From Seeking Alpha;
Industrial output in Germany declined for the second straight month in September as a slowdown in China and other emerging markets took its toll. Output, adjusted for seasonal swings and inflation, fell 1.1% from August, when it declined a revised 0.6%. Combined with September’s sharp decline in industrial orders, the fall in output feeds speculation that the German economy may lose steam by the end of the year.
Will the Fed Raise Rates In December?
I make the case for a raise in rates in December. It’s the case I made once before 2 meetings ago. It’s a credibility issues. If you listen to the folks at CNBC, they have been calling for a hike for over a year. They are eternal optimists that ignore the data. http://bit.ly/1IiZCQ3
They do look at unemployment numbers but only Rick Santelli gives the U-6 data, and we finally broke below 10%. That means we are still at 9.9%. That’s a recovery?
The last rate hike didn’t come and Melissa Lee said the Fed “chickened out.”
I don’t think the Fed will chicken out this time, but I do believe the data doesn’t support a hike and they are still worried about deflation. I also don’t think they want to disappoint the market so will raise rates. Maybe .15, maybe .25. If they don’t, how do they maintain the illusion they are in control? I think their backs are against the wall on this one.
Gold will fall till that time and should break $1,000. We’re only about $90 away and less than $20 from the 52 week low.
As far as the best time to buy gold, I do recommend cost averaging into an allocation. No one will catch the exact bottom. It’s like buying the DOW in 2009. Some bought 8,400, some bought 9,400. Neither cared when the DOW hit 18,000.
Related posts
About Doug EberhardtDoug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
Disclosure:
Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with capital you can’t afford to lose. This is neither a solicitation nor an offer to Purchase/Sell futures or options. No representation is being made that any account will or is likely to achieve gains or losses similar to those discussed in this outlook. The past track record of any trading system or methodology is not necessarily indicative of future results.
All trades, patterns, charts, systems, etc. discussed in this outlook and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author.