from Birch Gold Group:
Your News to Know rounds up the most important stories about precious metals and the overall economy. This week, we’ll cover:
- Gold’s roughly $300 surge – and why blaming one jobs report misses part of the story
- Why BRICS gold buying still doesn’t add up to a gold standard
- The better question behind Washington’s battle with the Fed: Whom should the central bank actually serve?
TRUTH LIVES on at https://sgtreport.tv/
Gold gained $300 – but not because of one jobs report
Gold has suddenly become a media darling again after gaining roughly $300 in a matter of days.
Reuters reported Friday that gold climbed over 7% for the week, reaching a seven-week high over $4,300 an ounce.
Why? Well, the obvious explanation was the July jobs report.
The Bureau of Labor Statistics (BLS) reported that U.S. payrolls declined by 23,000 jobs, a massive miss compared to the +80,000 median forecast.
Yes, that’s significant – but the report gets more interesting the deeper you look.
The BLS also revised May and June payroll growth downward by 103,000 jobs combined. Labor-force participation has fallen 0.7% since January. With these revisions, the average monthly payroll gain over the last 12 months was just 34,000.
In other words, Friday’s report didn’t suddenly reveal a problem. Instead, it added another piece of evidence to a slowdown that has been developing for some time.
I wrote about some of those early warning signs earlier this year.
So yes – the jobs report mattered to gold. Weak employment data changed expectations about what the Federal Reserve might do next. (That matters because interest-rate expectations affect the dollar’s strength, inflation forecasts, the economy and the relative appeal of physical gold compared to other assets.)
But here’s the part I think gets lost in the headlines:
Gold’s rally had already begun before Friday’s jobs report arrived!
Gold was trading around $4,030 on Monday. By Thursday, before the official payroll report, the price of gold had already climbed over $4,200. Economic concerns, changing expectations for Fed policy and developments around the Strait of Hormuz were all being repriced.
Then the jobs report added fuel.
That distinction matters because financial headlines have a bad habit of treating gold like a vending machine: Insert one disappointing economic report. Receive higher gold price.
If I’ve taught you nothing else over the years, I hope I’ve taught you this: The real world is a lot more complicated than that.
One weak jobs report doesn’t tell us the economy is headed for recession. Neither does one week’s $300 move tell us where gold goes next.
What concerns me is that the evidence of a slowdown is really piling up… Consider:
