Do Bad Jobs Reports Mean It's Time To Buy Gold?
Stalling. Flat. Stuck. Those were the words being thrown around after the release of the latest jobs report, with the month of August showing the national unemployment rate at 9.1 percent. The tally has stood above 9 percent since March.
With the debt ceiling debate in the rearview mirror, only now is Washington finally putting jobs at the top of the agenda. In the coming week, Barack Obama is scheduled to deliver a major speech in which he hopes to take on the challenge of running for reelection amid such high levels of unemployment.
Having seen the federal government prioritize a politician-induced fiscal crisis over the nation's employment, Americans have been left wondering to what extent they are on their own. Indeed, unlike most of Europe, unemployment benefits can run out in this country, as demonstrated by the millions of '99ers' who are going without any government assistance after reaching the max of 99 weeks. For point of fact, the country is suffering from its highest level of long-term unemployment since 1948.
It's no surprise then that Americans have begun resorting to other measures in order to survive. And this latest glum jobs report, an important economic indicator as they come, has coincided with the latest run on gold futures. As Dow Jones reported, futures rose as high as $1,884.60 an ounce on the Comex division of the New York Stock Exchange. That figure means the price of gold was just short of the record settlement high of $1,891.90 reached Aug. 22.
Economists were hardly surprised by the run on gold in view of the economic climate.
"We've got poor economic data, you've got sovereign debt issues here and in Europe," Matt Zeman, head of trading with Kingsview Financial, told Dow Jones. "I can't come up with a lot of reasons why gold wouldn't continue to work higher."
And the prospect of future stimulus packages in both the U.S. and Europe only makes gold buying more appealing. Such measures would result in the devaluing of currencies, and gold is often seen as a counterweight to such jolts.
The link between gold and the recession has been noted in many outlets, and the prospect of stimulus packages, among other government measures, led Goldman Sachs to up its forecast for gold, even amid record high prices, according to marketwatch.
Saying the precious medal is still "underbought," Goldman focused on Europe's problems in forecasting a bullish outlook for gold.
"Escalating pressure on peripheral euro-zone sovereigns as policymakers have yet to agree on a convincing solution to the European debt issues has generally increased the risk of a global financial event that could at least temporarily derail our constructive commodity views," the bank said.
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