Gold saw some decent selling pressure to end last week’s trading, with spot prices falling by nearly two percent. Friday’s non-farm payrolls data was the primary culprit, as the report showed the U.S. added 255,000 jobs last month-well above consensus estimates of 180,000 jobs.
The unemployment rate moved a tad higher, but that may simply be attributed to an increase in the labor participation rate. Combined with positive revisions for both May and June, the jobs data was described by analysts as “stellar, strong and solid.”
No question about it, the jobs report was a solid piece of economic data that made investors feel better about the economy and hungrier for risk. That was evident as gold and silver got pummeled and stocks rallied to fresh all-time highs.
While gold may see further selling pressure following this stronger than expected jobs report, it may not fall too far. In fact, we are of the opinion that gold will simply provide an excellent buying opportunity for what we believe will be a long-term cyclical bull market.
While better economic data may have shifted interest rate expectations slightly, Fed Funds are still pricing in just an 18 percent chance of a September hike and a 45 percent chance of a hike in December. The Fed has never raised rates with a less than 50 percent chance priced in by markets, and this time around will likely be no different.
The reality is, however, that even if the Fed did raise rates, they are not likely going to be going very far any time soon. Not while much of the world is still fighting deflationary pressures and is actively engaged in various quantitative easing measures.
The Bank of England just this past week introduced some serious measures to fight what it believes will be some of the negative economic consequences of the Brexit vote. The Bank of Japan stands ready to act further, as well as the ECB.
Further easing measures by these nations could include further rate cuts deeper into negative territory, additional bond buying and more.
Just because things may be looking better in the U.S. does not mean that the rest of the world will follow suit. In fact, the global economy could still potentially have some very trying times ahead.
Gold has held up well despite stronger equities and the notion of higher rates in the United States. We believe this is indicative of significant underlying strength, and that gold is simply at the beginning of what could be a substantial long-term run higher.
In other words, this could be a great time to begin investing in physical gold or to add to existing holdings.
We believe that once the next equity market crash takes place and the next bear market is upon us, investors will have few options to turn to outside of precious metals.
You can get involved now at current price levels, or wait for gold to rise by $100, $200 or $500 per ounce or more before taking action.
The choice is yours…
Don’t wait for your stock portfolio to implode, or for gold prices to skyrocket. Explore your options today. Speak with an Advantage Gold account executive now to learn more about the potential benefits of physical gold ownership, and how you can even buy and hold precious metals using your IRA account. All it takes is a phone call. To get started, simply call us at 1-800-341-8584.Tags: brexit, Fed, gold, interest rates, jobs, jobs report, participation rate, silver, speculative trading, Stocks, unemployment