Last Friday, the U.S. Department of Labor released its Employment Situation report for the month of August. According to the report, the U.S. added 151,000 jobs in August, well below consensus estimates of 175,000 jobs. The unemployment rate held steady at 4.9 percent.
While the addition of 151,000 jobs might sound pretty solid when taken at face value, the number was a clear miss and may drive a shift in interest rate expectations.
The week before last, the rhetoric coming out of the Fed symposium in Jackson Hole, Wyoming was undoubtedly hawkish. Fed Chairwoman Janet Yellen voiced her view that the case for another rate hike has strengthened. Fed Vice-Chairman Stanley Fischer even discussed the possibility of not one but two rate hikes this year.
All in all, the Fed sounded as if it was pleased at recent progress and it appeared to be quite optimistic about the economic outlook.
This was, of course, before last Friday’s jobs data.
While the jobs data certainly cannot be called “horrible” or “extremely weak,” it does raise the question of whether or not this number was a fluke- or perhaps previous numbers were a fluke.
While a September rate hike is still on the table (technically), it is difficult to imagine the Fed raising rates following a jobs number that misses expectations by about 25,000. The central bank may decide to take a wait and see approach, and hope that the September jobs data looks significantly better.
Whether or not a hike comes in September, there is still a good chance that a hike is seen before the end of the year. Whether or not such a hike is necessary and warranted may be the subject of debate.
Both gold and silver saw heavy buying following the release of the non-farm payrolls data. This buying was likely a mixture of short covering, bargain hunting and rate speculation.
The latest jobs report simply underscores a very real and legitimate concern: Even if the economy has picked up some steam, and even if housing and consumer spending are on better footing than they were in recent years, what’s to say that economic activity can’t turn south again?
The answer is nothing…
Perhaps the next rate hike is nothing more than the Fed looking to maintain its credibility after a year’s worth of tightening talk. Or perhaps tightening now may make cutting rates again in the future more effective.
Whatever the case may be, rates are not likely to go much higher any time soon, and we believe that investors should be looking to acquire as many hard assets as possible-with or without higher rates.
The stock bull is getting tired.
The era of expansion may have already run its course.
If stocks start to really sell off, look out below.
Now is the time to be considering alternative assets. Physical precious metals like gold and silver have stood the test of time and have been through all types of market conditions.
If the economy shows signs of decelerating again, or if there is another stock market meltdown, investor capital will be looking for alternatives.
Much of that capital could find its way into gold, silver and other precious metals.
The only question is: Do you want to buy gold and silver at current prices or wait for a sharp increase in prices?
Assuming you agree with the former, speak with an Advantage Gold account executive now before prices rise. Our precious metals professionals can answer your questions about physical gold and silver ownership, and can even show you how easy it is to buy and hold these precious metals within your IRA account.
Don’t wait for the next stock market apocalypse before taking steps that may help secure your financial future. Call us today at 1-800-341-8584 to get started.Tags: advantage gold, expectations, Fed, gold, interest rates, jobs, stocks market collapse, unemployment