Surprise – gold ticks up on jobs report. After a lackluster week, the yellow metal regained a little shine this morning after weaker-than-expected growth numbers in the U.S. labor market were released for July.
The Bureau of Labor Statistics show 157,000 jobs were created last month. This is down quite a bit from the 191,000 number that Economists were predicting.
However, the unemployment rate dropped to 3.9%, as expected.
Gold prices were laying low up until this hit the air. At the time of this post, September Comex gold futures were up $3.40 an ounce at $1216.30 and September Comex silver was up $0.08 at $15.465 an ounce.
Every Coin Flip Has Two Sides…
Even with this morning’s bright spot (for precious metals, if not for workers) a cursory review of gold and silver prices as of late is enough to spot a downward trend which has seen both hovering at one-year lows.
The factors leading the charge of this decline are not only numerous, but overtly obvious to avid market watchers. A strong U.S. dollar, rallying equities markets, rising interest rates and lower bond yields have teamed up to create a perfect storm in this zero-sum game. Among investments (and investors) markets typically win at the expense of one another’s momentum.
Yet that can also be seen as one of precious metals’ most redeeming qualities. If you flip the script and these adverse market factors are reversed, it’s gold that hedges, standing firm against portfolio losses. And at some point (maybe soon), the spot price of these precious metals will become an attractive target for a buy proposition. It’s not an if, but rather a when, it happens. And without a doubt, some enterprising investment managers will later look quite prescient to be on the right side of such a strategy. It has happened before, and it will happen again. It’s why a coin flip has two sides.
Aside from the market forces which push and pull spot prices along, it’s also good advice never to turn a blind eye to any geopolitical risks that could upend the metals market in the flash of an errant missile (or tweet). Recently, even areas that aren’t currently involved in what we would classify as low-intensity verbal conflict have begun to creep into the conversation. This includes assets such as the Hormuz Strait (Iran) and the Taiwan Strait (China). If you’re unfamiliar with either scenario and the risks they pose to geopolitical security, get yourself educated on these issues soon.
Have a wonderful weekend.
Disclaimer: This editorial has been prepared by a Dillon Gage Metals analyst for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.