Monday, October 8, 2012

Gold in Largest Two-Day Drop Since August

For the second day in a row Gold prices fell on Monday, resulting in the biggest two-day drop since August.

The strange idea that a bunch of seasonal, part-time hiring in the latest jobs report, which may have pushed the unemployment rate down to a still hefty 7.8 percent, made some investors feel it will pressure the price of gold down because of a possible stronger economic recovery.

It's ludicrous of course, as not long after the end of December the temporary, part-time workers will be let go, and the unemployment numbers will shoot back up, if not before then.

After falling against the euro to a two-week low, the U.S. dollar finally managed to pull itself up, as some believe a stronger recovery than expected, which would push up the price of the U.S. dollar if it were true.

It isn't of course, but that's the faulty assumption being reported in the press; more than likely in hopes of attempting to make Obama look like he's doing better than he really is with the economy.

With weak earnings expected, it's hard to point to anything really positive about the U.S. economy, other than the probability the housing market may have bottomed out. In that case, even if it hasn't bottomed out, it is probably close to it, although that will have very little impact in the near term on the economy either way.

As long as Ben Bernanke and the Federal Reserve continue to create money out of thin air by acquiring $40 billion a month in mortgage-backed securities, the price of gold and silver, along with other hard assets, will continue to go up over time.

It's likely the Fed won't stop stimulating until unemployment drops below six percent, with some hint from some members of the Fed that it may not stop until it reaches 5.5 percent.

The December contract for gold futures in the U.S. settled at $1,775.70 an ounce, down $5.10, or 0.3 percent. It's up by over 13 percent in 2012 so far, the 12th year in a row it'll finish in positive territory.

For silver, it closed at $33.98 an ounce, down 1.4 percent. It has also dropped significantly over the last couple of days, down over 3 percent during that period.

Platinum closed at $1,689 an ounce, falling 0.9 percent. Palladium ended at $653.47 an ounce, a decline of 0.5 percent.

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