Lear Capital: Sliding in Plain Sight – Gold Holding Bold

2010_01_05_17_53_260001It must be so because it is what we hear every day.  The economy is recovering and the outlook for 2014 is for greater GDP growth, lower unemployment and strong market performance.  But, the difference between what we hear and what we see could not be more stark.

Today, only 6 out of 10 people who could work are working, 2 out of 10 are on food stamps, and more than 300,000 people a week file for first time unemployment benefits.  New job numbers also disappointed the markets adding just 74,000 in the month of December.  And, for 2014, the roster of companies cutting jobs is growing.  The list includes IBM, Target, HP, the U.S. Air Force, Intel, USPS, JC Penney…I could go on.  This is all occurring in plain sight yet we hear recovery is underway.

Adding to the mayhem are new data from China.  In short, China is slowing down and that can only mean one thing — global demand for stuff is waning.  U.S. demand for stuff is waning.  Yet, recovery is underway.  And while experts still parade across the TV screen touting a global recovery, the markets are sliding lower and lower and lower.

On the other side of the aisle, gold is being brutalized.  Big banks and brokerages are downgrading their 2014 gold forecasts, expert talking heads tell us gold is headed lower and the voices of gold advocates are being muted.  Never have I seen the gold sentiment so low as it is today.  Yet, gold is holding bold to levels at or near its reported all-in cost of production.  Today, Gold is trading at a 2 month high.

You just don’t have to be that smart to see that rising debt and rising interest rates are beginning to weigh heavy on the markets.  A close friend in the mortgage business said the mortgage business has fallen off our fiscal cliff.  He’s wondering if food stamps will be available to the thousands of mortgage brokers who are fast approaching tough times.  And they say rising rates are good for the economy and another sign that we are in recovery.

Then, just hours ago, Treasury Secretary Jack Lew sounded the warning bells saying the nation’s debt limit will be reached earlier than the anticipated end of February deadline.  Here we go again.  Just when you think the rat is dead and buried it scurries across the floor to snatch one of the baby’s stray cheerios.  How long will it be before the Yellen begins.

While tapering was cheered and touted as a sure sign the economy was in recovery, what we see is quite the opposite.  One can only believe that tapering may be short-lived.  I doubt Janet Yellen is going to let the economy slide back into recession in her first months as Chair of the Federal Reserve.  Add to that an inevitable raising of the debt ceiling – AGAIN  -  and you see how quickly inflation and fear of a weaker dollar can dominate headlines to come.

The stage is definitely set for both gold and silver to resume another leg up in this bull market.  The economic news could not have been better than it was when Bernanke sang his swan song.  The sentiment for gold could not have been more negative as it has been over the last several months.  Its’ time to pay attention to what you see and not what you hear.  Every day, you are gambling your savings and retirement.  Where are you going to place your next bet?

As always, this is just my opinion and no one else’s.  If you agree I would be honored to have you follow me @DaveTheGoldDr.

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