Another bad US economic indicator is becoming a focus for economic policy makers. Last month at the economic symposium at Jackson Hole, Janet Yellen said, “As a society, we should explore ways to raise productivity growth … improving our educational system and investing more in worker training.” Yellen is referring here to the production efficiency that occurs when incoming, better-educated college graduates enter the labor force, bring their new knowledge, and create better processes. This is commonly called the “productivity miracle” and has been a reliable economic phenomenon for 50 years.
Friday of last week brought in much weaker numbers than the Fed expected from the non-farm payroll report. That was the big bet Janet Yellen’s crew was going all-in for, but the jobs report wasn’t the only important figure hitting reverse, and definitely wasn’t the most important look at the overall health of the economy.
As Peter Schiff points out in his latest podcast, this “specter” of a jobs number that the Fed is promoting should not be nearly as influential as productivity numbers or the PMI manufacturing index, both of which were down yet again. All of these contributed to gains in gold and silver going into Labor Day weekend, and they are continuing to rise as concern for a September rate hike has all but disappeared.
Peter stated it clearly in this week’s podcast: “You know things are getting bad when the Fed has the general public believing what they say about hiking rates, and they still don’t do it. The moment they start telling the truth, that they can’t raise rates because the recession is out of control, is when this country can finally face reality and start recovering.”
After the last week’s lackluster jobs numbers were reported, gold futures got a big jump, halting a weekly decline. After the Bureau of Labor reported only 151,000 jobs were added last month, investors sought a safe haven in the yellow metal while hopes of a September rate hike were all but squelched.
The gold spike halted a weekly loss fueled by two weeks of so-called “hawkish talk” from Janet Yellen and other monetary policy makers.
It’s been a week since Janet Yellen’s talk at Jackson Hole. Learn more about the aftermath and what’s to come in this week’s edition of Fed Up Friday.
New Job Numbers Bad News for Possible September Rate Hike
Employment numbers for August came in this morning, and, at just 151,000 newly added workers, they’re lower than many were hoping. The official unemployment rate remained at 4.9 percent. Average hourly earnings grew only 0.1 percent, bringing the 12-month increase in wages to 2.4 percent. The wage increase is said to be ahead of inflation, but that’s only if you consider the fuzzy consumer price index numbers the Fed uses to make their data dependent decisions. Gold prices jumped around $10 per oz at the news.
Holding physical precious metals continues to be in high demand around the world. In fact, the need for physical gold is so high that Australian-based mining company, Resolute Mining, is offering to pay out investor dividends in the yellow metal.
In an unprecedented move, the mining company’s new policy states that “shareholders with more than 5,000 shares can opt to receive their dividend payment in gold through a personal account held with the government guaranteed Perth Mint.”
John Welborn, Resolute’s Managing Director & CEO, with Richard Hayes, The Perth Mint’s CEO
After Janet Yellen’s speech at Jackson Hole last week, gold stocks sold off on the Chairwoman’s “hawkish” tone. It was once again an overreaction and misinterpretation of the Fed’s real impact on the economy. In his latest take on Yellen’s speech, Peter Schiff explains why the Fed’s “hawkish” talk is just a front to keep the markets anticipating action. In any case, Peter explains, the decision to hike or not will have little effect on the economy.
A rally in gold prices happened on Friday after Janet Yellen’s hint at a potential US rate hike in September. During the economic symposium at Jackson Hole, Wyoming, the US Federal Reserve Chair said the case for raising interest rates was gaining strength amid strong economic numbers. Gold rallied $20 an ounce with the dollar dropping against other currencies.
The Fed’s been looking for new friends this week, tuning out the haters and struggling to convince the public about potential rate hikes. Check out their follies below!
Flip-Flopping Fed Gets No Credibility from Market
A market that doesn’t care about the direction the Fed wants to take us can be a recipe for a firestorm. In 2016, the market’s faith in the Fed seems to be at an all-time low as they tout guidance, yet change course with as little as a single economic report contradicting them. All eyes were on Jackson Hole today as Fed Chair Janet Yellen opened up the annual Economic Symposium.
So what did she say? She stuck to her guns about the (now laughable) potential for another rate hike before the election. Those guns include being as vague as possible and hinting that a rate hike may or may not be coming very soon. All in all, Yellen didn’t really say much at all, other than to continue her standard issue talking points and give very little guidance for the market on the direction of the US economy.
According to Charles Schwab’s chief fixed income strategist, Kathy Jones: “Yellen succeeded in leaving the door open to almost anything. Unless there’s a huge rise in jobs in the next jobs report, [a rate hike is] still probably more likely in December than September.”
No other economic concept has created as much confusion and in-fighting among economists as the idea of inflation. Along with its antithesis deflation, they have been the boon and bane of many monetary policy makers, detractors, and admirers for decades.
But what does inflation really mean? How does it affect the average business owner or the average individual? More importantly, how do governments and central banks use inflation to justify their own actions? These are essential questions to understand for anyone interested in making informed decisions to protect their wealth.
Bloomberg recently reported the safe depository company, Malca-Amit, is seeing a 90% jump in demand for storage of precious metals and stones in its Singapore-based branches. It’s hardly surprising given the 26% increase in gold and 37% rise in silver prices year-to-date. Like the rise in any metal, high prices are spurring many to dig through their old jewelry boxes and reappraise Grandfather’s gold watch for its intrinsic value.
