The US markets are closed today, but the March jobs numbers were release this morning — 126,000 non-farm payroll jobs were created last month. The forecast was for 245,000 new jobs, so this is a terrible report that falls nearly 50% short of expectations.
Taking into account all the economic data thus far in 2015, it’s no wonder that the Atlanta Fed’s GDPNow metric puts 1st quarter GDP growth at 0%.
None of this comes as a surprise to Peter Schiff, who has been predicting this slow descent into another recession for some time. His podcast from earlier this week reviews the latest awful economic data and predicts the poor jobs numbers that we saw this morning.
A new report from Goldman Sachs warns that mineable reserves of rare commodities like gold may dwindle to extreme scarcity within two decades. This means that easily-mined gold is getting harder and harder to find. With less gold being pulled out of the earth, less gold is being refined and produced for consumers. In fact, 2015 may prove to be the peak year for gold production.
- Peak gold discovery occurred in 1995 with 160 million ounces, which means that after 1995, less and less mineable gold has been found.
- The rate of gold production tends to lag behind discovery by 20 years.
- Therefore, as you can see in the chart below, gold production is likely to steadily taper off after this year.
Gold Prices Could Skyrocket as Asian Demand Increases
Bloomberg – Australia & New Zealand Banking Group Ltd. published a report predicting that gold demand in Asia will double by 2030. The price of gold could increase to up to $2,400 in the same time frame to keep up with demand. As incomes in India and China rise, consumers will purchase more jewelry and invest in the commodity. Central banks in these and other countries will also continue to buy gold. The report predicted that if global financial instability continues, the price of gold may reach as high as $3,230.
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In a stunningly despotic move, France has launched severe new restrictions on cash transactions. After September 2015, French residents cannot make cash payments of more than 1,000 euros, down from the current limit of 3,000. Foreign visitors’ cash payments will be capped at 10,000 euros rather than 15,000. Not only that, but any bank withdrawal of more than 10,000 euros per month will be reported to French authorities for good measure.
The claim is that these restrictions will help to fight terrorism. French Minister of Finance Michael Sapin pointed out that the terrorists who killed 17 people at Charlie Hebdo and a Parisian food store partially used cash to finance their attack.
For the fourth month in a row, Gallup found that Americans named the government as the biggest problem in the United States. Jobs and the economy tied for the second-most worrisome problems. Together, these three issues are the top concerns for almost 40% of Americans.
Though issues such as terrorism, healthcare, race relations and immigration have emerged among the top problems in recent polls, government, the economy and unemployment have been the dominant problems listed by Americans for more than a year.”
In a short article for Casey Research, Jeff Clark observes that the gold price has declined for eight consecutive days for the first time since 2009. However, investors shouldn’t worry too much. As the chart below shows, gold prices often cycle through a low point in March before picking up again.
Since 1975, March has been by far the worst month for gold. In other words, the current price behavior is normal for this time of year. In a world of growing currency manipulations and negative interest rates, it’s only a matter of time before we see the inevitable consequences of these actions. It won’t be pretty—but gold will be a refuge in that fallout. This tells us that gold’s current decline should be viewed as an opportunity to shore up our precious metals portfolios.”
Speaking of historical trends, what about the stock market? Gold is likely to reverse this March slump, but will the stock market continue on its multi-year bull run?
Mainstream analysts continue to tout an economic recovery based upon new jobs, but are now starting to worry about stagnant wage growth. One popular excuse for this is “pent-up wage deflation.” The argument goes that since businesses didn’t cut wages during the financial crisis, they are now refraining from raising them.
A new op-ed in the Washington Post debunks this theory and boils the issue down to the basics: the economy is still lousy. Matt O’Brien points to the same problems Peter Schiff has been warning about for years:
It’s just the unemployment, stupid. Or maybe the underemployment. Between people who can’t find the full-time jobs they want, people who haven’t been able to find any jobs after looking for at least six months, and people who think things are so hopeless that they’ve given up looking for now, there are a lot more people than normal stuck on the margins of the labor force. And these ‘shadow unemployed,’ according to the Fed, exert just as much downward pressure on wages as the regular unemployed. Put it all together, and wages haven’t recovered because the economy hasn’t fully recovered.”
Explore the latest exciting developments in the silver industry with the February edition of Silver News. Its front-page story covers how silver nanowires are being explored as an alternative to widely-used indium tin-oxide. Once testing is complete, silver could become even more essential to the manufacturing of touch-screens, plasma televisions, and other common electronics.
Perhaps even more exciting is the new commercial release of a 3D printer that can simultaneously print conductive silver inks inside plastic designs. Everyday consumers can now print customized electronic devices. This advancing technology could add significant demand to the electronic silver market beyond large manufacturers. You can watch a video about this new printer from Voxel8 below.
Chinese Gold Demand Outpaces World Production
Forbes – More than 315 metric tons of gold were withdrawn from the Shanghai Gold Exchange from the beginning of January to mid-February. During the same period, only 300 tons were newly-mined around the globe. The gold demand came in preparation for the Chinese New Year, the country’s biggest holiday. China is already the world’s second largest gold consumer, but its bullion demand will likely surge with changing demographics. In the next 5 years, China’s middle class is expected to grow 66% to 500 million.
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The US Justice Department has begun to investigate whether 10 of the world’s largest banks have manipulated gold and silver prices. The Justice Department is just the latest in a series of financial regulators to investigate possibilities of precious metals manipulation, including the UK Financial Conduct Authority, Germany’s BaFin, and Switzerland’s competition commission WEKO. On top of that, there are a number of pending civil lawsuits in New York against some of these same banks for gold price rigging.
What should physical gold and silver investors take away from this news?