March 15, 2011 – Successful gold and silver investment requires looking beyond the headlines and gauging what is seen by the dollar’s performance. For example, while Wall Street celebrates victory in the war against unemployment, drilling down from the headlines proves the victory is only in a minor skirmish.
A quarter million new jobs is nothing to sneeze at, but the reduction of the unemployment rate below 9% is pure deception. Through an extended recession you can’t simply consider those who are actively seeking work when calculating the unemployment rate, says Phil Izzo in the Wall Street Journal. More than 30% of today’s unemployed have been out of work for more than a year, the greatest percentage by far – ever. Many of those have given up the search and that is the core of a structural unemployment problem that will take a generation to overcome.
The Labor Department’s U-6 rate, which includes those who have given up, is now 15.9%. The labor force participation rate, which is the percentage of the overall population that is working or actively seeking work, is a little more than 64% – the lowest level since 1984 and two points below the 10-year average. If participation were at the average today, the unemployment rate would jump to 11.5%.
Hedge fund managers and dealers on the foreign exchange do their homework and they are not fooled by government smoke and mirrors. They know that the Fed’s insistence on holding down interest rates despite supply-side shocks in food and oil will only make the inevitable inflation worse. It should come as no surprise, then, that they “are betting record amounts against the dollar,” says Peter Garnham in Market Watch.
The economy is sick, inflation is looming, and there is “a growing belief that the US currency has lost its haven appeal” – the perfect recipe for gold and silver investment.
Senior Staff Writer – GoldSilver.org