Gold and Dow Flash the Same Warning Signal
By Greg hunter’s USAWatchdog.com
On Friday, both gold and the Dow flashed the same warning signal—the economy is in deep trouble. The Dow plunged nearly 275 points on the news of a weak jobs report, and gold rocketed higher by $66 on speculation global bankers are going to print money to resuscitate a dying financial system. You do not get this kind of tandem move in opposite directions by coincident. Last week, both the stock and gold markets appeared to stop pretending and acknowledged the vortex of debt and insolvency that could suck us all into a black hole.
Renowned gold expert Jim Sinclair of JSMineset.com said Friday, “Those popular gold writers calling for much lower gold prices are simply out of their mind and disconnected from reality.” Sinclair has been calling for “QE to infinity” (money printing) for years now, and he’s been right. Of course, money printing masked the recession/depression since 2008; and now, it looks like more of the same bad medicine is on the way—only a much higher dose. My only question is when does the money printing stop working and turn the currency into confetti? It appears we will find out sooner than later.
I heard one analyst on financial TV say the Dow death dive was overdone and it was “. . . just one bad unemployment report.” I heard another say we’re just going to have to “live with some inflation.” The rich can live just fine “with some inflation.” It’s the folks on the other end of the spectrum I worry about, which is 98% of the rest of us. As far as the unemployment report, there have been so many lousy jobs reports John Williams at Shadowstats.com has been calling what has been going on since the 2008 meltdown “bottom bouncing.” Looks to me we are hitting bottom, once again. Forget the rise in “official” unemployment to 8.2% from 8.1%. It’s been consistently much worse if you measured unemployment the way the Bureau of Labor Statistics (BLS) did in 1994 or earlier. In his latest report, Williams said, “. . . during the Clinton Administration, “discouraged workers”—those who had given up looking for a job because there were no jobs to be had—were redefined so as to be counted only if they had been “discouraged” for less than a year. This time qualification defined away the long-term discouraged workers. The remaining short-term discouraged workers (less than one year) are included in U.6.” If you add those “long-term discouraged workers” back in to the BLS calculation, Williams says unemployment “rose to 22.7%, from 22.3% in April.”
Take a look at this chart of unemployment from Shadowstats.com. The blue line on top is drawn by using data that includes “long term discouraged workers.” Does it look like unemployment is improving like the government says it’s been doing? 
Don’t think the Fed and ECB (European Central Bank) don’t know how bad things really are. My bet is they are in panic mode behind closed doors and are planning to unleash a deluge of new money starting in Europe. Two problems front and center are the increasing insolvency of Greek and Spanish banks and dealing with bank runs. George Soros telegraphed the elites’ wishes yesterday when he said, “The euro zone needs a European deposit insurance scheme for banks, Soros said, as well as direct financing by the European Stability Mechanism (ESM) for banks, which “must go hand-in-hand with euro-zone-wide supervision and regulation.” (Click here for the complete Soros story from CNBC.com)
I guess if the banks got even more bailout money and more public backing from EU taxpayers, everything would get back to “normal” at least for the bankers. The ECB and the Fed better do something quick before the pace of bank runs goes into high gear in Europe. According to money manager Eric Sprott, widespread bank runs in the EU is a nightmare situation that is turning into reality. A recent post on Sprott.com said, “. . . no matter what happens in the Eurozone, the absolute worst case scenario for the authorities is a bank run. It terrifies all involved, because they can spiral out of control faster than governments can react to stop them, save for the most Draconian measures. . . . The number one reason we have always believed gold should be owned, and why we believe it will go higher, is people’s growing distrust of the banking system – and we are now there. We will wait and see how the summer develops, and keep our attention firmly focused of the second phase of the bank run now spreading across southern Europe.” (Click here to read the entire post from Sprott.com.)
The economy in the Western world is clearly in trouble, and gold’s rocket rise is public notice to take cover.
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About the Author
Greg Hunter
Greg is the producer and creator of USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin. USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows.
Greg, while reading your new column, the MSM on my TV is saying Germany is going to get centralized control in Europe in exchange for money printing to “save” the PIIGS and “rescue” Wall Street. How much longer will this economy run on Vapor Money? Where is reality? Are we so far gone that as long as we are sitting in our vinyl sided houses with our foreign cars in the driveway filling our heads with Madonna and ESPN on the TV and drinking a beer we will let this happen? The day of reckoning is coming and I’m afraid alot of people wont’t see it coming and alot of people we try and warn about it simply dont want to think about it. Eat, Drink and be Merry…..As it was in the days of Noah…….
Mike,
Thank you for letting it rip here!!
Greg
Greg: while watching the Asian markets last night, I noticed a blurb stating that the Shanghai spot for gold had reached its highest level. This at a time when US spot was down $3. Decoupling? True price discovery? Any thoughts?
Andy B,
I think it has been well documented by GATA and others that the gold (and silver) markets are manipulated. However, the market will, in the end, defeat any and all manipulation. We are seeing that now. I do not know it it is decoupling but prices are going higher as the NY and London controlled PM markets transfer bullion to the East.
Greg
Obama will make it allllll better…just give him 4 more years!!! Honest!!!
what a complete joke……
Which clown will do any better? Romney? Get real.
You nailed it, buddy. Is this concept rocket science? It seems as though about one person in a thousand gets this. It’s a phoney bifurcation with goofballs on one side and dumbshits on the other.
Maybe a little starvation will incite some political unity and help people realize that none of these SOBs is our friend.
Amen.
We seem to conveniently forget that it was a Republican named Richard Nixon who reneged on Bretton Woods, thereby turning all major currencies into fiat money overnight and since then the U.S. Dollar has lost over 90% and the Indian Rupee over 99.5% of their respective purchasing powers.
Then came another Republican named Ronald Reagan who adopted a “spend but don’t tax” policy which racked up a massive deficit and it was left to his hapless successor to try and rectify the problem with higher taxes, an attempt which cost him his re-election.
We also seem to overlook the fact that it was a Democrat named Bill Clinton who left office with a modest budget “surplus” which his successor, a Republican named George W. Bush promptly turned into an astronomical deficit with his tax giveaways to his super-rich buddies, an insane war on Iraq and massive bailouts of TBTF corporations and tanked the economy.
From this it should be clear to anyone that it is all Obama’s fault.
Everyone has their bias’. You left out Clinton’s repeal of Glass-Steagull, for example. But, BARRETT has pulled you both off-topic… The financial crisis was a bipartisan creation.
Paul,
Lots of blame to go around for BOTH parties. Spot on point man!!!
Greg
Exactly. Which only reinforces my thesis that it is all Obama’s fault.
They are ALL guilty! They haven’t followed the Constitution since the 20’s???Even ole’ Bubba, changed how all the accounting was done so he looked better. They all do it. We’re headed for a crash. Batten down the hatches.
‘My only question is when does the money printing stop working and turn the currency into confetti?’ I realize this is a rhetorical question but felt compelled to try an answer….It stops working when the money is released out into circulation….so far the banks not letting go of the cash but rather just draw more from the fed/treasury and pass it around to each other in the form of sovereign bond purchases. In the process they are lining their own pockets and salvaging their own misdeeds with the overflows while congress looks the other way…..The public, though really the ultimate payers here, is really ‘out of the money’ so far on the QE thing as the $$’s just don’t get out into circulation among the end users, us! Making themselves feel solvent, so to speak the bankers quietly corrupt the market with politicians so inept or_________(you fill in the blank here) while congress dawdles and pretends to do things important for the people….http://www.youtube.com/watch?v=h19FZtDprd0&feature=player_embedded…..check out the fools sitting about this guy in congress, do you really think there is any hope for working class middle America with these people representing us? MSM will refer to this guy as having a ‘melt down’- I refer to it as trying to ‘dog kick’ sense into idiots!
Greg-thanks for all you do…..
Thank you Big tom for the comment, link and analysis!!
Greg
What about silver? I have some silver bullion because it is cheaper to purchase large quantities. Do you think silver is still a good go to if you don’t want to go the gold route, or should I sell the silver and buy smaller quantities of gold? Great reporting as usuall.
Doug,
Silver’s only problem is that it is bulky. You can carry and store 10 ounces of gold much easier than a “monster box” of Eagles or Maple Leafs. That said, you really need to have both in your physical portfolio. Silver will go much higher on percentage basis than gold in this decade according to Eric Sprott. Sprott was one of THE MOST successfully money managers in the last decade.
Greg
I have a patient that has a husband from Greece. We are all here in the USA. His mom’s money was still there, in Greece, and about a week ago he went there to get all his Mother’s money wired out of there.. He is a pilot, so it made for easy travel, but that got my attention. They certainly feel Greece is going to fall out of the Euro-zone (His family feels that way). Regardless if Greece gets out or stays in, it is a sign of the times that he flew there and did that.
Thank you for the reporting Bryon!
Greg
QE in an election year is usually politically influenced. If the Fed truly is loyal to Mr Obama they must print and print soon. Mr Obama needs time for this stimulus to stimulate the economy so he can take credit for the false recovery before the election. So they need to print and print now if Mr Obama’s reelection is part of the motivation. Should they wait, Mr Obama’s re election will truly be imperiled. The economy will continue to implode and the stock markets will continue to free fall. A decision to print later will be very risky and will not help Mr Obama’s re election chances. Is it possible that the Fed has decided that Mr Obama is expendable? Lets hope so.
Unfortunately it doesn’t matter as long as we continue to elect presidents who are loyal to the Fed.
Glen, I beg to differ. The FED cannot be politically influenced as you understand it. The FED is a private entity, a synthetic intermediary between the Treasury and the US Mint. This private entity is owned and managed by big banks. Its decisions only serve banks. It is unlikely that it serves politicians because all evidence suggests the FED serves itself and banksters.
There is much misunderstanding about the FED and its origins, purposes, and goals. If more QE happens, it will only be another attempet to save the big money-center banks, whom the FED nearly owns and fully represents… many of which are looking like Lehman Bros about now.
QE, needed or not, is about banks, not politicians and not economies. The big banks contribute about equally to demicans and republicrats running for President. The banks don’t want many things to change, and the FED is always in their court.
….ikb
It is important to remember that the majority of the world’s population is only of average intelligence or below, and that persons who have certain types of sociopathic values tend to be attracted to positions of power.
This helps me understand what is going on.
Good concise article and to the point. Thanks.
Thank you Robert.
Greg
Totally accurate and to take it further…thanks to assistance from the mainstream media ‘presstitutes’ and poltical hacks /lapdogs these psycho-sociopaths have been able to create a ‘virtual reality’ where we’re lead to believe unemployment is only 8.2% instead of 20%+ and the national debt is portrayed to be around $ 16 Trill vs. the very likely figure of $100T+ and the cost of living is considered very manageable….assuming we don’t count food and fuel. The list goes on and on and matched only by Ben Bernanke’s level of fin’l chicanery, obfuscation and fiat fluff.
The level of arrogance exuded by this self proclaimed ‘elite’ is really off the charts now and I for one truly hope they all get a healthy dose of ‘reality’ before it’s all said and done.
Greg, the Dow to the rescue, meaning, the FED must have come into the market over the weekend and shored it up, as at close it is barely down. Once again, the Fed, Market, elite, & wall street are blaming Europe, that’s like a pig in his own pen telling the other pens they stink. Anything but admit a jobless, stagflationary economy that is so debt ridden that the talk now is to raise the retirement age to 75 or 80; go figure that arrogance. The elite can retire while the 98 percent others get to serve them until they croak.
Your article was timely, well thought out and factual. What you didn’t mention is that the middle class has been ruined and got the short end of the stick. The elite have money and will get more tax relief if Romney wins, the poor already gets help, but the lonely middle class got screwed,its gets nothing except to work until old, old, old age.
Art,
Spot on man. Thank you for adding to the content of the post!
Greg
Hi Greg,
I agree with Art. Anyway you slice it the ‘middle class’gets the short end of the stick every single time! The middle class is the ONLY class that pays substantially into the Federal Government. And yes I know that the rich pay 50% of taxes, but guess what they can afford it. I’m not asking for more of their hard earned money. Just don’t hinder me from making my own hard earned money Obama!!!
It’s the elite,the politicians,congressmen, senators,the rich, and the poor who milk the government day after day.
But what do we[middle class]get? We get lost jobs, lost wages, foreclosed homes, repossessed cars, and closed small businesses!
And when the %@#?$ hits the fan, it will be the middle class ‘top side’, that is clamoring for food and dodging bullets in order to feed our families. The elite will have moved to their underground cities stocked piled with everything they need. Leaving the middle class to deal with the lawlessness created by the termination of entitlements.
I say that the best thing to do is to move outside the city limits, stock up on food, buy a couple of guns, and invest in gold and silver. You know like Obama said, ‘holding on to our guns and our religion.’
We should stock up on food especially, because you can’t eat gold or silver.
Greg thanks so much for your insight, I guess Art got me fired up. You articles are a blessing, and they help me to try and predict the timeline in regard to the coming economic collapse.
And in case you were wondering, I don’t fit the usual profile of the doomsday prepper, I’m African American, and there’s a growing number of us ‘waking up’ to the horrors of Obama.
Valerie
Good job Valerie !! I don’t consider myself a “prepper” either.
But, don’t forget to stock up on things you can barter with. When the SHTF, my neighborhood will start our own little economy and take care of ourselves! And, don’t forget the simple little skills/hobbies for trading too. If I can bake bread or sew, and you can fix an engine. That’s valuable.
the idea of deposit insurance is preposterous. are they going to insure against the country converting the depositors’ holding from euros to a new local currency? people are pulling their money out of greece and sending it to germany not only because they are afraid of bank failure. in greece, they are doing it because they are worried that their euros are going to become new drachmas.
In less than 50 years many of our time-tested beliefs have been openly mocked and/or turned on their heads.
Namely, Gold and silver use to be the currency of choice in troubled times–but not today just ask many of our economic and media experts.
It is now being reported that “the rich” are embracing only hard assets and are entirely out of paper. When the gig is finally up I wonder how many people will feel like the Dutch who once greatly over estimated the value of the tulip!
In other news today congress issued a strict edict demanding Jamie Dimon conduct a complete and thorough investigation of himself. All costs will be put on the taxpayers and no-bid contractors must be
given right of first refusal.
I heard he complied with Congress and found no criminal or ethical violations of himself. Congress applauded him and is considering asking the President to award him the U.S. Presidential Medal of Freedom for all his civilian high standards and humanity work.
It should be interesting to see what happens when the Pan Asia Gold Exchange gets going. The manipulations and shenanigans are just over the top, and nothing makes sense.
Greg.
Interesting thought. With so much seperation between rich, and poor. It seems posible the dollar will always be the poor mans money. As i see it. In desperate times food will be in highest demand,so high Gold, and silver will easy be bought by the wealthy. The poor will still need to pay high taxes,gass,electric…ect… As long as there are millionairs, gold will flow up hill. How long will a man hang onto his gold when it cant pay for a loaf of bread,pay property taxes ,and all the things of comfort we suckers have come to think is a need.
I believe Friday was the big turn-around day for PMs.
They stopped trading with the Dow and against the dollar
and started trading as a safe haven. For the wealthy, it is rapidly
becoming a wealth-protection situation as opposed to a return on
capital situation. Unlike 2008, there seems to be no safe-haven currency
as all major economies are struggling with solvency and Gold appears to
be the only safety remaining. It seems like the 2008 financial crises has
taken a long time to come to a head, but now it appears to be coming to
a head at fast pace. At best, maybe a few months remain for investors to
take a hard defensive position and in The EU, maybe only weeks.
Thanks to Greg Hunter and a handfull of others, some of us have opened
our eyes to what’s happening under our noses. Wake up folks and smell the
coffee. Time to get ready for a major event of unknown magnitude. It is better
to be a year early in your preparation than to be a day late.
On May 31, 2012, Gold made a huge up move, and we have someone named Jim Sinclair thought Gold is in the bull market and made a comment, calling the popular gold writers out of their mind and disconnected from reality.
I don’t know who is disconnected from reality and who is out of their mind.
We can not tell, whether Gold will continue to go up from May 31, 2012, or go down from there.
If Jim Sinclair think he is connected to reality and he is not out of his mind while other popular gold writers are, I want to see him put the money where his mouth is and start buying Gold today, and very soon, the Gold market will tell him he is connected to the Gold market or not.
All the talking without taking any actions is simply talk.
And before, May 31, 2012, Jim Sinclair didn’t positioned himself before the huge up move.
Why? Because he did not expect Gold would make such a move, he did not expect Gold make a reverse so quick in very short time.
He can only talk and calling the popular gold writers are out of their mind and disconnected from reality, while he missed the move.
Jim SinClair if you think the Gold market will go up from here, you got to put the money where your mouth is, don’t just talk without any actions.
SBrown,
I think he already has taken his position–years ago. What your talking about is trading not investing or insurance. Sinclair is not telling people how to “trade” the market. Thank you for your comment, even though I totally disagree with your unfair characterization of Mr. Sinclair.
Greg
Whether my comment is fair or unfair toward Jim Sinclair.
We have to go back to look at when, at which hour, his comment was made. If his comment was made on Friday that day before 8am Eastern Time, then he is truly connected to the Gold market, if his comment was made after 1pm that day, then he was just taking the advantage of the huge up move that already happened, and made a comment about other popular gold writer.
If Sim Sinclair is truly connected to the Gold market, he should made his comment before things happen, not wait after things happened then made a comment.
Do you see my point, Greg?
I am a fair person. I let you find out at what time Jim Sinclair made that comment, if he made it before 8am, I will write to him and apologize for my unfair comment.
If his comment was made after 1pm, after the Gold market made a huge up move on Friday, then he should put the money where his mouth is and start buying more Gold.
S Brown,
I see your point but I think it is invalid. You are trying to glean trading advice when none is offered. You are also grading him on an extremely short time span. Sinclair likely has many ounces of gold at a price in the single digits–maybe the very low single digits. Why would he buy more. He is not trading the market and has repeatedly told people not to do it. He has also said the best way to play this market is to consider gold an insurance play and hold it as a core investment in your portfolio. Sinclair has made some magnificent long-term calls. In late 2002, he said to buy gold and predicted it would reach $1650.oo per ounce by January of 2011. It reached that mark about mid-year 2011. Please note this was a call made more than 8 years earlier. There were plenty of ups and downs along the way, but by any measure, it was a fantastic call and more than a 4 fold increase in price. He has made others as well. In 1974, when gold averaged $160 per ounce he predicted it would reach $900 per ounce in 1980. (Please note this was AFTER a run-up from $35 per ounce.) It hit $887.50 in intraday trading in January 1980. This was more than a 5 fold increase. I have been reading JSMineset.com since 2006 and I read it 3 or 4 times a week. From my experience, I think your comment is just not a fair appraisal of what Sinclair offers on a FREE site. He is not selling a newsletter of offering trading advise other than do not trade your insurance.
Thank you for your comment and for supporting this site.
Greg
Greg,
Thanks for another informative article and thank too for making your site free to all. I feel the tune will keep playing until the election. No matter who is elected, I feel things will really begin to fall apart at a rapid rate. I operate somewhere between dread and out right fear on what is coming our way. We can do no more than prepare as best we can and pray.
Thanks Jan for your comment and support.
Greg
Got bullets?
Ahhhhh, one more of my favorite precious metals!!!
Hi!, Patrons Of Greg Hunters’ WatchDogUSA Et Al:
The way they say to create a World Government is to create worldwide malcontent towards all previous conventional government; so that the mssses will accept the idea that only the elite’s world leadership through a World Govenment will hold the coveted answers to everyone’s problems forever and ever world without end amen. Fiat money is the elite’s promotion ticket towards the creation of that end: World Government under their complete control with no over rulling middle classes to push their agendas aside. The world’s middle classes are too broke monitarily & morally to campaigne against them. They have the printing presses and we have their inflation/depression/recessions which have been going on now for more than 40 years sense Nixon closed OUR US Gold Window creating our image as the Great Satan!
RUSS SMITH, CALIFORNIA
[email protected]
Greg,
Thank you for your common sense approach and answers. My question is from a very simple standpoint. An overactive printing press will allow the USA to repay debt with a devaluated dollar. Will this not benefit me in the repayment of my mortgage ie paying off the mortgage with devalued dollars before the dollar completely collapses? For example, if i have the dollars to repay my mortgage, and in lieu of repaying the mortgage now, purchasing hard assets such as gold or silver, then paying the mortgage with devalued dollars from the sale of the assetts? Is this a good plan or flawed? is there a better alternative? Secondly, i have 50% of my assetts in gold and no silver. is now the time to get into a couple of monster boxes of silver? you thoughts are agreatly appreciated from this low level middle class guy trying to protect his family.
MICHAEL WILLIAMS,
I am very weary of giving specific advise on investment and timing strategies. I am not a market timer or investment advisor. If you were to pay off your house I would make sure you would be able to get clear title no matter when you do it. I think everyone should have a core position in both gold and silver, but this has to be an insurance play not a trade. You must be in the position to set it and forget it. In other words, you must be able to hold any investment in PM’s until you wish to sell and not be forced to liquidate during a correction. Only you can asses your situation.
Greg
Gregg one I find it funny people asking you advise concerning the market. I am hoping to get more information about what is going on between Russia and China. It seems to be very low key not only in MSM, but also in the alternative news, yet I foresee it having great significance. Can you enlighten us on this matter?
anni,
Russia and China are not only trading partners with Iran but military allies. At the very least, the Russians and Chinese have sold Iran missile and torpedo technology that can sink U.S. warships and damage U.S. bases in the ME. If there is a war, expect Russia and China to side with Iran. They will, at the very least, supply them with weapons. There is a good chance any war with Iran will spiral out of control and directly involve the Russian and Chinese military in what will surely be a WWIII event. I hope I am wrong, as there will be no real winners in the next global conflict–only survivors.
Greg
Russia and China historically turn tail and run back to their boarders if push comes to shove so don’t expect them to create WWIII for Iran, at best they will send some weapons of newer technology. Any conflict with Iran will be contained to the immediate vicinity.
Art,
What about Korea and the 20 million Russians who died turning back Hitler on the Russian front? You are correct on the technology though. It there is war, the U.S. will take some big hits. I hope we can avoid it. On the economic front, if there is full metal contact, the world economy will plunge so deep it will make the Great Depression look like a wadding pool.
Greg
At a time when O’Blowhard is trying to decimate our military !
bring back the OTTOMAN EMPIRE
“Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves.”
Norm Franz.
Gold is flashing ….WARNING….!! About ready to explode ..higher.
I liken Gold to a lie detector….with the innate ability to ascertain truth and falsehood.
The Banks have sold the world on the Debt Lie……that…
….Debt was good !! In fact ….Debt = Slavery.
Individuals, Corporations, Governments and Banks are collectively negligently culpable.
Debt was considered a medium/convenience for existence, extravagance and survival. But it always implied that living beyong ones means was never sustainable. As with Governments the world over, the economies of the once great nations are mired in the depths of recession/depression. The reason….Debt.
Gold Stands tall when those that have been elected to protect the wealth/safety of many, choose only to protect the few. Those that hold Gold will indeed be crowned Kings.
The continuation of the use of psychology to brainwash the masses will be exposed for the great fraud that it is. Gold is our ally and does that work for us.
When the masses awake from their slumber it will be too late.
Knowledge is power….understanding what Gold is…engenders real power. Having possession of Gold provides absolute power.
I encourage your readers to visit the history books and understand the Bretton Woods Agreement and in particular what it meant to have possession of physical gold for the USA. The part that gold played in that era is critically more relevant.
Undistorted information is available to all if they are inclined.
Knowing what part Gold plays in the future monetary system is vitally important. Who holds the Gold is KING.
QE release a lot of paper money into the market a portion of which goes into the stock market, gets beaten by bears and substantial money reaches a select few? Is that right?
C.G. BHARGAV,
Money printing always helps out the people at the top most and hurts the people on the bottom worst. The short answer is yes.
Greg
Greg – I applaud your patience!
Thank you Bit Tom! I appreciate your support.
Greg