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.