Friday, August 2, 2013

Gold and Jobs

Gold rebounds above $1,300 after jobs miss

Yeah, sorry.  Nothing to get excited about here, although the headline is, well, almost bullish.
Gold futures turned a steep loss into a small gain Friday after July payrolls growth came in short of expectations, leading analysts to say plans for the Federal Reserve to taper its bond buying could be pushed further out.
In other words, "leading analysts" say the Fed may give smart investors more time to unload their holdings before the big decline.  Oh wait, we've already seen a pretty big decline.  I expect more to come though.
“I believe gold will remain supported as long as the market believes tapering is off the table,” said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange, in emailed comments.
Why would anybody continue to hold gold knowing that the Fed will inevitably begin to taper?  I mean, it's "off the table" for what, another month?  Tapering is coming.  The expected accompanying inflation never happened.  Gold is set for a precipitous fall.  There's nothing magical about gold.  It is just another form of fiat money.  The only thing that ever gave gold any fundamental value was the gold standard.  Now, gold's value works just like the much aligned fiat dollar.  Gold's value only comes from the belief that someone else will give me the same value for an ounce of gold as I give someone else.  I can tell you right now, no matter how bad things get, I will likely not give anyone $1,300 value for an ounce of gold.  Unless I happen to know someone who would give me more than that, of course.  Consequently, I'm not buying gold at $1,300.

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