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Friday, January 4, 2013

If You Can't Stand The Heat, Get Out of the Kitchen

While I wouldn't rush into a crowded movie theater and scream FIRE after reading this morning's labor report, I wouldn't describe it as steady either. The headline should be modified to say hiring and unemployment 'steady', as long as it implied underperformance (from the previous economic cycle (chart 1) and deterioration (chart 2 & 3); this headline would likely be too scary for a public yet to be confronted by the next round of horse manure called the debt ceiling debate.

Whether the public gets it or not, something is definitely wrong.  Long-time Insight readers recognize this something as the enormous and unstable debt burden of Western economies and failing confidence that central planners can control it without social and political consequences.  It's also known as the sovereign debt crisis in the global community.

Can central planners control the debt crisis?  The steady rise in the price of gold despite periodic attempts to shoot the messenger of bad news since 2001 suggests that it's unlikely.  Those heavily influenced by easy interpretations designed to maintain a status quo (world) they understand (doesn't scare them) won't likely recognize the signs of economic and financial deterioration the falling safe is only inches from their head.

Those that cannot deal with this reality, which includes the numerous paper operations in gold, please follow Truman's advice and get the hell out of the kitchen!  If not, chasing strength against the setup of money and time have been and will be kiss of death in precious metals as long as the East continues playing the West's game (chart 4).

Chart 1:  Birth/Death Model (BDM) Contribution to Nonfarm Net Payrolls (NFP) Added/(Lost)

Chart 2:  Job Creation Histogram (JCH):  Net Nonfarm Payrolls Added/(Lost) less Civilian Labor Force Added/(Lost), 12 Month Average.

Chart 3:  Average Weekly Initial Claims State Unemployment (AWIC) And YOY Change

Chart 4:  London PM Fixed Gold and GLD (ETF) Total Assets WA Stochastic Moving Average

Headline: December jobs report: Hiring and unemployment steady

The job market ended 2012 with more growth, as moderate hiring continued at the end of the year.

The economy added 155,000 jobs in December, bringing the total number of jobs added in 2012 to 1.84 million, the Labor Department said Friday. The unemployment rate held steady at 7.8%.

Source:  more


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