Saturday, March 5, 2011

When Things Look To Good To Be True...

"...It’s the realization that the value of the money that they are being denominated in is being destroyed, and ergo the prices of gold and silver have to go up and if you don’t grasp that concept you’re going to miss this market."
 -John Embry

A funny thing happened on the way to the CRIMEX Friday.  The non-farm payrolls report came in "hot" as the economy gained 192,000 jobs in the month, roughly in line with economists' forecast of 190,000 jobs.  This is not the "unexpected" I, and others out here, expected.  A big miss on the jobs forecast, and subsequent bashing of the Precious Metals did not materialize.  Shorts betting on a fall in the metals on a bad jobs number got caught with their pants down, and were forced to cover quickly.  Toss in the escalating price of Oil, and Gold and Silver rose steadily throughout the CRIMEX trading session to the surprise [and delight] of many, and both rose even further in the after hours market.

But be wary.  This Silver break to new 30 year highs is not supported by it's market internals.  A Bearish Divergence began setting up in Silver Monday on it's daily chart, and continues as it runs along the top of it's up trend channel.  A reversal "may" be nearing.  I would be reluctant to chase Silver here.  Higher prices going forward are all but certain, but no market goes straight up.  A big dip buying opportunity "may" be close at hand.  I don't trust these CRIMEX goons as far as I could throw them, even if they are getting their asses kicked right here and now.

Could the Silver market continue higher here?  It most certainly could, paparticularly if the unrest in the Arab world continues unabated, and Oil continues to rise by $2+ a day.  Margin requirements were raised on Oil contracts after the close Friday, and it should be noted.  However, any ease in the Lybian siege and the rise in the price of Oil could take down the price of Silver swiftly as it is "technically" perched for a fall already.

The weekly chart of Silver is looking suspiciously like the runup to the Bear Stearns collapse in March of 2008.  That was a massive short squeeze in Silver that was stopped dead in it's tracks by the Fed and JP Morgan.  Yes, things are different now, but the crooks rigging the game are the same...and they are in the midst of a massive short squeeze today.

When things look to good be true...maybe they're not.  Stay on your toes this week.  Protect your profits.  And be on the lookout for sale prices in this great Silver Bull market.

Despite the headlines and the rah-rah on CNBC, the February Jobs Report was nothing to cheer about.

The BLS net birth/death adjustment added 112,000 payrolls to February’s data.

Burst of hiring could mark turning point for jobs- AP
Companies added more workers in February than in any month in almost a year -- a turning point for the economy that finally pushed the unemployment rate below 9 percent. Economists say the stronger hiring should endure all year.

I doubt it...and I am not alone with my doubts:

February’s Jobs Report
New York Times Editorial
Over all, the job market did not get any worse in February, and by some measures, showed signs of new life. It would be wrong, however, to regard the latest data with anything other than extreme caution.

Unemployment declined to 8.9 percent from 9 percent in January and from 9.7 percent a year ago. Unfortunately, the improvement over the past year is mainly because of a decline in the size of the labor force — generally, people giving up their search for work — a quirk in the data that masks the true level of distress.

It is all too easy to disparage “dropouts” as slackers. But with the average spell of unemployment at a record high of 37.1 weeks, and with nearly five unemployed workers for every available job opening, their plight is not so much a personal failing as an economic catastrophe. A weakened labor force is a sign of distress and decline, presaging a slow recovery and an ailing society.

Job growth data is similarly troubling. On net, 192,000 jobs were added in February, marking 12 straight months of private-sector job gains, for a total of 1.3 million new jobs over the past year. Even if last month’s pace of job creation could be sustained, it would take nearly eight years to return to the pre-recession unemployment rate of 5 percent, set in December 2007.

Discouraged Americans Stop Looking for Work
By Alan Zafran
Meanwhile, we do have to tip our hat to the bears, who rightfully point out that the official government statistic of an 8.9% unemployment rate (meaningfully down from 9.8% only three months ago) may not be fully capturing the whole labor picture. Why not? Well, let's attribute that to something called the labor force participation rate.

You see, the government defines unemployment as those non-military individuals over age 15 who don't have a job, have actively looked for work in the past four weeks, and are currently available for work. The government definition also includes people who were temporarily laid off and are waiting to be called back to that job.

But what the government's definition fails to capture is how many Americans (over age 15 and not in the military) have spent countless unsuccessful months looking for work and have finally left the labor force. Specifically, those persons who didn't look for a job in the past four weeks, or those who are so discouraged that they have stopped looking for a job, are not counted as being unemployed. Ironic, isn't it? The longer someone is not working, the less likely they are to be considered unemployed by the government. Go figure.

No comments:

Post a Comment