The Jobs Number & Reality Check
The prevailing thinking to emerge from the job numbers alone are to confusing to say the least. They lead to the assumption that the U.S. economy has downshifted for the last three consecutive months. However, the Fed will not move into QE mode for that has robbed them of their power to even try to manipulate the economy in tune with Keynesian Economics. There is a lot more depth to the numbers than meets the eye.
The other side of the job numbers is the economic evolution underway. The introduction of technology is reducing jobs since basic jobs can be replaced with machines. We are seeing this trend everywhere. South Africa’s gold-mining companies are also now turning to machines to replace workers to reduce the cost of mining gold. This is a trend that is impacting the global economy. This is a wave of innovation which unsettles the economy and some jobs vanish as new types of jobs are created requiring different skill sets.
So the jobs number is nothing to get all excited over. You can see the stark contrast as household incomes are showing a sharp gain, which is reflected in car sales accelerating toward record levels. The jobs number by itself is not altogether a key indicator. The markets will collapse and rally based upon it, but that is trading noise.
Are stocks and gold inversely correlated?
QUESTION: Mr Armstrong, is it true that stocks and gold are inversely correlated?
ANSWER: No. That is not a correct statement. There is no such relationship that is static other than assets v money whatever that might be at the moment. Commodities peaked in 1919 and bottomed with stocks in 1932. The all rallied into 1937.
There will be times that gold and stocks will trade together as well as in opposition. The relationship is a complex dynamic that actually involves a contango of influences.
Therefore, the answer is NO. There is no constant relationship between gold and the stock market regardless of what promoters will argue. Keep in mind they are selling something. They are not objective analysts.
Not even Gold and silver are correlated at all times either. We do not see any steady consistent ratio of silver to gold throughout history. So there is no relationship that you can ever say is constant. This applies to even two precious metals no less gold and stocks.
The golden rule is simple – assume nothing. The truth always lies in the data.
Gold & War
MM
ANSWER:
No. The only impact that war will have on gold is confined to either
prolonged inflation or the uncertainty of the victor — the hedge against
government survival. War by itself is a non-event. Gold will rise ONLY when there is uncertainty because the currency of the government will not survive a loss or a win if it is Pyrrhic victory.
So be careful. The gold promoters will tout that gold will soar if a war takes place. They did that with Russia’s invasion of Afghanistan back in the 1980s. But
war means nothing unless there is a rise in uncertainty as to who will
win or the cost changes the economic trend in a Pyrrhic victory.
The Romans closed or opened the door of the Temple of Janus for whom
the month of January is named after based upon the existence of war.
When the doors were closed, there was no war, so political uncertainty
did not exist. When Rome was at war, the doors remained open as a symbol
of political uncertainty. So this is a very familiar concept that has
ancient roots.
Gold rose in
value expressed within the local currency of any nation where its future
existence came into question in both World War I and World War II.
Capital will also attempt to move away from wherever the crisis might
be. So war in Europe and the dollar rises. The Cuban Middle Crisis and
the dollar declined as capital fled to Europe. Just because there is war
somewhere, which there often is, has no impact upon gold unless your
country is impacted with respect to confidence.
Government Prosecutors Are Being Exposed as Corrupt
The one thing that MUST change is the person who holds the power to prosecute. There will never be any justice as long as government retains that power. Why? They never prosecute their own and this allows politicians to write laws that exempt themselves from prosecution. Since government prosecutors are part of the bureaucracy, they will never provide the check and balance against corruption. People are starting to notice this problem, which is a reminder that this is the peak in government confidence. The New York Times, which hid from the truth in my case, ran an opinion: “Dishonest Prosecutors, Lots of Them”. It has been a long-time coming.
The World Is a Teacher If You Listen
CNBC even mentioned your turning point. They called you the “fringe” economist. Others call you the “source”, “Mr. Yen”, “globetrotting economist”, “uncannily accurate financial forecaster”, “the “Renaissance man”, the “Legend”, and of course the “Forecaster”. Everyone admits you have been the most accurate analyst of all time. So my question is, will governments turn to your model when they see there is no choice?
Regards;
BM
ANSWER: That
is a good question. Typically, human nature would say no way.
Governments will always abuse their power until the very end. I would
like to think that we could move forward in this journey of civilization
and learn to live with the cycle. But until we discover another
planet with lifeforms capable of waging war that causes everyone to ban
together against some alien force, we will continue to fight among
ourselves.
So what I do, I do in an effort to help shape what comes after the crash and burn. I do not expect government to accept me with open arms. I suppose I am a globetrotter.
I have been fortunate in being perhaps the only economist who has had
to deal with clients throughout the world. They have trained me to look
at the world through everyone’s eyes — that is the key. It is also why
our World Economic Conferences have had decades of success. When people
come together from around the world, they get to see what I have seen
with respect to how the world functions.
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