According to the October non-farm payroll numbers, the US economy added 531,000 jobs, well above the projection of 450,000. The two prior months also saw significant upward revisions. The unemployment rate dropped to 4.6%. The one weak spot was labor rate participation, which remained at 61.6% instead of increasing to 61.8%, indicating a lot of people aren’t returning to the workforce.
Meanwhile, stock markets continue to surge to new records. In the eyes of investors, everything is great. But Peter said it’s not because the economy is booming. It’s because the Fed has promised to continue the stimulus indefinitely.
Even though they’re going to be tapering, they did leave the door open to tapering the taper if the data turns. Powell has reassured everybody that interest rates are locked at zero for the foreseeable future – potentially indefinitely. And that’s exactly what the market wants to hear. Because as long as interest rates are not going up, and they’re going to stay at zero, and money is free, well then there’s no price too high for the stock market.”
Even with the taper and employment news, gold had a breakout day on Friday. It was up about $26 and closed solidly above $1,800 an ounce — previously an area of strong resistance. Peter said the fact gold rallied on a strong jobs report is more significant than the dollar amount of the rally. Over the past several years, gold has been clobbered after strong jobs numbers.
Some of the biggest down days gold has had this year have all occurred on days where a stronger than expected jobs report was released. A lot of times, gold would drop 20, 30, 40, even 50 dollars following a stronger-than-expected jobs report. Why? Because signs of a strong economy mean the Fed is going to be tighter. They’re going to raise rates sooner. They’re going to taper bigger. So, gold has been very nervous about the jobs numbers.”
Conversely, gold has had some of its biggest rallies after weak employment reports. All-in-all, the jobs report has been one of the biggest market-moving events for gold. So, the fact that we got a stronger than expected jobs report and gold not only didn’t go down but actually had a pretty solid day is significant.
And last Wednesday, gold didn’t drop on the taper announcement either. At the time, Peter said that indicated the taper had already been priced into the gold market.
And Friday’s action is more confirmation. Because now we got a strong jobs number and gold just shrugged it off and went higher. So, if gold didn’t go down on the taper, if gold didn’t go down on the strong jobs report, when will gold go down? It probably won’t. Because it probably means the sellers are gone.
The people who are looking to sell the taper — they’ve already sold. The people who want to sell strong jobs reports, they’ve already sold. So, all we have left are buyers. We don’t have a lot of sellers. The fundamental case for gold has never been stronger. And so, gold’s going is going a lot higher.”
In this podcast, Peter also broke down the jobs numbers, talked about the Peloton stock, discussed Michael Saylor’s claim gold will go to zero, and explained how the IRS tricked the middle class.