Dear Friends,

By now the government’s data release of this morning’s unemployment number is already baked into the market cake. The crummy news served to reinforce the notion, that helicopter Ben and company will continue their mission of protecting us all from global warming by filling the air with so many scraps of paper (aka – dollars) that they will serve to blot out the sun and keep us much cooler. No wonder it is so dad gum cold this year. In plain speak – Quantitative easing is alive and well and shows no signs whatsoever of being endangered any time soon.

The news sent gold careening upward breaking through the $1,100 barrier and making yet another all time high in nominal terms. Pre-weekend selling emerged as profit takers met up with gold perma bears to back gold off the session high but dip buyers continued to come in and push it back off the lows. Again, this is occurring with the Dollar actually gaining against the Euro and selling emerging in crude oil, the grains, natural gas and sugar and livestock. I mention this point because the hedge fund algorithms that have taken over the commodity markets would generally be selling gold under such circumstances. Yet gold is higher in spite of these factors. That is most remarkable. Not only that, this time the mining shares are actually higher even with the stock market struggling to hold on to its meager gains today.

As a point of interest, many of you follow John William’s wonderful work over at Shadowstats which cuts through the BS that the ministry of propaganda publishes on a regular basis and serves up to the generally gullible sheep. You have thus long known that the official statistics regarding the unemployment rate are not at all credible. I do find it interesting however that even at the government’s own official web site (http://www.bls.gov/news.release/empsit.t12.htm ^[1]), the more realistic U6 numbers are actually horrendous (Seasonally adjusted at 17.5% compared to the headline number of 10.2%). If even these numbers are fudged, and we know that they are, one can only imagine how bad the true rate of unemployment is in this nation.

That is why chatter about the Fed withdrawing liquidity from the system is so imbecilic. The only reason some Fed governors even broached that subject a while back was a quixotic attempt to prevent a complete rout in the US Dollar by carry traders. Today’s data makes their public ponderings seem even more futile than ever notwithstanding all the publicity and hoopla surrounding their little ol’ dry run attempt to fine tune their actual mechanism with which to do so.

Technically gold is very strong on the weekly charts with all of the major moving averages trending solidly higher. It is a bit overbought on the daily chart and is showing some signs of selling but that is not to be unexpected after its performance this past week. The news from India this week brought about an entire new dynamic in the market and has many now looking for further Central Bank purchases to provide a strong floor of support on any bouts of price weakness.

We will more than likely see a repeat of last week’s data in this week’s Commitment of Traders data with swap dealers and commercials adding to shorts while managed money and CTA’s added to longs. The specs are in the driver’s seat right now and have not shown any signs yet that they are tiring.

Gold in terms of both the Euro and British Pound continues to perform exceptionally well. Yen priced gold is holding up fairly well but has been somewhat held back by the run into the Yen during periods of equity weakness and risk aversion.

Click chart to enlarge in PDF format

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