The How and The Why

252
Fri, May 4, 2012 - 10:25am

In a stunning development, much to the surprise of The Shill, The Coug and LIESman, today's job report was "weaker than expected". Surprisingly, the only mouthpiece that came close to predicting the actual number was former O'Bomney hack, Austin Goonsby. What does that tell you?

So here's the deal. Though I firmly believe that political pressure sways the calculative ability of those within the BLS, it's also possible that, because we are truly in a new paradigm, the current BLS methodology is simply outdated.

From 1982 to 2007, the U.S. economy was measured as expanding. Those who didn't have jobs often found jobs. Those who still couldn't find jobs, applied for unemployment "insurance". This transfer payment program provided some welfare to those in need of it until they could secure employment and, since the economy was "growing", most found work before the government checks ran out. And that's the key...the program has an expiration date for those on the dole.

The current expiration date is 99 weeks. This means that anyone receiving unemployment insurance will only receive checks for about 2 years before the government cuts them off. Now, as this pertains to today's jobs number is important. You see the BLS counts those receiving checks as part of the unemployed base. As part of the calculation, when someone stops receiving checks, they are no longer considered to be unemployed. For the 25-year period of 1982-2007, this was an OK way to do things as it was statistically correct to assume that someone no longer collecting unemployment insurance had now found a job. Now, however, that's not the case.

Instead, many folks are "long-term unemployed". They lost their job and applied for unemployment insurance and, after 99 weeks, the checks stopped coming. These folks are now considered by the BLS to have found a job but have they? Maybe a few have but just because the checks ran out does not mean that you are no longer unemployed. However, to the BLS, this is exactly what it means. So, payrolls can only increase by 115,000 and the labor force participation rate can fall to 64.3% but the stated "rate of unemployment" can also fall to 8.1%. TA-DAH!!! Barack The Magnificent can again proclaim at today's press appearance that the economy is strong and he should be re-elected.

More details can be found by reading these excellent, brief summations from ZH:

https://www.zerohedge.com/news/people-not-labor-force-soar-522000-labor-force-participation-rate-lowest-1981

https://www.zerohedge.com/news/real-u-3-unemployment-rate-116

Again, many of the people not in the measured "labor force" have simply given up. Their unemployment checks have run out and the BLS simply ignores them and fails to count them as if they don't exist at all. And this is how things work in the good ole U.S.A.

Ignoring and manipulating facts and data is also how things work in the gold and silver markets. Look, here's the deal. Everything...and I mean everything...points to a bottom here that will lead to a very strong rebound, particularly in silver. But it's a little like the BLSBS. Post-MFG, we may be in all new paradigm where the only entities left trading paper metal are Cartel Monkeys and HFT WOPRs. Under those conditions, it's going to be very difficult for the metals to surge without some type of "flipping" event which causes the algos to by tilted positively instead of negatively. A sustained short squeeze that drives price back through the 200-day MA would do the trick but can we get that to happen absent news of impending QE? More importantly, will The Gold Cartel allow that to happen ​absent the imminent appearance of overt QE3 or a Cartel switch to net long?

So, just as every traditional indicator I follow screams BUY right here, in this post-MFG world we have to remain cautious. Not so much cautious from a risk perspective, just cautious from a timing and frustration perspective.

Hang in there. Let this nonsense play out. The American economy is moribund. Europe is an economic disaster. Global demand for physical precious metal is only going to increase. Do not let the minute-by-minute, hour-by-hour shenanigans of the Comex scare you. Your silver and gold will have a higher fiat-conversion price 6 months from now. They will have a higher fiat-conversion price 12 months from now. And, if there are still traditional fiat to which you can convert 24 months from now, the price of gold and silver will be higher still.

OK, that's all for now. As I've typed, I see that we've begun to squeeze the smarty-pant shorts a bit. This is encouraging. In gold, a move abive 1650 will intensify the pressure. Silver needs to crawl back above $31 before anything other than weak hands begin to get squeezed. Keep your fingers crossed and look for a new thread after I've had an opportunity to review what should be a very interesting CoT later this afternoon.

TF

About the Author

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turd [at] tfmetalsreport [dot] com ()

  252 Comments

Airgead
May 4, 2012 - 10:26am

I could have been furst

I am not that silly

SV
May 4, 2012 - 10:28am

Silver Vigilantes!! These shorts are gonna get phyzzed out!

Silver below thirty cannot be maintained by the banksturds.

https://silvervigilante.com

Lightning
May 4, 2012 - 10:28am

Lightning strikes

Lightning strikes second today.

murphy
May 4, 2012 - 10:33am

Cinco De Mayo, almost

The best reason to hold miners in one paragraph. As long as you hold 50% physical and 50% miners.

We all know the fundamentals, ad nausea. Are things better today than 11 years ago when the bull metal market starting running at $250 and $4.50?

We all know it''s manipulation and MOPE. They crushed MFG to take out the volume and remove players from the market. The HUI has been at the same level as it is now three other times. July 2008 au 960, Jan. 2009 au 1118, Aug. 2010 au 1216. What's the price now? Only about 70% higher than 2008.

The stock market that they refuse to let go down, will eventually. Whether before or after the US election, it does not matter. The miners may or may not crash with it. We would like to eventually sell our miners to convert to physical, right?

Since the miners have been beaten into submission already, to shake out the people without total conviction, they may not go down further.

Okay, here's the money shot (paragraph).

The paper market experiences a tremendous crash and all paper assets are wiped out, including the miners, causing the current financial system to change to something new. If this occurs then the price of physical gold and physical silver ( I'm talking to you Victor) will be soaring. It will make the paper losses we experience pale in comparison. But before this would occur do you believe that the miners may experience a SIGNIFICANT rebound? Think SLW in 2008 at $4.50 to it's high last year at what, $47.50? How does that compare to Apple from $200 to $600 folks?

Long and strong. Sit tight and be right.

Is there a way to incorporate my money shot paragraph into the T.I.T.S. index?

Hard Rain
May 4, 2012 - 10:33am

Good Read

This was a good read for me and very educational. Gotta love this site. It's on my daily must read. Better than a college education.

Rain

¤
May 4, 2012 - 10:34am

Stand your ground...

...in the face of any adversity and meet it head on!

That includes daily PM beat downs

As always...thanks TF, we appreciate it!

SpeakEasy, news, tunes/vids and eye-candy...

https://www.tfmetalsreport.com/forums/frivolity-forum

SV
May 4, 2012 - 10:35am

The commitment of traders

trading volumes been light, lets see if there is a line in the sand...

https://silverliberationarmy.com

Hard Rain
May 4, 2012 - 10:36am

Thank you

That's very kind of you to say. I appreciate it.

Gramp
May 4, 2012 - 10:38am

Stacking this a.m.

Guess another deep sea fishing adventure is in the works!

few thousand years of history is on our side...

Oh, and did anyone catch the interview with Ted Nuggent on whatever MSM spoutlet?

He did come across as erratic.... though it was disgusting to see the interviewer wimper, squirm, and look like a child who wants to be a tattle tale to teacher... Oh the horror! Uncle Scam has you in his Cross Hairs there Teddy!

Groaner
May 4, 2012 - 10:39am

the usd just popped up.. crazy

I guess the market does not believe QE is coming

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