This post was just published on ZYX Buy Change Alert.
Gold traders misinterpreted this morning’s GDP data. In our analysis, the U. S. economy is not weakening as shown by the headline.
The headline was that GDP contracted by 0.1%. A deeper look under the surface shows that 2.6 percentage points were shaved from the GDP because of reduced government spending and less stocking of inventories by the private sector.
In our view, less spending by the government is not a bad thing.
Less stocking by the private sector is positive for the future quarters. Since there are less inventories in the channel now, businesses will be buying more to restock and this will give the economy a boost.
Further digging under the surface shows that during the last quarter both consumer spending and business investment spending were robust. If gold and silver continue to rise, we will be inclined to short sell them. At these levels we would not buy. There is too much risk in buying or short selling at the present price of $1680.
Please stay tuned.