The U.S. Department of Labor just reported employment numbers for January. This number is known as ‘œmother of all numbers.’ January nonfarm private payrolls increased by 257,000 vs. 168,000 consensus. There are several components to this number, but our models focus on nonfarm private payrolls. The number was a blowout on the positive side. This means the U.S. economy is improving strongly, and makes it highly unlikely for QE3 to occur this quarter.
By any rational school of thought and analysis, this is a negative development for gold and silver.
So what do gold and silver do? They immediately jump up on the release of the employment number, including the SPDR Gold Trust ETF /quotes/zigman/41663/quotes/nls/gld GLD -0.64% and the iShares Silver Trust ETF /quotes/zigman/417006/quotes/nls/slv SLV -1.68% . Then short-sellers jumped in to take advantage of the insanity of the gold bugs.
The Flat Earth momo (momentum) crowd has been running up gold and silver.
Traditionally, gold runs up when there is inflation or when there is bad geopolitical news.
Over the last two weeks, gold has run up every time there is good geopolitical news and every time there is data that supports low inflation. On the flip side, gold dips every time there is bad geopolitical news or data favoring inflation.
The Momentum crowd has taken over. They run up gold every time there is ‘œfeel good’ news or data and run it down every time there is a ‘œfeel bad’ news or data.
How is this behavior even possible? The answer lies in the…Read more at MarketWatch
