Week in Review: Labor, gold, silver

The Above chart (courtesy of Shadow Stats) puts the tremendous joy over the jobs recovery as experienced over yesterday's BLS job survey in perspective: the August 2009 annual decline remains the worst since the Great Depression, and the current level of employment is far from any recovery.

The BLS Birth/Death guestimate of how many new jobs were probably created and not reported accounted for 175000 of the 244000 jobs new jobs reported in the BLS labor survey:

For April 2011, there was a positive monthly bias used of 175,000 jobs, up from the revised estimate of 141,000 used in April 2010. In March, the net bias was a boost of 119,000 jobs. These upside biases reflect an ongoing assumption of a net positive jobs creation by new companies versus those going out business.

Further, Shadow Stats reports that: "Again, what has happened here is largely a distortion created by the extreme severity of the economic downturn, which disrupted regular seasonal patterns and calculations of related seasonal adjustments. The big issue remains that the month-to-month seasonally-adjusted payroll data have become increasingly worthless, with errors likely now well beyond the 95% confidence interval of +/- 129,000 jobs in the reported monthly payroll change."

GOLD AND SILVER DROP: THANK GOD

If you scour the gold and silver sites it will be tough to find any article by any Metals Guru not patting themselves on the back for presciently warning everybody about the impending drop in metals prices. Gee. In retrospect everyone's a genius.

The game works like this, as silver hits 35, you issue a warning. It hits 40 you issue a warning. It hits 45 you issue a warning. It hits 50 you issue a warning. It crashes, you point to your latest warning. You're a genius.\

Look, there's no real traders issuing warnings, or I told you so's. Real traders trade. Gurus and analysts blab.

Here's the deal. Silver is a very difficult market, because Central Banks don't buy silver. So you lack the underpinning that makes gold a much steadier, surer one way bet over time. Without the Central Bank underpinning silver is much more at the mercy of Large Hedge Funds and Banks that can push the price around at will. So watch out.

Over time if you're amassing bullion, don't worry, silver will always be the poor man's gold. And as such it will piggy back on gold's relentless return as real money.

But don't try to trade silver. It's tough.

As for gold see the charts on the posts below. It feels like it's had a big drop. But really, on the monthly chart, it's barely budged. If you think the unemployment blip might cut into gold's strength, think again, and look at the analysis above. If you think killing Bin Laden will have an effect on Gold then please don't try to gamble your money in the financial markets. Hide it in a hole in your back yard, or you'll lose all of it.

As i stated below, gold's correction could easily carry into the 1360-1390 range just to test the break out on the monthly chart signaling the beginning of Phase 2 of the gold bull.

This is the phase where Institutions (Central Banks, large Hedge Funds, Sophisticated Investment Funds) finally get involved, driving the price relentlessly higher.

Phase 3 is where Merrily Lynch and those type of Financial Advisors finally get involved dragging the public into the mix. This will come in a few years. This is when the price explodes.

Have your position set before that happens.