Source: Republika
On the other hand, the macroeconomic situation is not looking that good either. Many reports coming out in the last few months suggest major economic indicators have also been trending down this summer. One of the latest reports on the US market brought some disappointing jobs data that may lead to further problems. However, this situation might ultimately be good for precious metals prices. One of the obvious reasons, analysts say, is because the Federal Reserve hopes to see more economic pain before reversing course on rate hikes.
The Federal Reserve's chairman, Jerome Powell stated that he welcomes a “softening” in the labor market. This basically means that Powell wants more Americans out of work and in financial straits to ease inflation pressures. This statement won't affect politicians who will continue to fuel inflation through debt-financed spending programs, and who won't be dissuaded by any rate hikes. However, it is possible to drain liquidity from the real economy as long as central bankers make it more difficult for businesses to borrow and hire new employees, at least that's what the analysts believe.
Source: Pakistan Today
The latest job report is good news for the FED. The increase in the official unemployment rate to 3.7% in August (from 3.5% the prior month) will support the narrative. While it still falls in between historical lows, the unemployment rate, as calculated by the Labor Department, does not account for millions of people who are currently out of work. This included but is not limited to “discouraged” workers who have been out of a job for too long, part-time and gig economy workers who are looking for a job but cannot find full-time employment, and more.
Another report from John Williams of ShadowStats shows that 24.6% of Americans were jobless in August. This alternative report suggests that job seekers are going to face more challenging times, especially if the slow but steady recession that is yet to be acknowledged by the government worsens. Analysts believe that this data suggests that investors are anticipating the scale back of FED's its rate-hiking plans this September.
Source: Bankrate
The weakening of the traditional market, namely the US dollar, which historically has an inverse relationship with the gold and silver market, means that smart money is likely positioning itself for a turnaround in gold and silver markets. According to SentimenTrader, “The smart money is buying silver. For only the 3rd time in history, commercial hedgers hold a net long position in silver futures. The other two preceded 20% rallies.”
On the other side, market sentiment among speculators and the public in general toward gold and silver is terrible. This contrarian sign is usually a good sign for a major big rally since it historically started when public sentiment is at its weakest point. Investors should consider buying some gold or silver from a liquid and flexible market, such as digital gold. This will help them move their capital quickly, without relying too much on the traditional market. Digital Gold can act as an intermediary to acquire gold, in the fastest and shortest time possible. Not to mention the security of Digital Gold is backed by a bullion vault.
While it is not risk free, the opportunity is good for retail investors to stack up more gold. But as always, do your own research and plan based on our own situation first.
This article is written by joniboini.
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