KITCO NEWS/Jim Wyckoff

Gold prices up as U.S. monthly non-farm payrolls see big drop

April 3, 2020

24 Hour Spot GoldGold prices are trading moderately up in early U.S. trading Friday, in the wake of another dour U.S. economic report that shows a crippled U.S. economy. June gold futures were last up $5.30 an ounce at $1,643.50. May Comex silver prices were last down $0.029 at $14.625 an ounce.  Friday’s monthly employment report for March showed an unemployment rate of 4.4% (3.5% in February) and a big non-farm payroll decline of 701,000 (up 273,000 in February). Analysts were looking for a 10,000 decline in payrolls. This is the first decline in monthly non-farm payrolls in nine years. The monthly employment report for April is likely to be much grimmer.

In a stark show of how much damage the coronavirus outbreak has done to the Euro zone economy in such a short period of time, the bloc’s March composite purchasing managers’ index (PMI)—which includes both the manufacturing and services sector—came in at a record low of 29.7 versus a reading of 51.6 in February. A reading below 50.0 suggests contraction.”

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BLOOMBERG/Ranjeetha Pakiam

Gold Squeeze Had Traders Looking for Bars as Far Away as Sydney

April 3, 2020

“The historic squeeze in New York that roiled the gold market last week had investors looking as far as Sydney for supply. Logistical disruptions due to the coronavirus pandemic had led to fears there wouldn’t be enough bullion in New York to meet delivery obligations for contracts traded on the Comex. Investors scoured the globe to track down physical gold, with independent Australian refiner ABC Refinery reporting a surge in demand from North America for deliverable bars last week.

‘We have received increased demand from North America, obviously with the recent Comex liquidity shortage,’ said Managing Director Phillip Cochineas. Demand also picked up from Europe. ABC makes products including 100-ounce, 1-kilogram and 400-ounce bars, with the latter now deliverable after CME Group rushed the launch of a new futures contract to address supply issues … Investors are pouring into exchange-traded funds, gold sales at Australia’s Perth Mint jumped to the highest since 2013, while the U.S. Mint sold the most bullion coins in three years.”

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CNN BUSINESS/Anneken Tappe and Annalyn Kurtz

The US economy lost 701,000 jobs in March — worst report since 2009

April 3, 2020

worst month since march 2009“The American economy lost more jobs than it gained for the first time in a decade. In March, the economy shed 701,000 jobs, according to the Bureau of Labor Statistics. It was the first time the economy lost jobs in a month since September 2010, and the worst month for American jobs since the depths of the Great Recession in March 2009. The unemployment rate shot up to 4.4%, from a near 50-year low of 3.5%. It was the highest unemployment rate since August 2017 and the largest single-month change in the jobless rate since January 1975.

Most of the job destruction took place at restaurants and bars, where the economy lost 417,400 jobs. Retailers cut 46,200 jobs and health care employment fell by 43,000 jobs as routine visits at dentists and physicians offices fell. If there’s an ounce of good news in the March report, it’s that bulk of the layoffs were temporary: 1.8 million people were unemployed temporarily last month, up from 1 million in February. But the labor market will probably start to look a whole lot worse starting next month.”

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CNBC/Jeff Cox

Another figure in the jobs report paints an even gloomier picture of the coronavirus damage

April 3, 2020

paycheck to paycheck“The government’s survey of establishments painted a grim picture of the U.S. employment situation through early March, but its poll of households was far worse. The household survey, which asks individual residents how many people are working there, showed a stunning drop of 2,987,000 workers for the month.  That compares to the 701,000 nonfarm payrolls decline reported in the establishment survey and gives another perspective to just how bad the situation has gotten since the economy has all but shut down to protect against the coronavirus spread.

When releasing its headline nonfarm payrolll numbers, the government focuses on the establishment survey as it captures a larger sample size and is considered less volatile than the household count. The establishment survey captures about 145,000 businesses and work sites, while its counterpart focuses on 60,000 eligible households and includes agricultural workers.  Both use the week up to the 12th of the month for sampling, which in this case was before the worst of the job losses began. The Labor Department uses the household survey to calculate the headline unemployment rate, which jumped from 3.5% to 4.4%.  In the March survey, the household survey’s numbers are stunning. They show a decline of employment from 158,759,000 in February to 155,772,000 in March. That came amid a drop of 1.6 million in the civilian labor force and a 1.1 percentage point tumble in the employment-population ratio to 60%. The labor force participation rate contracted 0.7 percentage points to 62.7%.”

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MARKET WATCH/Quentin Fottrell

‘Far more extreme than anything we’ve ever seen, including worst weeks of the Great Recession’ — economist gasps as jobless claims jump 3,000% in 3 weeks

April 2, 2020

unemployment and insurance claims“Initial unemployment claims jumped 3,000% to 6.6 million last week from 211,000 for the week ending March 7, the Labor Department said Thursday. Businesses have closed in an effort to stop the spread of coronavirus, as millions of Americans practice ‘social distancing’ at home. ‘This kind of upending of the labor market in such a short time is unheard of,’ said Heidi Shierholz, a senior economist and director of policy at the progressive Economic Policy Institute, a Washington, D.C.-based think tank. She called the latest numbers, ‘A portrait of disaster.’ The $2 trillion stimulus package, passed by the Senate last week, will help the U.S. through the COVID-19 pandemic, of which New York City is now the epicenter, Shierholz added.

‘The spike at the end shows the unprecedented territory we are in right now,’ she said, citing this graph, showing labor market trends over the last 50 years. ‘What the labor market is currently experiencing is far more extreme than anything we’ve ever seen, including the worst weeks of the Great Recession.’ The number of unemployed Americans is likely to surpass the prior record of 15.3 million, also seen during the Great Recession after the subprime-mortgage market crashed. Economists predict 25 million Americans could lose their jobs in the next few months.”

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YAHOO FINANCE/Myles Udland

The U.S. economy is entering the ‘deepest recession on record’

April 2, 2020

cumulative decline dueing past recessions“The U.S. economy is struggling right now. On Thursday, we learned that initial filings for unemployment insurance totaled a record 6.648 million for the week ending March 28, more than doubling the prior week’s reported total of 3.238 million that had also marked a record high. Distressingly, last week’s data was also revised higher on Thursday to 3.307 million. And while the labor market fallout from the coronavirus-related economic hard-stop we’re experiencing has been the most abrupt and severe so far, economists at Bank of America Global Research believe the broader economic downturn we’re entering will result in the worst recession in modern U.S. history.

‘The recession appears to be deeper and more prolonged than we were led to believe just 14 days ago when we last updated our forecasts, not just in the U.S. but globally as well,’ said BofA.

‘We now believe that there will be three consecutive quarters of GDP contraction with the economy shrinking 7% in 1Q, 30% in 2Q and 1% in 3Q. We expect this to be followed by a pop in growth in 4Q. We forecast the cumulative decline in GDP to be 10.4% and this will be the deepest recession on record, nearly five times more severe than the post-war average.’ In 2008, the economy experienced a cumulative recessionary decline in GDP of 4%, the most since World War II. BofA is expecting the 2020 recession will be more than twice as severe in terms of the total GDP decline.”

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