Something Worth Crying About

It’s enough to make a little girl cry. Really…

The story goes that she broke down when her mother was listening to campaign news on National Public Radio (NPR).

We can relate…

As you might expect with the election drawing near everything — everything — is viewed with pathological myopia through the prism of politics. One look at that fat guy running around New Jersey after Sandy wiped out the state’s coastline is all you need for confirmation.

With that prism in mind, we present this morning’s October jobs report from the Bureau of Labor Statistics.

It says employers added 171,000 jobs last month — more than the “expert consensus” was counting on. It also says the U-3 unemployment rate moved up a bit to 7.9%. Chalk up the discrepancy to growth in the labor force; the employment-to-population ratio grew to 58.8%. No telling whether that’s the start of a trend, though.

Unlike last month, we see no Twittersphere chatter this morning about the numbers being manipulated to steer the election.

But the chronic manipulations that have plagued the numbers for decades persist: The real-world unemployment rate as calculated by John Williams at Shadow Government Statistics ticked up to 22.9% — just shy of the 23.0% record set in September 2011.

“It would be very unfortunate if Romney wins,” opines our friend, the inimitable Doug Casey — with his own take on that which stirred the pot in The 5 a few weeks ago.

“That’s because Romney would be associated with free-market economics,” Casey laments, “as Republicans almost always are. A real pity. The social and economic disaster that’s looming over the next four years would incorrectly be blamed on capitalism. From a long-term point of view — if you care about posterity — it’s actually better if Obama wins. Then socialist-style ideas might get more of the blame for the train wreck.

“On the other hand, the continuing global economic crisis (and much worse to come) would be a great excuse for Obama to open the floodgates on all kinds of really, really stupid ideas.”

Bottom line: “There are no political solutions. The economic problems are bigger than any politician. There’s no way out. I pity the poor fool who wins this election.”

Conclusion: “You’ve got to continue accumulating gold and silver to protect yourself from financial chaos, and you’ve got to diversify yourself internationally to protect yourself from government chaos.”

Speaking of gold, it began slipping in overnight trade… and the slippage accelerated after the jobs numbers came out.

At last check, the spot price was $1,695. Silver’s losing ground too, at $31.78.

The election outcome will have no impact on the price of gold, suggests Mark O’Byrne at GoldCore.

For one thing, “The U.S. fiscal cliff involving steep government spending cuts and tax hikes looms in January and is likely to support gold at [current] levels and lead to higher gold prices in the coming weeks.” That’s baked into the cake no matter who’s elected.

Nor does Mr. O’Byrne buy into the notion — mooted in the Financial Times this week — that gold would stumble in the event Romney is elected and he appoints a “hawkish” Federal Reserve chairman.

“Gold will not suffer when there is a change and a move away from ultra, ultra loose monetary policies,” O’Byrne says. “As was seen in 1980, gold’s secular bull market is likely to end if the Federal Reserve again achieves positive real interest rates.”

We’ll pause here to note that a 10-year Treasury note yields 1.7% this morning while even the bogus inflation measure pumped out by the Bureau of Labor Statistics is 2.0%. Thus a negative real rate of -0.3%.

O’Byrne draws one more lesson from 1980: “Gold will only fall toward the end of the interest rate tightening cycle — this could take many years. “

Cheers,
Addison Wiggin