-- Posted Monday, 8 June 2009 | Digg This Article | | Source: GoldSeek.com
Aug Gold: Open= 956.3 High= 9961.1 Low= 943.8 Last= 952.8 -9.8
The Obama Administration announced today that it will speed up some of its stimulus spending money to help create more jobs by the end of the summer. President Obama has claimed, so far, that 150,000 jobs have been created (or saved!) by his stimulus plan. Jared Bernstein, a chief economist and economic policy adviser in the White House, said that some $44 billion has been spent thus far, which amounts to $293,333 per job created. Is the White House trying to create jobs that earn at least $250,000 in order to tax them more?
Early this morning, the markets were less concerned about US economic forecasts and spending plans than perhaps with the second downgrade of Ireland’s debt rating, which now stand at just AA. Still, even in the face of other nation’s fiscal woe’s the US dollar couldn’t hold onto strong gains made today and weakened in the close, helping gold prices claw back about half of the day’s losses.
It appears that gold needs time to correct to lower levels in order to find better buying support. Traders can’t be too disappointed that gold didn’t take out $1,000 on this move. The US credit rating is still in tact, inflation has yet to kick up, the Fed isn’t quite monetizing debt, panic about the recession has ebbed, but despite all of these bearish influences gold still gained over $95 an ounce in May. Not bad considering the circumstances. It appears then, that the market is still holding quite strong.
Long term, the US dollar is not on a path towards recovery, not with the amount of new spending being proposed by the Obama Administration. It would be one thing if the president limited himself to a trillion dollars worth of actual stimulus spending, such as infrastructure. Yet even a majority of the stimulus bill goes to social spending. Top that off with a $1 trillion plan for the health care industry that is likely to cost taxpayers much, much more in the future, and its little wonder why our creditors are very nervous and weary of the dollar.
Our ‘promissory’ notes are backed with little more than faith. Uncontrolled spending weakens that faith. China is increasingly finding its faith in oil, soybeans, and concrete, not paper. Russia finds itself believers in oil and natural gas, and even begrudgingly the euro. This is why many see gold as an asset to hold over the next few years, as a place to store value. The status of the US dollar as the world’s reserve currency is in question and even if it retains that status, it has likely has sustained irreparable damage.
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-- Posted Monday, 8 June 2009 | Digg This Article | Source: GoldSeek.com