Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | 

Commentary : Gold Stock Review : Markets : News Wire : Quotes : Radio : Silver : Stocks - Main >> News >> Story  Disclaimer 
Latest Headlines

Gold Seeker Closing Report: Gold and Silver Fall But Miners Gain
By: Chris Mullen,

Gold Resource Corporation Declares January Monthly Dividend
By: Gold Resource Corporation

India Silver Import 2014 At 7,063 Tonnes, Up 15%
By: Koos Jansen

Dollars and Gold: Deja Vu All Over Again
By: Mickey Fulp

Test of Strength
By: Bob Loukas

Canary's Alive & Well
By: Gary Tanashian

Thoughts from the Frontline: A Five-Year Global Financial Forecast: Tsunami Warning
By: John Mauldin

Gold & Silver Trading Alert: Is the Rally in Gold Over?
By: Przemyslaw Radomski, CFA

What would an emerging markets crisis mean for the U.S. dollar and gold?
By: Arkadiusz Sieron

Gold And Silver – Around The FX World In Charts
By: Michael Noonan


GoldSeek Web

US Manufacturing Indicative of Double Dip Recession

-- Posted Wednesday, 3 August 2011 | | Disqus

By: Dr. Jeffrey Lewis


The double dip is one of the worst phenomena of an on-going recession.  When an economy double dips, the losers of the first dip who were confident enough to enter into a small recovery are wiped out, thus setting the course for a very long second leg in an economic crisis.


The cause of recessions and double dips are respected by all schools of economic thought.  Economists suggest that the boom often turns to bust when stockpiles of wholesale goods become too large, and thus industry cuts back to allow wholesale inventories to ease with the cyclicality of demand.  The result is slowing employment, faltering economic activity, and an eventual chain reaction which spreads throughout the entire economy.


The United States manufacturing sector seems to be in such a lull.


According to the Institute of Supply Management, a trade industry responsible for the Index of Manufacturing Activity, manufacturing confidence found a two-year low in July.  The reading was reported as 50.9 percent, off from the 55.3 percent in June.  Astute followers of the news will notice that this was the lowest reading since July 2009, which just happens to be the month that economic think tanks declared the recession over.


Whereas any reading over 50 is growth, the index had previously risen for 23 straight months.  Now, failing to reach two years of consistent growth suggests that a double dip is on the horizon.  


Excuses for the failing manufacturing industry are plenty.  Among most economists’ responses were claims that the Japanese earthquake would necessarily slow the manufacture of cars in the United States, especially from foreign firms such as Toyota Motors.  The slowdown does naturally affect some manufacturers within the industry, but American based automobile manufacturers are picking up the slack in stride. 


Analysts should wonder if the slowdown in US manufacturing isn’t the result of a foreign happening, but one which happened domestically: the debt ceiling debacle.  Manufacturers typically find the US to be a costly place to do business; however, the benefits are plenty.  Among the biggest benefits is the realization of relative political security in knowing that their property and plants will not be seized by government overnight, as is the case in many developed world nations.  US manufacturers can plan further into the future in the United States, making it an excellent place for long-range projects like manufacturing centers.


We should also wonder why the weak US dollar is doing so very little to propel manufacturing.  The strongest months for US manufacturing were in the first months of the year, when the dollar was at its strongest.  Year to date, the US dollar has given up 7.5% to the Euro, 7.3% to the Australian Dollar, and just over 5.2% to both the British Pound and Japanese Yen.


Any way you slice the recent economic report, you will find that it does not paint a good picture for the US economy.  Weakness in manufacturing removes hours from employee schedules, reduces demand for the US dollar for international sales of manufactured goods, and will ultimately trickle through every other industry.


Investors should know by now that any response to manufacturing weakness will be currency debasement and lower dollar values.  This bodes well for investment metals.


Dr. Jeffrey Lewis

-- Posted Wednesday, 3 August 2011 | Digg This Article | Source:

comments powered by Disqus


Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to >> Story

E-mail Page  | Print  | Disclaimer 

© 1995 - 2014

©, Gold Seek LLC Supports

The content on this site is protected by U.S. and international copyright laws and is the property of and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.


The views contained here may not represent the views of, its affiliates or advertisers. makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of, is strictly prohibited. In no event shall or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.