Tuesday, July 20, 2010

Gold Rises on Weak Housing Report

Although it'll take a little time to sort out because of conflicting economic reports which attempt to mask the extremely weak U.S. and global economy, the weak housing report again reminds us of the importance of holding gold in the face of major risk associated with the economy.

The appearance that there is uncertainty as to which direction the economy is going is exasperated by news reports that imply this is the case, when in reality, now that the faux recovery is exposed as soon as the government props are lifted away from various sectors of the economy, gold will again be seen as the one place investors can place their money and retain it.

If you have trouble believing that, just look every time the data come out and the ubiquitous and dishonest word "unexpected" is added to it. Every single time we get down economic news the financial press, especially mainstream financial press, somehow can't ever figure out what's going on, and they are caught off guard by the "unexpected" economic news.

How could anyone be that ignorant, for example, concerning the housing market in the U.S. As soon as the tax credit was ended housing started predictably plummeted, as they did again in the latest data, where they were down another 5 percent in June, which was the lowest in eight months. How can that be unexpected?

Now they're saying there will probably be a double dip recession in housing if the job market doesn't improve any time soon. We also know that's not going to happen, as the wasted 100s of billions allegedly already spent has done nothing to create jobs, as government money never can.

All we've got from that, for the most part, is more government employees feeding off the hard work of the private sector, and which they can't afford to do any longer.

How that all affects gold is this: housing starts plummeting, and if no jobs are created, we're going into another recession. Unless you think a miracle is going to happen or spending another $1 trillion or so will solve it, you're in for a world of hurt as the "unexpected" circumstances overcome you. Gold will explode upward again as the realization comes that we've been lied to again. There never has been prospects for a recovery, there has never been a recovery, and there isn't going to be a recovery for a long time. Gold will be the beneficiary of that as the realization grows on the investing community.

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