~~by Leslie Burton of Daniels Trading
|Photo, Courtesy: http://sunchandi.com|
This was unexpected and euphoria for Gold bugs. We know that the tapering will come, but the Fed really seems backed into a corner on the when part. They are giving an endless sentiment to the quantitative easing, but it may simply come in December. After all US Federal Chairman Ben Bernanke steps down from his post in January. The debt that the US is building is really making the economy worse in a sense. Countries such as China buy our Treasuries and regard the US Dollar as the premier currency.
The Philadelphia Fed Survey of General Business Conditions Index for September was 22.3 while the previous reading was 9.3. The Leading Indicators for August was 0.7 % while the previous reading was 0.6 %. The Current Account for Q2 2013 was -$98.9 billion while the previous reading was -$106.1 billion. The Housing Starts for August were 0.891 million while the previous reading was 0.896 million. The Housing Permits were 0.918 million while the previous reading was 0.943 million. The MBA Purchase Applications for the week of September 13th Composite Index was 11.2 % while the previous reading was -13.5 %. The Purchase Index was 3.0 % while the previous reading was unchanged. The Refinance Index was 18.0 % while the previous reading was -20.0 %.
The Treasury International Capital Foreign Demand for Long-Term US Securities for July was $31.1 billion while the previous reading was -$66.9 billion. Industrial Production for August came in at 0.4 % increase while the previous reading was 0.0 %. The Capacity Utilization Rate was 77.8 % while the previous reading was 77.6 %. The Manufacturing component was up 0.7 % while the previous reading was -0.1 %.
The expectations called for about 175,000 to 180,000 making this close but yet falling short of expectations. This creates more uncertainty in the marketplace. With the Syrian crisis looming any report shy of 200,000 could tip the market. 200,000 is the number that the Fed would like to see pointing to expansion and recovery clearly. It is thought that though slight, this number should not interfere with the potential tapering that is expected by many for the September meeting. The Unemployment Level for August slipped to 7.3 % while the previous reading was 7.4 %. The average hourly earnings were up 0.2 % while the previous reading was -0.1 %. The Average Workweek was 34.5 hours while the previous reading was 34.4 hours. The Private Payrolls Report was 152,000 while the previous reading was 161,000.
The United Nations inspectors did find "clear and convincing evidence" that sarin gas was used on August 21st on the people of Damascus. The surface to surface rockets carrying the nerve gas were recovered at the attack site where blood samples and urine samples had been taken. The Syrian rebels have been thought to not have experience or knowledge to use the weapons themselves. The question of whether Assad may be brought to justice for war crimes may never be answered. The moral and ethical elements of this situation remains extremely difficult particularly for US President Barack Obama. He may have a great desire to protect the people of Syria but he may be bound by Congress to abide by and treaties or mandates from the UN and/or Congress.
Secretary of State, John Kerry spoke on behalf of the president stating that President Bashar al-Assad may be held responsible for the chemical weapons attack in Damascus. Over the recent years, it is thought that about 100,000 + lives have been taken in this civil war in Syria.
- Conflict in the Middle East would escalate.
- Inflation would have to accelerate.
- The economy would have to worsen.
- The Fed would continue or increase the easing and become ultra-accommodative.
- The ECB would increase their monetary stimulus.
- The central banks would have to bump up buying.
- The speculator would have to regain confidence in the Gold market.
Gold is a safe-haven product that requires an environment of crisis and chaos. It may be sort of like insurance, you hate paying the bill, but when tragedy strikes, you are glad you have it.