Los Angeles, CA – The arrival of the Labor Day weekend was met with the bemoaning for the lack of labor; a government report released on Friday stated the unemployment rate remained at a high rate of 9.1%, causing a ripple effect in the economy and stock market. The gloomy unemployment news caused investor jitters and lifting demand for safe haven assets, such as gold.
Friday’s report clearly showed stagnation in the creation of jobs in the month August; this marked the first time since World War II that the economy had a net of zero new jobs created during the month.
This news caused stocks to drop sharply, with the Dow Jones Industrial Average slipping 253 points or 2.2%; the S&P 500 also plummeted 2.5% to 1173.97, wiping out an entire week of gains. In addition, the news of the souring job outlook caused U.S. bond prices to climb and the U.S. dollar to fall almost 2% to the Swiss Franc.
Covenant Investors CIO Steve Shafer sums up the reports’ implications: “Today is one of a series of data points that, when taken in aggregate, continue to show a weakening U.S. economy and a lack of confidence in our government’s ability to do something about it”.
As a consequence, Gold rallied close to its record high; the precious metal climbed back up to $1870.00 an ounce, a 30% increase from the beginning of the year. Matt Zeman, strategist at Kingsview Financial in Chicago, commented on the move in gold: “we’ve got non-impressive jobs numbers, to say the least… Investors are feeling shaky about going to equities. Gold and Treasuries are going to be beneficiaries”.
Let Gold be your beneficiary in a turbulent Economy and doubtful looking job market. Precious metals, such as Gold and Silver, act as a hedge against stock market turmoil, inflation and a weakening dollar.