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Morning Snapshotby Peter A. Grant
Oct 09, AM 
Gold continues to consolidate below the $1800 level as risk-off sentiment prevails in the wake of rising growth risks in Asia and persistent uncertainty on Europe. I think the market also remains a little perplexed by Friday's much better than expected US unemployment rate.Regarding the latter: John Mauldin did a very thorough examination of the NFP report in his Thoughts from the Frontline newsletter. I like his analysis for a couple reasons: First of all, he echoes some of my own snap analysis from Friday in noting that, "the entire drop in the headline unemployment rate is from the increase in part-time workers. That such significant numbers of people can only find part-time work is not a sign of a strong and growing economy. It is however completely consistent with a flat, lackluster economy." Secondly, Mauldin dismisses any notion that the data where manipulated for political purposes. In Spain, it's becoming increasingly clear that Rajoy's government will not reach its deficit targets. Despite €100 bln in tax hikes and spending cuts, the continued contraction in the economy is thwarting efforts to narrow the budget gap. While Rajoy continues to delay on an official bailout request, eurozone policymakers are instead considering allowing Spain to ease the pace of their austerity measures. Of course, that would likely prompt other troubled periphery nations to seek similar consideration. German Chancellor Merkel is visiting Greece today, where she got a rather hostile reception, even as she pledged German support to keep Greece in the eurozone. The Greek economy however has been decimated by 5-years of recession and an unemployment rate near 25%. Germany is perceived by many as the driver behind harsh austerity measures in exchange for €200 bln in bailouts thus far. Bailouts that have done little to rectify the dire economic condition. I did a pretty thorough examination of the heightened growth concerns in Asia in yesterday's DMR. The takeaway of course is that if Asia — and particularly China — sputters along with the US, Europe and Japan, there is the risk of another global recession and intensified deflationary pressures. That in turn would likely lead to an even bigger monetary policy response, which could push gold to new all-time highs. • US IBD/TIPP Economic Optimism Index rose to 54.0 in Oct, vs 51.8 in Sep. • UK Industrial Production -0.5% m/m in Aug, in line with expectations, vs negative revised +2.8% in Jul; -1.2% y/y. • UK Manufacturing Production -1.1% m/m in Aug, vs negative revised +3.1% in Jul; -1.2% y/y. Peter Grant is USAGOLD's resident economist and a well-known analyst globally in the forex and precious metals markets. NEWSLETTER SIGN-UP Opinions expressed in commentary on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.
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Tuesday October 9
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