Another Brick in the Wall: the GDP, Gold and Silver

By Brad Zigler

Real-time Inflation Indicator (per annum): 8.0%

The value of the goods and services cranked out in the United States - the nation's gross domestic product [GDP] - decreased at an annual rate of 0.5% in the third quarter of 2008. Preliminary estimates made last month called for a 0.3% downturn after real GDP increased 2.8% in the second quarter.

Consumers continue to wield a strong influence upon the U.S. economy as most of the weakness in GDP was traced to a downturn in personal consumption expenditure [PCE]. In the third quarter, PCE tumbled 3.7% after rising 1.2% in the second quarter.

The new GDP stats fall in line with indicators released over the past two weeks (see "Consumers Buy Into Disinflation").

Industrial Slackening Ahead

On the industrial side, recession concerns are being seen reflected in precious metals' prices. Because gold has limited industrial utility, price spikes in the yellow metal imply upticks in investment demand - often in response to economic worries. Silver is used in more manufacturing applications and is a better bellwether of industrial activity.

Gold's price has appreciated 4% since mid-August, while silver's declined 22%. So, economic worry index up, industrial expectations down.

The impact of the dollar can be factored out by measuring the metals' trends against crude oil. In terms of oil, gold has appreciated at twice the rate of silver since summer.

Precious Metals' Ratios

All this is throwing great doubt into my Christmas shopping. Just how much are those "five golden rings" gonna set me back this year? And will Tiffany take payment in crude?

Comments

[ozzy43:]

I do not understand why intelligent people insist on citing fraudulent government statistics like the GDP. Garbage in, garbage out. Any analysis that relies on such bogus numbers must per force generate flawed conclusions. Using shadowstats.com numbers or some similar more reliable less biased measure would yield conclusions in line with reality rather than government sponsored fantasy.

2008 Nov 25 04:30 PM

[marxbites:]

Here here Oz !!!!

Lets get us a different govt like Huck Finn said he wanted!!!

Cept now the impotent states are all the same wussies controlled from DC

The Austrians were right before WW1 they saw coming, and have been right ever since. Keynes like Marx are lying bastards - both responsible for most all war deaths of the late 19th and whole 20th century. Especially Stalin's incredible genocides against his own countrymen.

Govt produces nothing. Gives naught to nobody not first stolen from others. Is the worlds single largest consumer and waster of natl resources.

Screw this CFR/NWO/Intl Banking/MICC cabal that JFK & IKE warned us about the perils of.

Ditto on Shadowstats !!

2008 Nov 25 05:17 PM

[GMiki1:]

That's a theory in regard to gold versus silver, Brad, but not one I can believe. Silver and gold run somewhat together but they run differently. At some point silver will begin its own great ascent. But then again, oil is not done for, either. Funny that no one is paying attention to the IEA finding of a 9.1 percent annual decrease in oil production.

2008 Nov 25 06:28 PM

[ussmls7:]

Silver & Gold have been the center of talk amoung groups of people for years now,because of the wild price swings & the theorys of Price Surpression. Ted Butlers lastest article at SilverSeek.com tells it like it is! We the Tax Payers,have been paying these Jerks at the CFTC to maintain a fair & fraud free market,but we get the nothing for our money! When there is so much out right evidence of Manipulation of both metals,yet nothing is done do stop it! JP Morgan Chase Crooks enjoy the Cover from the CFTC to take care of the remaining Shorts,as the small investers fight to keep from selling at these "false" low prices! Then if you raise heck with your Repersentive about the Crapy job the SEC ^ CFTC have done,you get a reply,saying there no funny business that they are aware of. What has happen to our Nation? Where is the outrage from people whose lifes have been ruined by these Banks & there partners in Crime!?
I look at the figures coming from Comex, as the amount of Physical Silver now leaving the warehose, will that help the Price of Silver? Or will these Banks & the FED come up with some other new Rule to keep the real price from giving us our Day in the Sun?
With Obama cabinet now looking more like the Clintons ,I dont think thing will be any better for investers in PMs. Who knows,what to expect from the many that put loads of money into getting him elected! But those that are playing in the paper PM market,I hope you know when to get out!

2008 Nov 26 10:33 AM

[Natalie Le:]

Go buy Superfund gold funds. They're up 17-20% ONLY IN NOVEMBER. Their other funds are up 33-70% YTD.
The MD said gold is gonna double to $2000 coz of hyperinflation.
www.youtube.com/watch?...

2008 Dec 03 02:58 AM