The data has been mounting against the economy for some time, but the market has ignored the warning signs until now. This latest disastrous monthly jobs number, though, changes everything again, and so the capital flow fervor for stocks could now shift back in favor of what were capital resources over the past several months. That means gold and the SPDR Gold Shares Trust (GLD) should mark a meaningful turn here, and so investors have a special opportunity to buy at a low.
Over recent months, we've listed for you here several warning signs in the economic data:
- The Economic Message is Getting Harder to Ignore (2 poor jobs reports)
- The Real Estate Recovery May Not Be Intact
- This Week Manufacturing May Mess Up the Economic Perspective
- Sell the SPY on High
- Recession, Are We Ignoring the Signs
- Recession Signal: Consumers Sound Off on Higher Payroll Taxes
- 3 Reasons to Buy Gold & Silver
- The Fed's Math Just Doesn't Add Up
- 5 Economic Problems that Need Reconciling
Writing articles like this has been difficult against a tide of momentum-inspired and euphoric investors who also forgot that I suggested stocks were cleared to buy after Washington D.C. got out of the way. Today, those same harsh critics to my reports have likely forgotten me as they scratch their heads. Those of you paying attention know why these economic signals have been so ignored over the recent months, because of the massive capital flows coming into equity funds this year. Today's news about the labor situation changes all that.
Investors and Main Street will see this news in the newspaper this weekend and reconsider stocks and the economic perspective. Finally, gold will get its due and those waiting for the next low to buy in have it here. It's entirely possible capital flows will continue into equity funds for various reasons I'll get into in another article, but those funds will probably seek value more aggressively now and defensive positions like consumer staples have become pricey. So where will they turn? The SPDR Gold Shares Trust and other golden investments like the Market Vectors Gold Miners (GDX), the Direxion Daily Gold Miners Bull 3X Shrs (NUGT), ETFS Physical Swiss Gold Shares (SGOL), ETFS Physical Basket Shares (GLTR) and the iShares Silver Trust (SLV).
The SPDR Gold Shares Trust is down 7.2% year-to-date through April 4, but it's up 0.7% at the hour of scribbling here on Friday April 5. A look at the one-year chart presents the opportunity for those of you who like a visual.
And gold, silver and the relative securities like the widely held SPDR Gold Shares Trust have two other factors working in their fundamental favor besides a currently failing U.S. economic argument. The Cyprus failure of the Europeans set a terrible precedent regarding savings in fiat currency that supports long-term demand for gold. Japan is joining in the central bank cash burning parade, with a quantitative easing program that rivals that of the U.S. Because of the capital fervor of the start of the year, these issues have been overlooked, but now that the major U.S. economic report on labor has failed, investors will turn to gold. This could be day one in the nascent rally in gold, and the SPDR Gold Shares Trust is a great way to leverage it.