Today's non-farm payrolls release, a statistical report from the US government on job growth, was very disappointing, signaling no real growth. This should not be surprising to anyone who remains focused on debt and understands the only issue is debt. So long as the global outstanding public debt in the Western world continues to grow, employment will be low, and probably will decline once short-term effects of bubble-creating stimulus pass through. Fixing the debt issue is the first step, and it is required to go through before doing anything else. The failure of monetary authorities around the world to understand this is the biggest problem, in my opinion.
Anyway, today's price action -- in which US stocks fell, and gold rose -- is an important trend that we'll see more of, although perhaps not exactly in the manner it occured today. It is more likely, in my opinion, that US stocks will decline relative to gold, but that both gold and US stocks will rise when priced in US dollars. This trend is most easily visualized and traded via an examination of the dow/gold ratio.
To sustain a rise in equities, QE 3 will be needed, and I believe it will come. It is only a matter of time, and perhaps not even much time, as Bernanke has a special two-day meeting planned this month. Perhaps it will be QE3, or perhaps some type of a new international monetary agreement. Either way, we are at the point where central bankers need to do something. We know their actions have tended to result in an increase in the money supply, and that inflationary monetary policy starts with the banking industry and trickles down from there. This is a self-fulflling cycle at this point, as such policies do not address the solution to unemployment. The real solution starts with debt cancellation.
Anyway, so long as the problem remains unaddressed, long gold is on solid ground. If you think this problem will remain unaddressed for a while, gold mining shares are a viable value play.
Disclosure: I am long GDX, GDXJ.