Meanwhile back at the U.S. ranch, White House economic advisor Larry Summers will be leaving his post by year’s end. Not the most market-friendly development, this. The Huffington Post sees that “Larry Summers is to a large extent responsible for the administration’s inadequate answers to the economic problem. Summers underestimated the depth of the economic crisis and he did not underestimate it accidentally.”
The HP adds that: “He underestimated it because his view of the world is very Wall Street-centric, so once they had saved Wall Street, they thought everything else would follow naturally. And the fact that the two economies, Main Street and Wall Street, de-coupled was not on his radar screen.” Most bets regarding Mr. Summers’ eventual replacement are clustering around the idea that he or she will be a corporate executive with hands-on experience in job creation. At the White House, the new slogan might be “Jobs are Job Number One.”
The Obama White House might actually have some luck with that task, at least if one economic soothsayer proves correct once again. Singapore-based economist Thomas Lam wants to be heard. Mr. Lam correctly (and precisely) called the end of the worst U.S. recession since the Great Depression roughly sixteen months ago.
In Mr. Lam’s view, U.S. economic growth will average between 2% and 2.5 % in the next few quarters, and while he says he is still gauging jobless claims for his analyses, he is now also “focused on a proprietary leading index that gauges implied risk premiums and future expected yields.”
As of now, Mr. Lam also says that the chance of a double-dip event for 2011 is to be estimated at no more than 20%. Mr. Lam – ranked as the number two best economic forecaster by Bloomberg – also says that “there is ‘an empirical tug-of-war going on right now’ between analysts and investors trying to fathom whether another recession is likely.” Indeed, look no further for evidence of such a war than to gold’s behavior in the 24 months following its deflation-tinged decline to the $680s during the summer of 2008.
All of the above brings us to the midweek precious metals sessions’ opening in New York, minutes ago. Against a backdrop of a further half-percent easing in the U.S. dollar (down 0.39 to 79.86 on the index) the spot gold market opened with a $7.40 gain and was quoted at $1,294.00 on the bid side. Few doubt the achievement of the $1,300.00 offer price in coming hours; however the question being asked with increasing frequency is: “What’s next?” The metal has added some $140 without any effective pause over recent weeks. The search for additional fuel to keep this wagon in motion is now on, as the half-life of the Fed statement ticks away.
Silver opened with a six-cent gain at one penny above the $21.00 mark on the bid side this morning. The white metal shows a $3+ gain over the past month. Platinum, which also gained more than $125 in a near-vertical climb of late, added another $11 to values as it opened at $1,630.00 the ounce. Palladium rose $5 to $538.00 and it now sports a roughly $90 gain over the past 60 days or so. Rhodium remained steady at $2,300.00 basis the bid quote. Thus far, paper profits appear to suit the funds playing in all of the metals, just fine.
Until tomorrow (and a new record),
Jon Nadler is a Senior Analyst at Kitco Metals Inc. North America