Gold boosted on lower than expected jobs

Mind you, similar “signs” are also coming, not from the mind of M.Night Shyamalan, but from the US Fed at this time. Bloomberg reports that the Fed’s policy makers appear to be in favor of an “abrupt” ending to the QE2 program, when the end of June rolls around. The FOMC meets in eleven days, and that is about halfway through the bond-buying period that was instituted back in early November of last year. The Fed’s move came on the heels of a poor jobs and economic indicators’ scene in August, and it was seen as causing spec funds to run amok with certain commodity prices, drunken with the prospect of the ultra-cheap money environment that the Fed created for them for another six months or so, at least.

Now, however, the US economic picture has brightened considerably, and it has become fairly clear (at least to some) that the risks implicit in a prolonged easing stance are beginning to outweigh its benefits, especially when it comes to QE2 being “morphed” into QE2.5 or QE3 after mid-year. Even the full-run of QE 2 has come under questioning by some Fed members, but that fact has not stopped hard money newsletters from assuring their audiences that the Fed will continue with its current policies for, basically, …ever.

Reuters reports that according to Charlie Morris, head of absolute return at HSBC Global Asset Management, “the financial and geopolitical backdrop has not deteriorated enough for gold to show off its safe-haven credentials and it remains firmly a risk trade, while the chance to get into silver may have passed.” Mr. Morris recently cut his fund’s level of exposure to gold. Mr. Morris also opined that "we're at a crossroads and it's a very complex time because on the one hand, you want to protect yourself against inflation, but those trades are extremely overcooked."

The HSBC fund manager has adopted a “defensive view of the world” and believes that gold “is not the best way to profit from that stance.” However, HSBC Global Asset Management remains bullish overall on gold, even if it does not envision gold as the cure-all for what ails the world at the present time. And, while gold might be a good enough value to become a buyer near $1,340- $1,350 for Dennis Gartman, the famed newsletter editor remains on the sidelines of the market, for the time being, citing risks of further retreats in the yellow metal.

Someone else who shares that view is Mr. Bernanke. Whether or not related to the state of Utah’s proposed legislation to allow its denizens to use gold and silver coins as an alternative “legal tender,” Mr. Bernanke commented that he dismisses the notion of the gold standard returning to the U.S., anytime soon. The Fed Chairman noted in his testimony before the Senate Banking Committee that gold "did deliver price stability over long periods of time, but over shorter periods of time it caused wide swings in prices related to changes in demand or supply of gold. So I don't think it's a panacea."

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