Gold turns higher after weak jobs report

In the Lead: “Dirty Business”

Whether such bets prove to be correct remains to yet be seen, that is for sure. Counting on further Fed largesse just because of the reverberations of the Japanese quake and the emergent global soft-patch also dented US jobs figures may prove to be very short-lived and perhaps less than successful, but still full of volatility and counterintuitive moves, nevertheless (see metals prices circa…30 minutes and then 50 minutes after the Labor Department announcement)…

In any case, this morning was also all about assorted warnings. A warning by Dennis Gartman that his sale of half of his gold position is perhaps one step ahead of a potential decline in gold to under the $1,500 level, a warning by the China Banking and Regulatory Commission to the nation’s banks that they need to warn investors who are hot-to-trot in the silver market, a warning by the S&P about commodity market bubbles, and a warning sign seen in George Soros’ recent exit from gold.

In a rare (for it) announcement, the Standard & Poor’s Rating Services said that due to China’s too-large-to-ignore “participation” in the commodities’ market has engendered the likelihood of an unsustainable bubble. The S&P thus feels that any significant contraction in that country’s economy might well result in pain and suffering in the commodities niche. As they say; “You’ve been warned.”

One of the possible factors motivating Mr. Gartman to lighten up on his position in the yellow metal may have been rumor-based, but…as he says: “there are rumors and there are rumors of rumors about IMF sales, or sales on the part of legacy central banks in Europe, or sales from the European Central Bank, the proceeds of which can be used to prop or bail out Greece and the others,” Gartman wrote. “Although these are merely rumors, where this is rumored smoke there can be actual fire.”

Perhaps the bleakest warning of them all came not from the world of money this morning, but from the world itself; in this case, from China’s environment. In a devastating report on the levels of pollution that the country’s hitherto furious pace of growth has engendered, one senior Chinese official noted that more than half of that country’s urban centres are experiencing acid rains and that one-sixth of its river waters are unfit for any purpose.

China’s voracious appetite for lead, for example (it is the top consumer of that metal globally) has resulted in a mushrooming of lead-poisoning cases, especially as seen in children. The Chinese official, Mr. Li cautioned that “these heavy metal pollution incidents not only seriously threaten people's health, they affect social stability, and it ought to be said this is a rather severe issue." As has often been questioned in these columns: “What is the real price of certain metals?” Evidently, one that very few have the courage to talk about…

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