What unwanted gift from Ben left Janet Yellen?

What will break gold of its losing streak? Will inflation, which is a lagging indicator, be stronger than expected? In one of my most popular posts last year, I said that based on the jobs market, the limited housing recovery and regulations slowing down the flow of money, the Fed would have no choice but to start tapering and raising rates very gradually to keep stimulating the economy.

In CLSA’s Greed & Fear, Christopher Wood points out the forward-lookingU.S.data, pending home sales index, is “clearly suggesting stalling momentum.” Pending home sales have been declining for seven months in a row, “plunging by 8.7% month-over-month in December to the lowest level since October 2011.”

There’s also a weaker demand in mortgages in the past quarter. According to a survey of banks, nearly 30% reported weaker demand for prime mortgages, which is the “worst data since April 2011,” says CLSA. About 46% of banks are seeing weaker demand for non-traditional residential mortgages, the worst since January 2009.

The ISM manufacturing new orders index is also off. In January, new orders fell from 64.4 in December to 51.2 in January, which was the largest monthly decline since December 1980.

So even if investors shrugged off the latest disappointing jobs report, we’re pretty certain the incoming chairman is paying close attention to the scoreboard.

What looks promising today is gold’s bounce off its bottom, as you can see in the chart below:

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About the Author
Frank Holmes

Frank Holmes is CEO and chief investment officer of US Global Investors. This first appeared in his Frank Talk blog. For more updates on global investing from Frank and the rest of the US Global Investors team, follow on Twitter at www.twitter.com/USFunds or like on Facebook at www.facebook.com/USFunds. You can also watch exclusive videos on what research overseas has turned up on the US Global YouTube channel at www.youtube.com/USFunds.

US Global Investors, Inc. is an investment management firm specializing in gold, natural resources, emerging markets and global infrastructure opportunities around the world. The company, headquartered in San Antonio, Texas, manages 13 no-load mutual funds in the U.S. Global Investors fund family, as well as funds for international clients.

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