The US dollar value continues to bleed in 2008 as fears of a recession were intensified following disappointing employment numbers.
US Dollar Value Hemorrhaging
The US Labor Department reported on Friday that the unemployment rate in the United States unexpectedly surged to 5% in December, making its steepest one-month increase since the economic tailspin of late 2001.
Analysts on the street were expecting US employers to add 70,000 new workers to their payrolls last month. But even that lackluster performance couldn't be achieved. According to the Labor Department, only 18,000 new jobs were created nationwide.
December's dismal job production was the lowest level since August 2003, when the economy was still recovering from the 2001 recession.
The jobless rate, which had been expected to inch up to 4.8% from November's 4.7% reading, instead climbed by three-tenths of a percentage point to 5.0%.
And while the government jobs report doesn't mean a recession is inevitable, it definitely represents a major warning that the US dollar and overall economy could be in trouble.
At last look the US dollar index, an index of the US dollar relative to a basket of six foreign currencies, was at 75.92, only one and an eight points above a multi-decade low. The US dollar index has fallen a staggering 37% in the past six years.
The prospect of a weaker US dollar, higher oil prices, and geopolitical risks equal one inevitable outcome: Higher Gold Prices.
All this added to the micro fundamentals of poor mine supply, limited Central Bank sector sales, solid investor demand, and increasing jewelry demand, I see gold trading above $900 an ounce within the next few months.
Stay long gold,