#JobsJobsJobs! Gold & Silver’s Knee-Jerk To The Jobs Report Was A Drop (Which May Be A Good Thing)

The October jobs report just blew-out the estimates, and gold & silver have initially dropped, which may be a good thing for gold & silver. Here’s why…

Moments ago, the BLS just released the Employment Situation Report, commonly known as the Jobs Report, for the month of October, 2018.

Here’s a snapshot of the consensus estimates prior to the report:

Here are the actual numbers as just reported by the BLS:

Number of jobs created in the month of October: 250,000

Unemployment rate: 3.7%

Average hourly earnings (year over year): 3.1%

Labor force participation rate: 62.9%

A special notice was made with regards to Hurricane Michael:

Here’s Bloomberg’s take on the print:

U.S. hiring rebounded by more than forecast in October, annual wage gains topped 3 percent for the first time since 2009 and the jobless rate held at a 48-year low, signaling the labor market will keep driving consumption and economic growth.

Nonfarm payrolls rose 250,000 after a downwardly revised 118,000 gain, a Labor Department report showed Friday. The median estimate in a Bloomberg survey called for an increase of 200,000 jobs. Average hourly earnings for private workers advanced 3.1 percent from a year earlier and the unemployment rate was unchanged from September at 3.7 percent, both matching projections.
The figures give Republicans another economic accomplishment to tout ahead of Tuesday’s midterm elections as they seek to defend control of Congress from what polls indicate will be Democratic gains. The continued hiring and wage increases also reflect a tax-cut boost and reinforce expectations that the Federal Reserve will raise interest rates for a fourth time this year in December, though such an outlook may further unsettle investors who just sent U.S. stocks to their worst month since 2011.

Some charts with coverage of the report, from ZH:

And while the BLS reported that a whopping 198K workers were unable to work due to bad weather, what is curious about the number is that according to the BLS, “Hurricane Michael had no discernible effect on the national employment and unemployment estimates for October, and response rates for the two surveys were within normal ranges” indicating that the US economy, all else equal, is back to overheating, and the Fed may once again be well behind the curve.

But the most important part of today’s report is that the increase in average hourly earnings jumped by 3.1%, in line with expectations and up from 2.8% in September. As we previewed overnight, this was the highest print since April 2009.

The President will certainly be beyond pleased, so most likely my Friday Wrap will include at least one Tweet of his today on just how awesome the economy is.

Gold & silver had been rising overnight, and as you can see in the chart below, silver was on the verge of breaking out.

So it was the cartel’s favorite hit man, who goes by the name “Johnny Fat Fingers”, to the rescue:

Extra selling pressure was applied shortly after 8:10 a.m. EST, prior to the jobs report release.

Remember, the jobs report isn’t released until 8:30 a.m. EST, and the market doesn’t officially open until 9:30 a.m. EST. The purpose of this selling pressure is to show downward momentum in the prices of gold & silver with the intent of carry-through.

The moment the Jobs Report hit the tape, as per custom, gold & silver dropped as the dollar popped:

Of course, we know that Jobs Report Fridays are one of the favorite times to smash the metals.

As such, some 20 minutes in, and still 40 minutes from the opening bell, the knee-jerk reaction in gold & silver is down:

Which may not be a bad thing.


The knee-jerk reaction is often times not the direction of the actual, eventual move, and there is good reason to suspect the metals could go higher today. Here’s the thing: That wage growth is going to be touted as totally freakin’ awesome, and with a historically low unemployment rate, and with expectation busting number of jobs created, the Fed is definitely hiking in December as these are signs that inflation is picking up.

So what does that mean for gold and silver?

Gold and silver are the ultimate inflation hedges, and when the “market’ figures this out, they will respond accordingly. Furthermore, a pretty much assured December rate hike will put additional pressure on the stock market, which would also be good for gold & silver.

There is still a full day of trading left.

Stack accordingly…

– Half Dollar


About the Author

U.S. Army Iraq War Combat Veteran Paul “Half Dollar” Eberhart has an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill. Paul dived into gold & silver in 2009 as a natural progression from the prepper community. He is self-studied in the field of economics, an active amateur trader, and a Silver Bug at heart.

Paul’s free book Gold & Silver 2.0: Tales from the Crypto can be found in the usual places like Amazon, Apple iBooks & Google Play, or online at PaulEberhart.com. Paul’s Twitter is @Paul_Eberhart.