Until today, I did not realize the U.S. had 10,000 jobs that could still be lost in the mining sector, but as this administration has almost put U.S. coal mining out of business, prices of other metals have made producers cut costs.
The employment data have given gold bugs another chance. As the $1,100 level held despite more shorts being put to work at quarter's end, the bond and currency markets now believe the Fed can't raise rates this year, so gold has once again squeezed the shorts. The technical funds are still sitting shorts as the 100-day moving average, which has moved down to $1,145, has yet to be breached.
The bigger number, which seems light years away, is $1,178.50, and I think it will take a EURUSD move above 115 to get anywhere close to that. But this is different than two weeks ago, when we tried holding $1,150.
There is now a bit of geopolitical concern mixed in with the global economic worries. The rhetoric between Congress and President Obama over the inaction from the U.S. to Vladimir Putin's airstrikes on Syrian rebels is going to make a lot of people uncertain of how this unfolds.
Obviously, since I am long Market Vectors Gold Miners ETF (GDX), I am hoping that gold can sustain some upward momentum, and the fact that the rally came so quickly after the 142,000 NFP print, which many shorts were unable to cover, means there could be more to come Sunday night on the Asian opening.
The fact that silver is outpacing gold is also helpful, as I think you need the higher beta metal (silver) to lead the recovery. The interesting precious metal is palladium, which has rallied all week despite bad economic numbers.
The one positive number is 18.2 million, which is where car sales are tracking in the strongest September ever. Ford (F) had its best retail sales since 2004, with the F-150 retail sales up 28%, which should be a boost to Alcoa's (AA) downstream business.
It is going to be difficult for the economists at the Fed to reconcile these numbers with a poor September and downwardly revised August employment number. But this is very meaningful to palladium demand, which is 70% derived from auto sales. In light of the Volkswagen (VLKAY) diesel issues, the platinum/palladium ratio is at its narrowest level ever, and gold/plat is at the widest I can remember.