The Fed, Gold & Jobs

October 07, 2013


If you look at the graph representing the price of gold and the labor force participation rate, you’ll see that though the rate has continued lower since 2012, gold drifted lower opposed to the norm. That, I believe, is due to an acceptance or numbing to the current climate, and a false understanding of the unemployment data, which has created a false confidence in the situation.

Then take a look at the graph of the participation rate versus the gross domestic product. You can see that the decrease of the participation rate properly signals the direction of the GDP.

GDP vs. Labor Force Participation

The lack of growth in the labor force participation rate indicates that the economy is still a long way off from getting on its feet. This means gold has upward mobility on the back of the poor economic environment.

Taking into consideration the expected negative factors of Obamacare, the government shutdown and the impending negotiations on the U.S. debt ceiling, it behooves wise investors to consider their position in gold relative to the current market's view.

Miguel Perez-Santalla is vice president of business development for BullionVault, the physical gold and silver exchange founded a decade ago, and now the world's No. 1 provider of physical bullion ownership online. A fierce advocate for retail investors, and a regular speaker at industry and media events, Miguel has more than 30 years' experience in the precious metals business, previously working at the United States' top coin dealerships, as well as international refining group Heraeus.

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