The Peter Schiff Show Podcast

* Last week on Thursday we got that much weaker than expected ISM Manufacturing number, which didn't get a lot of attention because it came out a day before the jobs number which cast a pretty big shadow on all the economic data * The number came in very weak, as I pointed out, it was 49.4, which is contraction mode * Anything below 50 in the ISM numbers indicates a contraction and a recession * But of course, no one cares about manufacturing because it is such a small part of the U.S. economy, which in and of itself, is a major problem * The fact that it is such a small part of the economy should be very concerning, because without manufacturing you really can't have a service sector * The way the U.S. gets away with it is to just import with everyone else manufactures and we run enormous trade deficits, which is an unsustainable model * It's a great gravy train while the ride lasts, but when the rest of the world figures out that we can never pay our debts, then the gravy train comes to an end * The trade deficit represents an artificially high standard of living, but in the long run it's unsustainable because our creditors will not let us get away with this forever * I want to get to the ISM Non-Manufacturing number which came out yesterday; this represents the service sector of the economy * They were looking for 55, which was not a great number; last month we got 55.5, so there was some optimism around that number * They were looking for 55 even and, instead, the number came in at 51.4 * The lowest number in better than 6 years * And if you look beneath the surface and all the various components; new orders, back logs, hiring - horrible numbers consistent with recession * The complete opposite of what everybody was looking for, and when you combine this with the 49.4 we got from manufacturing that is a very bleak picture * The fact that we are at 6+ lows in the service sector does not bode well for the future * The trajectory is down, and how much longer is it going to be before the ISM Non-Manufacturing breaches the 50 mark? * Just when they start talking about these rate hikes - everything before this number came out questioned a September or a December rate hike - foregone conclusion * We had the same discussion in September a year ago * They punted and raised rates in December - will they do it again? * Given the bad news to date, there is really no way the Fed is going to raise rates in September * But just when the Fed officials are talking up a rate hike, everything changes with some bad news * The Fed never admits the data is bad they just don't raise rates and you've got to figure it out for yourself * When the ISM Non-Manufacturing number came out, gold took off * It continued to rise throughout the day and closed up better than $20 * Gold got back above $1350 after having just tested the $1300 level * Silver had a big up day; it went back above the $20 mark * We had a strong move up in the gold stocks again following Thursday and Friday's strong move in gold stocks * The markets were very surprised, and when this number came out, all of a sudden all the bets were changing * The odds for a September rate hike were way down * But not that much for December, because people are just assuming they can't go in September because we got this bad news, but, of course, by December, we may get some good news * The reality is that by then, there will be even more bad news * The Fed is not going to be raising rates; they are just talking about it, politically * In fact, John C. Williams, President and CEO, Federal Reserve Bank of San Francisco late last night ignored the bad financial news entirely in his statement, reiterating that every meeting is live * His only motive for this could be politics * If the data is so good, why don't they raise rates?  The answer is that they can't. They know the economy is not good, but they can't say that * On CNBC,

*  On Friday we got the Non-Farm Payroll report and, of course, this jobs report is the most important ever * Because it was going to determine whether the Federal Reserve would raise interest rates at its September meeting * Of course, I didn't think the Fed would raise interest rates in September regardless of what this jobs number was * It's just that so many people were convinced that it was going to happen just because several Fed officials said it was possible

* The price of gold continues to retreat * Gold was down about $12 today; it closed around $1310 * The dollar index up again as more and more people begin to contemplate the possibility of a rate hike in either September or December * Or maybe even both, because the odds of a rate hike, either in September or December have now increased to about even money * If you go back to June, the odds were practically zero * What has changed in the last couple of months? * The only thing that has really happened is that you've had various Fed officials going out of their way to mention that a rate hike is still possible * Why would they do that? * Obviously, a rate hike is possible * Usually they are asked the question and they mention the possibility * If the Fed had no intention of raising interest rates, I doubt they would admit it at this juncture * They want people to believe that a rate hike is possible because if you admit that it's not possible, * That opens a can of worms that the Fed isn't interested in opening just ye

* Earlier today Janet Yellen delivered her much-anticipated and way over-hyped speech at the annual Jackson Hole Symposium * It wasn't as irrelevant as I thought it was going to be, but the actual relevant part of the speech was lost on just about everybody * Instead they keep focusing on whether or not the Fed is going to raise rates by another .25 in September or December or maybe both * In reality, whether they do or do not is irrelevant, given the nature of where we are and where the U.S. economy actually is * For a small person, Janet Yellen certainly casts a large shadow over the financial markets * Everybody was on pins and needles, all the traders were there with their fingers on the buttons waiting to react to anything that Yellen said * I mentioned on an earlier podcast that there had already been a sell-off  on gold stocks a couple of days ago on the anticipation of Yellen's hawkish comments * The rest of the market seemed to ignore the possibility that Yellen would be a hawk * Before I discuss what she said, I want to examine whether anyone on the committee could be considered a hawk * A hawk is predatory; is to be feared, reflecting a tough central banker who believes in sound money * On the other hand, a dove is cute and fluff; doesn't really hurt anybody * A dove wants cheap money - keep interests low so as not to harm anybody - nothing to fear * When it comes to hawks with respect to the Federal Reserve, the bird is extinct * They are all doves and the only difference is the degree of dovishness * The hawks are gone and are probably never coming back * Yellen was not a hawk, and neither was Stan Fischer

* The price of gold fell about $12/oz today; silver prices were down another .28 * Both metals have been falling since recent new yearly highs * Gold, though is not very much below the highs * The real carnage has been in the mining stocks, particularly today; today was one of the biggest down days I've seen all year * The GDX index was down just over 7% * Some of the mining stocks were down 10% or more on a very small move in the price of gold and silver * In fact, we've wiped out the last 2 months of gains in the mining stocks * What is the catalyst for this? * Early this morning, around 8:30 - 9:00 New York time before the U.S. Stock Market opened * No news - gold was up 1 or 2 bucks... * All of a sudden a huge sell order hits and gold drops about 7 or 8 bucks on no news * Somebody decided to dump a lot of gold on the market, at one time and didn't really care what the execution price was * Considering how large the sell order was, it didn't really knock the market down very much * But the gold stock market was a different story * It kind of made me think that the rationale for getting gold to drop was the impact it might have on the gold stocks themselves * My guess is that a lot of people who were running with stops, that's when you have an order to sell below the market to try to protect your profits * My guess is that they hit a lot of stops today in a lot of these mining stocks and maybe, some of the bigger players were able to buy more gold stocks based on the shake-out that was created * By a relatively modest drop in the price of gold * Meanwhile, the dollar didn't rise very much today; the downtrend still seems to be firmly in place * What everybody seems to be focusing on is the Fed * People are worried about what Janet Yellen might say on Friday * The Fed's Jackson Hole Conference gets underway tomorrow and Janet Yellen speaks on Friday * I guess the thoughts are: "Maybe she will say something hawkish." * Maybe she'll say the U.S economy is strengthening and the Fed is getting closer to meeting its objectives * And that a rate hike is possible in the near future * So what? That's what she always says. * Now she's not going to come out and say, "We're raising rates for sure. We're moving rates in September." * The only thing she could say is that a rate hike is still possible * That is no different than anything that she has said in the past * So people being nervous about a possible unprecedented hawkish statement makes no sense * Even in Janet were to say she is raising rates in September and she followed through a rate hike * So what? * It's not going to hurt gold and it's not going to help the dollar * Expected rate hikes were already baked into the dramatic rise of the dollar in 2014-2015 * Gold declined from a high of almost $1900 to a low of $1050 because it was discounting all the rate hikes that are never going to materialize * Even if we get one or two more, that is nothing compared to market expectations * Even if we get a couple of small rate hikes, even if we get to .75 or even 1% * That is still not enough to hurt gold or help the dollar * When are people going to figure out it doesn't matter what the Fed does

* The dollar was broadly weaker today with the dollar index closing down .85 to 94.78 * At that time gold was up about $18; sliver up about .25 * Then all of a sudden New York Fed Chairman William Dudley in an interview on Fox Business basically sa...

* Today we got the official numbers for Q2 Non-Farm Productivity and the consensus was that it would increase for the first time in 3 quarters; the prior 2 quarters we saw a decline in productivity * So analysts were looking for a .5 increase in the second quarter * Instead, we got a decline of .5 * More importantly, this is the first 3-quarter consecutive decline in productivity since 1979 * That was the Carter years - stagflation, the misery index, sky-high inflation, sky-high interest rates * That was the last time we had a 3-quarter drop in productivity and President Obama is bragging about how great the recovery is and Hillary Clinton promises more of this * If you look at the actual size of the decline over those 3 quarters, it's the biggest drop in productivity since 1993 * If you look at the year-over-year decline, this is the biggest decline in productivity in 3 years * Productivity is extremely important * Politicians are all talking about higher wages - "We need higher wages!" * You can't get higher wages without higher productivity. * That is where higher wages come from * Now, a lot of politicians want to substitute government decrees - they want to mandate higher wages * Like minimum wage - we're going to force employers to pay this minimum wage * All that does, is raise the bar; it makes it harder for unskilled workers to get a job in the first place * Now employers are forced to pay a wage that may be well above the productivity that they can deliver * In that case, they can't get the job * Mimimum Wage doesn't just raise wages, it raises the bar * Another popular way that politicians try to mandate higher compensation is by mandating benefits such as health care, sick leave, paid vacation days, or overtime * The idea is that you're getting something for nothing - I voted for this guy and he delivered * That's not how it works * When an employer hires somebody, they look at the overall cost of employing that person, relative to the productivity required for the job * If I am mandated to provide certain benefits, the costs associated with them are also mandated * If you force the employer to provide benefits at a certain cost, how is he going to pay for it? * What happens is, the compensation becomes a mix of wages and benefits * Maybe the worker doesn't perfer that, maybe the worker just wants the higher wage * The worker can't have it because the government took that decision away by mandating that a portion of the pay include benefits, whether the worker wants them or not * The politicians hope the voters fall for the idea that they got something for nothing * That's government for you.  They always want you to think you're getting something for nothing * But the something for nothing costs a lot more than you think because the nothing is not nothing * In this case, wages go down so the benefits can go up * Everybody would be better off if the government stayed out and let each worker negotiate independently with the employer for a compensation package that is most valuable to that worker * But productivity is really the holy grail of higher wages * If we really want higher wages we need to raise productivity and that's not happening * If productivity is going down, wages are going down * If you want wages to go up, you have to have higher productivity * How do you get that?  Less government, lower taxes, higher interest rates so we get more savings and more investment and less of all this speculation and paper-shuffling that we have in this bubble economy * I want to talk also on this podcast about Donald Trump's economic speech yesterday * I just want to focus on one aspect of it that has been getting a lot of press: the estate tax * After you die, the government comes in, and if you have a sufficient amount of money, they take half of it * Donald Trump is promising to repeal the tax, which is a great idea

* What a difference a week makes, or maybe and economic report * The two big reports that everybody seems to focus on are the GDP numbers and the jobs numbers * It seems that the weaker the economy is, as measured by GDP, the more jobs, somehow, the economy seems to create * We got the jobs report for July and just a week earlier we got Q2 GDP * As I spoke about on the last podcast, that number was basically half of what Wall Street had been anticipating - less than half * They were looking for 2.4 or 2.6 and we got 1.2 * Even worse, we went back and revised down the prior 2 quarters to below 1% * That very weak number caused people to talk about the fact that the Fed can't raise rates, the economy is weaker than we thought, are we slipping back into recession?... * Now fast forward a week, and we get a Non-Farm Payroll report that is higher than anticipated and now all of a sudden people are starting to talk about September rate hikes again * Obviously, withe the stock market on Friday rising to a new record high, I doubt the equity traders actually believe that Friday's jobs report is going to produce a rate hike * Yet it doesn't stop all the financial journalists writing about how this confirms that the recovery is on track, and the Fed can raise rates * This jobs report doesn't confirm anything

* The carnage in global stock and bond markets continues; it really got started last night in Japan * The JGB (Japanese Government Bonds) dropped for the 3rd consecutive day * The biggest 3-day drop in bond prices in Japan in over 3 years, so yields surging, along with the Japanese yen * Of course, this is not supposed to be happening because they're doing more stimulus and they've got negative interest rates, yet the Japanese yen is appreciating anyway * The Reserve Bank of Australia also came out last night and cut interest rates to 1.5% * That is an all-time record low * Why did they do that? Is it because there's not enough economic growth in Australia? * Are they trying to revive a slumping property market * They've got a bubble in the real estate market - there's no valid reason for cutting interest rates from already low levels * The actual reason that the Reserve Bank of Australia gave for the rate cut was that inflation was not high enough * It's about 1%, the way they measure it, and their goal is to have it between 2 and 3% * In other words, the cost of living is going up by 1% a year and the Reserve Bank of Australia says, "That's horrible! We need to make sure that things get at least 2-3% more expensive this year and we're going to slash interest rates to make sure that happens." * Of course, when you do that, you have all sorts of risks, and what is the payoff? * Why is the cost of living going up 2-3% better than it going up 1%? * What's wrong with the cost of living not going up at all? * How about if it actually went down?  What if people could actually buy the things they need for less money? * What's horrible about the standard of living actually going up? * Of course, the real risk is, what if inflation goes from 1% (at least the way they measure it) to 4 or 5%? * Was it worth it? Now you have an inflation problem on your hands * If you've got 1% and you want 2% - You're close enough! * Obviously this has got nothing to do with inflation, they're simply trying to stop the rise in the Australian dollar * But the Australian dollar went up anyway! * They're trying to keep it down because they have this Keynesian world view that a weak currency is good and a strong currency is bad * But we've got to an inflection point where the central banks are losing this battle * The yen is rising despite the efforts to suppress it * The Aussie dollar went up, despite efforts to suppress it * The problem is, the U.S. economy is a disaster * We got the terrible GDP numbers, and we got a lot of other bad economic news today * We've got a lot more bad news coming out later in the week * We might get a horrific report on non-farm payrolls * We got that surprise good number last month, but who knows? We might revise that down and come up with another disappointing number on Friday * But the Fed, instead of acknowledging this, are still talking about rate hikes * In fact a Fed official just yesterday said the market should not rule out the possibility of a rate hike in September * First of all, if the economy comes roaring back (no chance that's going to happen) * Even if it comes back, they didn't say they WOULD raise interest rates, they said they might * Which also means they might not * It doesn't matter what happens to the economy, they can't raise rates * The economy is not getting better * We are either in recession or on the cusp of one * And the data continues to prove that, but the Fed continues to talk as if they're thinking about raising rates * That is part of the problem, because if the market doesn't believe that the Fed is coming to the rescue... * I said a long time ago that we could get rallies in the markets, but they are not going to be sustainable * The Fed is going to have to join the party * It will have to come to the aid of the markets with new stimulus * Just delaying rate hikes will not do it

* Yesterday we got the government's first estimate of Q2 GDP * Of course all of the pundits were looking for a big rebound from the very week 1.1% growth that the government claimed was reported in Q1 * In fact, the consensus range went from a low of 2.2% to as high as 3.4%, so a lot of optimism, going into Friday's release * When we got the number, everybody was surprised that the number was only 1.2% - substantially below even the lowest estimate * In fact, adding insult to injury, they made a lot of revisions to prior numbers; some up, some down going back a couple of years * Most significantly, they revised the last 2 quarters down * Q1, which had been reported as +1.1%, still very weak, was revised down to just =.8% * And 2015 Q4, which was reported at 1.4% was revised down to .9% * Remember, that's the quarter when the Fed decided to raise interest rates for the first time in about 9 years * The Fed said that they were data dependent and that the data was finally good enough, that the economy finally looks strong enough for the Fed to raise rates, when in fact, the economy was slipping toward recession * If you look at the last 3 quarters of economic growth, the average is slightly below 1% * That's assuming that the 1.2% number reported for Q2 actually holds up to scrutiny * My guess is that, just as the last 2 quarters were revised down... * And of course this assumes we buy the government's definition of inflation * Remember, the nominal GDP numbers are always deflated * The government has to subtract out inflation and the inflation rate that they claim is so ridiculously low it is hard to believe * If we had a more realistic inflation measure, I think that, not only would the second quarter come in negative, but the 2 prior quarters, as well * And we would already be in recession * But who knows? At some point in the future the government may revise all its numbers much lower and they will be able to officially concede that this greater recession, that I believe we're already in, actually started in Q4 2015 - the very quarter that the Fed waved the "all clear" on the economy and decided to raise interest rates * Of course, as soon as this weak number came out, all of the pundits were trying to rationalize why the number didn't matter * One of the things they pointed to was the strong consumer - consumer spending was the lone bright spot in this report; it jumped up by 4.2% * That is a big number.  There have only been 2 other quarters where the number was that high since this supposed recovery began in 2009, but both of those numbers came in the 4th quarter * And we all know that the 4th quarter is when consumer spending really picks up because that's when everybody does their holiday shopping * If you want to find a quarter when consumers increased their spending by this much, when it was not a 4th quarter, you have to go back 10 years * To me, that suggests that this number is probably now accurate * I don't see anything in the economic data that would suggest that consumer spending is that robust, so I think they will revise that part down, in particular, in future months *

*  Today the Federal Reserve concluded its 2-day FOMC meeting and it announced - surprise, surprise - that interest rates are not going up * But of course the statement was much more important than their actions because these days, it doesn't matter what the Fed does; all that matters is what they say they're going to do, or more accurately, what they will pretend to do * It really doesn't matter what they say, they're not going to do anything * I explained that on my last podcast; I explained it again on CNBC Futures Now * People obviously still don't get it and I continue to use the analogy of Teddy Roosevelt's "Speak softly and carry a big stick." but if you have no stick, which is the situation with the Fed, then you have to speak loudly, and if you speak loudly enough, nobody will notice that you have no stick at all * That's what the Fed did today when they did not raise rates, but released their somewhat hawkish statement, saying that the near-term risks to the economic outlook have diminished * What does that mean? * We think the economy looks better, and therefore a rate hike might be appropriate * The Fed said that the job market had strengthened, which it did for one month - we had one strong month, but it is a low bar * But that is only superficial - when you look beneath the surface, it is worse * According to the Fed, the job market strengthened and the economy is expanding at a moderate rate * If we have an strengthening job market and the economy is expanding moderately, why are interest rates still practically zero? * The Fed mentioned that household spending is growing, but again the bar is set pretty low * The continued to say that they believe the economy is evolving in a way that will warrant gradual rate hikes * By gradual they mean, "No more rate hikes." * They raised rates once in January and they haven't raised them since * I think the tightening cycle ended when they raised rates, and began when they started to talk about tapering * We are now in an easing cycle * Despite some general better-than-expected economic data, we got some very weak news this morning * We got the number for June Durable Goods and they were looking for a decline of 1.3% * We got triple that decline: 4% decline and in fact they took the may number down from -2.2% to -2.8% * Year over year we're down 6.4% - that's a huge decline * The biggest decline in 2 years * If you look at the core capital goods, down again 3.7% * This is a massive streak - we've now seen the year-over-year core number down 18 months in a row * The longest losing streak in history when the U.S. economy was not in recession * I believe that this streak will continue and ultimately it will be longest losing streak ever - including recessions * Which would mean that year-over-year core durable goods would have been weaker during this "recovery" than in any prior recession on record * What does that tell you about the character about the so-called recovery, if is produces data that is even worse than during an official recession?

* It's official. The unthinkable, according to the status quo earlier in the campaign, Donald Trump is the Republican Nominee * Although many wrote him off as a candidate, I never did; I always said he was being underestimated * I believed his message would resonate given how horrible the economy actually is and what is really happening beneath the headlines * Everybody was proclaiming recovery and that we're on the right track and I knew that that wasn't the case * I knew there would be a lot of dissatisfaction among the electorate on both sides of the aisle * Even after Donald Trump locked up the Republican nomination, everybody was still writing him off * The idea was, "He's going to lose in a landslide" * Republican establishment said, "Abandon ship!", distancing themselves from Trump to maintain the House and the Senate, writing off the White House * Maybe run against Hillary in 4 years * That was the general consensus * Again, I kept saying the the media and the political establishment on both sides were underestimating Donald Trump and the potential appeal of a Trump presidency * I think that the speech he gave at the convention really proves that point * I thought his speech was brilliant. * When I say brilliant, I don't necessarily agree with everything he said; I clearly don't * I'm talking about the political perspective * Was this an effective speech to set the tone of the campaign? * In that respect, I think he hit the ball out of the park * The most clever thing about his speech is he didn't go after the Republicans * He went after the Democrats * He went after their base; their core constituency * He is bringing the fight to their turf * He went for the women, he went for the minorities * Not just African Americans and Latinos, but the LGBTQ and the blue collar workers * Donald Trump did not go after the entrepreneur * He didn't promise to get government off your back and free up the businessman from red tape * That's a typical Republican acceptance speech * He said, "I'm going to be the champion of the little guy." * The downtrodden, the forgotten voter * "I'm your guy! The system has been rigged against you and because I have been part of the problem, I'm the only one who can deliver the solution" * I think this is a very powerful strategy * Because the Democrats have been taking their constituency for granted * What Donald Trump says is, "Why are you blindly supporting the Democratic nominee?" * What have they done for you? Nothing. * He will bring up the shocking statistics that have been getting worse under 7 years of Barack Obama * The horrible unemployment in the African American community * The inner city crime * The government dependency.  The despair. * Why are African Americans handing their votes to a Democrat? * The Democrats have let them down and failed them * Donald Trump will say, "I won't do that.  Trust me." * "I will deliver on the broken promises of generations of Democrats." * What about women? * Instead of denying the gender gap, he just accepted it.

* I was in Las Vegas for the Freedom Fest and following that I went to Vancouver for a one-day gold conference * One of the things I wanted to discuss was some discussion about me on the www.kitco.com website and I think it was prompted by my itnterview with kitco, which you can see on my YouTube Channel * Whenever there is a discussion about me an argument develops between those who want to believe I never get anything right and those with believe I get a lot of things right * I thought one part of the discussion was quite amusing * Of course, I never claim to be infallible; when you make a lot of projections they don't all turn out to be right * Nobody is 100% right on anything that they say * The key is, are you right more often than you are wrong * And when you're wrong, do you change your mind, when the facts change, which is something that I do * But people will always go back and focus on a quote from years ago and say, "Look here's a quote from Peter Schiff saying interest rates would go up, and Look! now they're down" * I did not expect the bond bubble to get this big * Who thought we'd have half of the sovereign debt trading for negative yields? * Very few people envisioned that, but it happened * For the last several years I have said nothing about higher interest rates * I do believe that when the bond bubble bursts rates will spike up * But I don't know when that is going to happen * If you've made enough forecasts, one can always find things that have not panned out * But these people overlook the overwhelming number of forecasts I've gotten right * One of the forecasts people used to make fun of me about was a forecast I made on a show called, "Southland Today" * I put that up on the internet years ago, it's a 2002 interview and if you watch that clip, you'll recognize that a lot of the things I said in that interview were used to form the introduction to the old, "Wall Street Unspun" the precursor to the Peter Schiff Show * The intro for that show included many quotes that were lifted from the "Southland Today" interview * During that interview, I said I thought the Dow would go down to 4000 * Of course a lot happened between 2002 and now * What did happen is that after I did that interview the market fell precipitously; the Dow did drop another 25-30% * The NASDAQ maybe even more * What happened between that interview and the market falling is that Alan Greenspan slashed interest rates down to 1%, and at the time of the interview I did not know he was going to do that * I thought Alan Greenspan would be smarter than that * If Alan Greenspan had not slashed interest rates, my forecast would have been correct * Once Greenspan lowered interest rates, of course, I changed my forecast and became bullish on the market when it was still quite a bit lower * 6yyj6e69

* I'm sitting with Josh Crumb, the co-founder of a company that was originally called BitGold but following the acquisition of James Turk's GoldMoney they rebranded their company as GoldMoney * I agree with that decision because I think GoldMoney is more descriptive of what they are really doing with gold, than is BitGold * But the reason we're sitting here today is because I was so impressed with their company after having lengthy conversations with the other co-founder, Roy Sebag, that I really agreed with Roy and I thought that the best thing for us to do was to join forces and to combine both companies to the mutual benefit of both investors and, more importantly customers of both my company SchiffGold, and GoldMoney * So we've agreed on a merger and we've formed a joint venture between the two companies * What I wanted to announce today is what this new joint venture means for current customers of my company, SchiffGold * One of the things customers might be thinking is: "Does this mean that my experience is going to change?" * GoldMoney (BitGold) is much more of an internet-based program where people are not interacting with live representatives * The answer to that question is no. * Nothing is going to change regarding the our customers' relationships with SchiffGold * In fact, what we're hoping to achieve is to bring some of that personal service to the current GoldMoney customers

* Today we got the Non-Farm Payroll report for the month of June * Remember the last 2 reports were quite weak and everybody was hoping for a rebound in June to prove that April and May were a fluke and not a new trend * In fact the Fed talked about that in their last FOMC meeting minutes * The consensus was for 180,000 jobs to be created and the range went from a low of 130,000 to as high as 235,000 * The consensus average of that range was 180,000 * The actual number came in at 287,000, over 100,000 jobs above the consensus * Now we did revise down the really bad number from May, and made it even worse * Initially that number was 38,000 jobs and now we know it was just 11,000 jobs * So about 70% of the jobs disappeared * I have a good feeling that the reason June's number is so high is that it's just wrong, and we'll see what kind of revision we get to it next month * Remember, a good chunk of these numbers are jobs that the government assumes were created without evidence, based on the birth-death model * I would suggest that far fewer businesses are actually being formed than the government believes * In fact, its possible that more business are shutting down than are hiring * Given the economy and the minimum wage, those business that are starting up are hiring fewer people than start-up historically hire * I think these guesstimates are wildly optimistic and skewing all the numbers * Unemployment rate, which was 4.7 last month and expected to notch up to 4.8, instead notched up higher to 4.9 * Private payrolls which were expected to rise by $170,000 jumped by $265,000 * But last month they revised a $25,000 gain to a $6,000 loss * Why did unemployment move up? Because the labor force participation rate notched up from 62.6 to 62.7 * Obviously not all the people who re-joined the labor force could find jobs * Average hourly earnings were expected to rise by .2% * Again they disappointed; they rose by just .1% * Overall, a mixed picture, but the headline number, the 287,000 vs 180,000 consensus * That's normally the number the market trades off * And that is exactly what happened - as soon as the report came out we had a big jump in the dollar index and we had a big selloff in Gold * Gold started out largely unchanged, went down about $22 on the news * Silver sold off, it was down about 40-50 cents * That was the knee-jerk reaction: strong dollar, weak gold, weak silver * Why? * A strong jobs number means the Fed is more likely to raise rates, right? * Rate hike is coming, good for the dollar, bad for gold * But what did I say on Wednesday's podcast? * I said that it didn't matter what the jobs number was * That gold was not going to go down, and if it was a weak number, I expected a big rally in gold * But I also said that a strong number would not hurt gold * Earlier in the year, a strong number would crush gold * I said that what's going on, and based on the latest FOMC minutes, I don't care what the jobs number is * The Fed is not going to raise rates * Jobs have nothing to do with it, Jobs are the excuse * The Fed can't raise rates now because of the fragility in the banking system, all the things that were revealed by Brexit * The market is sensing that and that's why within the first hour gold reversed all of its losses and finished the day up about $5.60 at $1365.40 * The highest close of the year on a day when we had a huge beat in the Non-Farm Payrolls * Silver had an even more impressive reversal; it rallied over $1 * Stocks really broke out; the GDX was up over 30% today to close at $30.54 * Not quite the highest close of the year * Many silver and gold stocks hit 52-week highs today, some hit 2 or 3-year highs * The overall stock market was also up just under 80 points; the Dow was up 250 * We have now recovered all of the post-Brexit losses * The Dow now back up around 18,000