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U.S. Growth and Jobless Claims Data Disappoint

Release Date: 
Thursday, May 31, 2012

Gold prices were higher as U.S. GDP and monthly jobless claims data showed a slowing labor market and a downward revision to economic growth. Gold was $5.00 higher at 6:25 a.m. Pacific Time on the New York Spot market, trading at $1,568.50 per ounce. Spot silver was $0.08 higher, trading at $28.11 per ounce. (Click here for the most current spot prices.)

The Commerce Department said the U.S. economy grew at an annual rate of 1.9 percent in the first quarter, well below the projected 2.2 percent growth. ADP data showed private-sector payrolls rising by 133,000 from April to May on a seasonally adjusted basis, below the expected 150,000 increase. Weekly jobless claims also rose to the highest level in five weeks.

Sprott Asset Management's Chief Investment Strategist, John Embry, said that at current levels, gold represents "one of the finest opportunities if not the finest in the entire bull market which is now in its 12th year." Embry continued, "I think gold is going to $10,000 at some point and it's going to have nothing to do with the cost to dig it out of the ground, it's going to have everything to do with the fact that people just don't think their money is going to be worth anything."

"Gold is the mortal enemy of the fiat paper currency system that we are operating and have been operating for 40 years," Embry said. "People are beginning to realize that this money is going to be turned into confetti and the authorities are scared to death that they are going to make the connection that gold is a good idea...People aren't making the correct connection that gold is what you should be holding in this environment - that will change."

Mitsui Precious Metals analyst David Jollie said, "There are plenty of bulls out there. They are waiting for a trigger to send the price higher, and the question is, what's that trigger?" He proposed, "it could be quantitative easing; it could be a short period of euro stability; it could be the Greek elections."

Dennis Gartman, investor and editor of The Gartman Letter, said, "The big trend, the long trend, the 200-day moving average type trend is still from the lower left to the upper right in gold."

(Source: "Gold futures edge up after economic data," MarketWatch, May 31, 2012; "PRECIOUS-Gold up but set for worst May in 30 years," Reuters, May 31, 2012; "Gartman: 'Go to the Sidelines,'" CNBC, May 30, 2012; "One of the finest opportunities to buy gold in the whole bull market – Embry," MineWeb, May 30, 2012)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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