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U.S. Payrolls Rise; Cramer Discusses Gold

Release Date: 
Friday, January 6, 2012

January 6, 2011

Gold prices moved slightly lower today on the New York Spot Market, with gold at $1618.20 per ounce at 7:05 a.m. Pacific Time and silver at $29.05 per ounce. 

U.S. non-farm payrolls increased by 200,000 in December while the unemployment rate fell to 8.5%.  The level is significantly higher than the 125,000 jobs that economists generally believe the U.S. needs to keep up with population growth.

Reports of higher U.S. private payrolls and reduced new unemployment claims were positive signs for the labor market.  Ong Yi Ling, precious metals analyst at Phillip Futures in Singapore, commented that "if we do see a positive figure, it could boost gold prices higher," noting that "in general, a strong number should be positive for risk assets and for gold." 

Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong, said, "there are going to be enough reasons to be worried about global growth and the financial system in the next quarter or two, and gold should benefit from that."

Jim Cramer of CNBC’s "Mad Money" recently offered his opinion on why investors should hold gold as part of a diversified portfolio:

"First, you need some gold because gold has a special property.  One that makes this metal precious to any portfolio," Cramer said.  "Gold tends to go up when everything goes down.  Consider it your insurance against economic or geopolitical chaos, against uncertainty, against inflation…all of the things that cause most stocks to decline but also cause the price of gold to rise."

"I like to think of the gold position as a kind of stock insurance," Cramer said.  "Now, would you want a home without homeowner's insurance?  No.  You wouldn't own a car without car insurance.  You shouldn't invest without some gold exposure because gold pays off when everything else fails.  This is not about upside.  It's about minimizing your risk to the downside, one of my hallmarks."

(Sources:  "Job Growth Accelerates," Wall Street Journal, January 6, 2012; "Gold steady ahead of U.S. jobs data," Reuters, January 6, 2012; "Gold extends gains ahead of jobs report,," MarketWatch, January 6, 2012; "Cramer:  Protect Your Profits With Gold," CNBC, December 30, 2011)

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