Gold & Silver Face Two Imminent Challenges

Gold & Silver Take A Dip But Aren’t Out Of The Water Yet.

Every recent economic event sure seems like “The Most Important Blah, Blah, Blah, Ever” event, doesn’t it? Two weeks ago we had “The Most Important FOMC Meeting, Ever”, which culminated with the Fed’s “Hawkish Shocker”, for lack of a better term, and the resulting plunge in gold & silver prices. Curiously, this week, in the precious metals space, many people have come to view Basel III implementation as the single most important change in the gold market in quite some time, if not ever, although there are plenty of people who disagree about the significance of Basel III for various reasons. Regardless, fast forward to the end of this week and the beginning of next week, and gold & silver are facing two imminent challenges, one of which falls into the “most important, ever” category, and the other of which falls into the “holiday traditions” category.

The Most Important Jobs Report, Ever.

On July 2, 2021, the Bureau of Labor Statistics will release the Employment Situation Report for June 2021, commonly called the “Jobs Report”, and this upcoming report will be “The Most Important Jobs Report, Ever”. Suffice it to say that if I’m wrong and it is not hyped up as the most important jobs report, ever, then surely it will at least be “The Most Controversial Jobs Report, Ever”. But either way, there will be movement in gold & silver as a consequence of the report “hitting the tape” this Friday morning at exactly 08:30 AM, Eastern Standard Time.

This will be the most important jobs report ever, or at least the most controversial, because of the heated debate about whether the Federal government is helping or hindering job creation. Specifically, the Federal Government is in active development of some sort of “infrastructure plan”, for whatever that means, which has been billed as legislation that would create “millions of jobs”.

Indeed, this very morning, President Biden tweeted moments ago:

“The Bipartisan Infrastructure Framework is a generational investment to modernize our infrastructure, create millions of good-paying jobs, and position America to win the 21st century.”.

The “millions” of jobs have been a key selling point of the infrastructure legislation since the very beginning. On the other hand, businesses of all sizes, including small businesses all across America, are having difficulty in finding and hiring workers, and many people say this “labor shortage”, for lack of a better term, is due to the fact that many unemployed individuals are living better and earning more because of generous Federal government benefits, be them welfare benefits, unemployment benefits, extended benefits, supplemental benefits, and myriad benefits, than people would otherwise live or earn if employed.

Adding fuel to this heated job-creation debate fire was something President Biden said last week during a press conference.

With regards to businesses not being able to attract workers, Biden said:

“Asking me, you know, well, guess what? Employers can’t find workers, and I said, yeah, pay them more. This is an employees’ bargaining chip now. What’s happening? They’re gonna have to compete and start paying hard workin’ people a decent wage!”.

Needless to say, whether this Friday’s jobs report is a huge miss, a huge beat, or if the number comes in disastrously low, or exceptionally high, there could be some very interesting movement in the metals on Friday morning and throughout the day. In my opinion, I do not think this jobs report turns out to be a nothing-burger because the stakes are so high, and therefore, no matter the number, there will be a lot of praise and just as much scorn.

The Fourth Of July And The Pent-Up Demand For Freedom & Liberty.

The Fourth of July is always an interesting holiday for the gold & silver markets. Not only is July 4 a Federal/market holiday, but there is commonly interesting price action around Independence Day as well, and this year should be no exception with the holiday itself falling on Sunday, and the “observed day” falling on Monday, July 5. You see, when many Americans are celebrating the holiday with backyard bar-q-ques, or with mini-road trips, or with all-out vacation getaways, the gold & silver markets will often be thinly traded around July 4, with light trading volume, and as such, any “buying” and “selling” in size can really compound and get price moving.

Last year, the United States was generally shut down, and gold & silver really took off in price in the early days of July, and that’s especially true for silver. Of course, in mid-July, gold ran to all-time record highs before the early August spike above $2,000. But what about this year? Are market participants going to be glued to their computer screens this year like they were last year, or is it more likely that maybe even the majority of market participants are ready to get out and enjoy the holidays again? If the latter is more likely, and I think it is, then along with movement in gold & silver prices this Friday, we will likely see interesting movement next week too. The $64,000 question is this: In which direction?

And now, to try to answer that question, let’s check out some really interesting charts of gold, silver, the stock market, the dollar, and more!

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Paul Eberhart
Paul Eberhart
Senior Market Analyst and Columnist

Paul Eberhart has been actively trading and writing about precious metals for more than a decade. A U.S. Army Iraq War Combat Veteran, he holds an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill...