Gold climbs back over $1200 on short-covering, a weak jobs report and emerging country capital reshuffle

Gold climbed back over the $1200 mark this morning with two London-based sources reporting short-covering in Europe. It is trading $1207 – up $9 on the day. Silver is trading at $14.26 – up 7¢ on the day. Gold also got an assist this morning from the release of the ADP jobs report which came in below expectations. Beyond those immediate influences, some of the flow from an on-going re-shuffling of capital out of emerging nation stocks and bonds is making its way into gold. The demand is coming both internally from beleaguered citizens within those countries and externally from global funds and institutions who see gold as an under-priced asset. Financial Times quotes Pimco’s Gene Frieda as saying “We’ve had a series of idiosyncratic shocks, but this week it has felt like a more generalized sell-off than an idiosyncratic one. Some investors just want to get out now.”

Quote of the Day
Our central bank monetary-led boom has made debt replace wealth for a long time. That’s not sustainable, of course. (We are ‘mining’ our soil for short-term gain.) We’ll see a return to the significance of productive stuff again I think, and that even includes farming – maybe especially farming. And the Midwest has a pretty good track record with productive stuff. Hard assets will matter again. But of course, I sound ridiculous even saying such things. Like a grumpy old grandpa.” – Mark Spitznagel, Universa Investments (as quoted by columnist, P.J. O’Rourke)

Chart[s] of the Day

Charts courtesy of

Chart note: These three charts show the central bank balance sheet debt holdings for three of the top four largest economies – the United States, Japan and the European Union. Together the three central banks hold an astonishing nearly $13 trillion in debt instruments, and not all are of the highest quality. The US Federal Reserve is in the process of trimming its balance sheet, albeit on a slow fuse. The European Central Bank is scheduled to begin reducing its holdings later this year. The Bank of Japan, for its part, says it will continue with its acquisition program as long as it deems necessary.

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