Gold stocks just had their best day since the financial crisis…
On Friday, the VanEck Vectors Gold Miners ETF (GDX), which holds some of the world's largest gold miners, surged 11.2%. It was its best day since October 2008.
As you may know, gold miners are leveraged to the price of gold. A small jump in gold can cause gold stocks to soar. On Friday, the price of gold spiked 2.8%, which sparked the rally in gold stocks.
Today, we'll look at what caused this big jump…
As you'll see, it's the latest sign that the U.S. economy may be headed for a recession…
And it's yet another reason you absolutely need to dedicate a portion of your portfolio to gold and gold stocks right now…
• Last month, the economy added its fewest amount of new jobs in six years…
According to the U.S. Labor Department, the economy created just 38,000 jobs in May—the fewest in one month over the past six years. According to Bloomberg Markets, economists expected 160,000 new jobs.
Gold and gold stocks spiked on the news. The U.S. dollar fell 1.7%. And the S&P 500 closed Friday down 0.29%.
• Jobs are getting more scarce…
Bloomberg Markets reported on Friday:
The report showed a broad hiring slowdown, including declines in payrolls in construction, manufacturing and mining. Job growth at private service producers slowed, with employment climbing by just 61,000…
Friday’s report showed employment in the information sector dropped by 34,000.
Millions of Americans have picked up part-time jobs to make ends meet. Bloomberg Markets added:
Americans who are working part-time though would rather have a full-time position, or the measure known as part-time for economic reasons, climbed to 6.4 million in May, the highest since August, from 6 million a month earlier.
And underneath the surface, other indicators are suggesting the economy is in bad shape…
• The number of folks employed by “temp” agencies fell by 21,000 last month…
Temp agencies place workers into temporary job assignments, such as seasonal work.
Temp agencies are often the first to hire workers when the economy is growing. When the economy slows, they’re often the first companies to lay off workers. That’s why a surge in temp layoffs can be an early sign that the economy is struggling.
• Temp agencies have laid off more workers than they’ve hired in four of the past five months…
Today, the industry employs 64,000 fewer workers than it did at the start of the year.
David Rosenberg, chief economist at wealth management firm Gluskin Sheff + Associates, warned that this is a major problem. He wrote in Business Insider:
[T]his type of weakness over such a stretch, again not to sound like an alarmist, occurred just prior to economic recessions in the past, without exception and with no “head fakes”.
Yes, it typically is not good news when the headhunters are the ones to start chopping off heads — this is a leading indicator. So I may not want to sound alarmist, but the answer is yes … I am worried.
I don’t want to alarm anyone but the facts are the facts, and the fact here is simply that this is precisely the sort of rundown we saw in November 1969, May 1974, December 1979, October 1989, November 2000 and May 2007.
Each one of these periods presaged a recession just a few months later — the average being five months.
If you’ve been reading the Dispatch, you know the U.S. economy is barely limping along. The current “recovery” is the slowest since World War II.
And it's not just the U.S…
Other major economies are in rough shape too. China, the world’s second-biggest economy, is growing at its slowest pace since 1990. Japan’s economy, the third biggest, hasn’t grown in two decades.
• But perhaps the most concerning number comes from South Korea—the “canary in the coal mine” for the global economy…
South Korea is one of the first countries in the world to report export data. And with more than 40% of its exports going to the U.S., China, and Japan, a significant drop in South Korean exports is often an early warning sign of trouble in the global economy.
South Korean exports fell 6.0% in May. It was the 17th consecutive month in which exports have dropped. The sharp decline follows an 11.2% drop in April.
• Over the last few months, we've covered lots of reasons why you should invest very cautiously right now…
Corporate profits are tanking. The S&P 500 hasn’t set a new high in over a year. Some of America’s most iconic businesses are closing stores and laying off workers by the thousands.
We’ve also been urging you to maintain a “defensive” portfolio—one that can withstand an economic shock like a stock market crash.
That’s why E.B. Tucker, editor of The Casey Report, has been encouraging readers to own a significant amount of physical gold.
Gold is one of the only assets that can do well during a financial crisis or recession. And as we often point out, gold is real money. It’s held its value for centuries because it has a unique set of qualities: It’s easily divisible, easy to transport, and durable. No matter where you go in the world, folks recognize its value.
Gold is up 18% already this year. And as we've mentioned, it's set to soar much higher in the months ahead.
• For a limited time, Casey readers can get in on the cheapest way to buy gold coins we've ever found…
Last month, E.B. worked out an exclusive deal with Gainesville Coins, one of the largest U.S. coin dealers. The company offers exceptional service and some of the industry’s lowest premiums…especially if you’re a Casey Research reader.
If you’ve bought a gold coin, you know the “premium” is the fee gold sellers charge above the market price. Premiums vary from one gold dealer to another. The lower the premium, the better the deal.
Now, for a limited time, you have an opportunity to purchase these coins at a HUGE discount to what other major brokers charge—including a one-ounce South African Gold Krugerrand for just $20 over the “spot” price of gold. Click here to see the full selection of special prices.
Again, this offer is only for Casey readers, so make sure to take advantage while you still can.
(Keep in mind, Gainesville Coins is not paying us a commission to recommend them. Instead of collecting a commission, we asked Gainesville to give Casey readers a special discount on gold coins.)
• To increase your profits from investing in gold, consider buying gold stocks…
E.B. expects gold to go much higher in the coming years. To profit from higher gold prices, he recommended two gold stocks earlier this year.
One is up 47% since March. The other is up 34% since April.
Those are huge gains for such short periods of time. And if gold continues to move higher as E.B. expects, these stocks should soar much higher.
The average gold stock gained 602% during the 2000–2003 bull market. The best ones soared 1,000% or more.
You should know that gold stocks aren’t for everyone. They’re incredibly volatile. As we saw on Friday, it’s common for gold stocks to move 10% or more in a day.
But if you’re OK with taking on some extra risk, owning gold stocks is a great way to potentially earn big 2x or 3x profits in a short period of time.
You can learn E.B.’s two favorite gold stocks by taking a risk-free trial to The Casey Report. By clicking this link, you’ll also get a chance to watch a short, free video where E.B. explains a huge threat looming in the American economy…and what you can do (in addition to buying gold) to protect your money. Watch it here.
Chart of the Day
U.S. companies are hiring at the slowest rate in years…
Today’s chart shows how many jobs were created each month since February. As you can see, the number of new jobs has plummeted by around 200,000. This is not a sign of a healthy economy.
If you don’t own gold yet, we recommend you buy some today. Another ugly jobs report could cause the price of gold to skyrocket.
Delray Beach, Florida
June 6, 2016
We want to hear from you.
If you have a question or comment, please send it to [email protected]. We read every email that comes in, and we'll publish comments, questions, and answers that we think other readers will find useful.