At 8:30 Eastern time this morning, the US Bureau of Labor Statistics (BLS) released its monthly jobs report. The news headlines for the release of these reports say, for example, “Largest Monthly Jobs Gain In Past Decade!” But, if you actually read the details in the reports (there are over two dozen of them), and understand where to find the fudge factors, the BLS report actually showed a net loss of jobs for the month of May!
Here’s how I come to that conclusion:
| Monthly change in jobs | |
| Employment Situation Summary Table B, Establishment date, seasonally adjusted | 431,000 |
| My revisions to increase the accuracy of the report: | |
| Delete increase in workers temporarily employed by Census Bureau | -411,000 |
| Delete May 2010 Net Birth/Death Adjustment, not seasonally adjusted | -215,000 |
| Corrected change in employment in May 2010 | -195,000 |
The BLS news release acknowledges that the employment numbers are temporarily higher because of the more than a half million total short-term jobs created to handle the 2010 census. To my thinking, these should be listed in a separate category, so that the BLS does not have to report an equally large loss of jobs in the coming months when the 2010 census work is finished.
In the Employment Situation Technical Note part of the news releases, the BLS discussion of “Reliability of the estimates” reads, in part, “The second component is an ARIMA time series model designed to estimate the residual net birth/death employment not accounted for by the imputation. The historical time series used to create and test the ARIMA model was derived from the unemployment insurance universe micro-level database, and reflects the actual residual net of births and deaths over the past 5 years.”
In more understandable terms, the BLS’s position is that, simply because the population of the US is increasing, there are more jobs being created above and beyond those that they detect by surveying businesses and households. This theory has consistently proved to produce erroneous results. Individual statisticians at the BLS have acknowledged that the birth/death adjustment consistently overstates unemployment employment. Once a year the BLS eliminates 1-2 million jobs from its reports, to undo the cumulative error caused by the monthly birth/death adjustments. By inserting this fudge factor each month, the US government is able to temporarily pretend that employment levels are better than they really are.
For the month of May it looks very suspicious that the federal government wanted to report a net jobs increase even if the surge in Census Bureau employment was ignored by analysts. Further, the feds wanted to see headlines like “Largest Monthly Jobs Gain In Past Decade.” It will be interesting to see how the employment statistics are twisted when the Census Bureau loses more than a half million jobs in the coming months.
Why are the US unemployment reports important for those tracking precious metals prices? Well, the monthly jobs reports for the past several years have almost always provided bad news. This kind of bad news reduces the confidence of investors who might consider holding US dollars, US Treasury debt, and US stocks and bonds. Poor jobs reports could lead investors to shift more out of paper assets and into tangible assets like gold or silver. Such a shift would cause the US government to have to pay higher interest rates on Treasury debt. Therefore, the federal government has a huge incentive to make the acquisition of gold and silver less attractive.
Suppressing precious metals prices right as the unemployment information is released is a tactic that has been successful at turning investors away from gold and silver. For more than the past four years (with only 2-3 exceptions), precious metals prices have been manipulated downward as each jobs report was issued. The action associated with today’s jobs reports was a textbook example of price suppression.
It is known by some top officials of the US government what the jobs and unemployment figures will be before they are released to the public. Since this month’s report, after excluding the impact of the short-term Census Bureau jobs and the birth/death adjustment, was really bad news, the administration had every incentive to pull out all the stops to push down gold and silver prices. So this time around, price suppression began a couple of days early rather than waiting for the moment of the announcement.
After all, for almost a year the federal government has been trying to claim that the US economy is in the early stages of a recovery. It wants to avoid the chance that the public may hear facts which contradict that pretense.
Because of the consistent track record of price suppression when the jobs reports are released, traders stand ready to short gold and silver at the same time, expecting that they will be able to cover in a few hours at lower prices. This magnifies the impact of the government’s efforts.
Once the point was made that gold was not strong at the time the jobs report was released, the manipulation ceased. In the hours since, the price of gold has jumped almost 2%! Silver has not yet staged a recovery, but it should next week. One surprising result was the decline in US stock markets supposedly because the “increase” in jobs was smaller than expected.
The point of this column is that people often don’t really understand what is happening just by looking at the headlines. I refer to misleading news headlines, like those for this month’s jobs report as “Things you ‘know’ that just aren’t so!”
Unfortunately, the news coverage and commentaries of the gold and silver markets are too often as misleading as was this month’s employment reports. What seems to be well hidden is that many people quoted about precious metals have a vested financial interest in seeing the prices suppressed. When you dig down to the truth, the real story often contradicts what is “commonly known.” The widespread public deception about the gold and silver markets is becoming ever more difficult to maintain. This is just one more reason why I expect far higher prices for those two metals in the coming months.
Patrick A. Heller owns Liberty Coin Service in Lansing, Michigan and writes "Liberty's Outlook," a monthly newsletter covering rare coins and precious metals. Past issues can be found online at http://www.libertycoinservice.com/ Pat Heller is also the gold market commentator for Numismatic News. Past columns online at http://numismaster.com/ under “News & Articles". His periodic radio interviews can be heard on WILS 1320 AM in Lansing, www.talkLansing.net, and on www.yourcontrarian.com.
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Another wonderful post Mr. Heller! This is the very information that everyone absolutely needs to know. This is exactly how the “Powers that Be” namely the U.S. Government and the rich investment tycoons boost the stock market to higher levels so that the working class (including myself) is forced to fund at high market values and these power traders run off with our investment profits the very next day. If you don’t believe this, watch how the typical trend is for the market to increase up to and during every payday as the working class funds 401K plans. The typical payday is either twice per month (middle and end) or every two weeks. It is worth observing this typical trend that these television anchors on CNBC and other financial stations either cannot comprehend, or are not allowed to report via government and investor protocol and political control. It is this information that the “Powers that Be” does not want you to know!
-Richard Stinchcomb
Pat,
Where were you over the past decade? You are only discovering that the work force expands routinely in May of 2010? What about May of 1982 or June of 2002?
Adjusting for new entries to the work force is nothing new. Professionals who actually study the makeup of the labor force have been doing this for decades. By the way, you should be adjusting for new entries to the workforce not births and deaths (infants rarely look for jobs; most seniors are long out of the work force).
Analysts and pundits have been talking about all these numbers for years. As has been reported voluminously for the last couple of months, the census temps have been a significant portion of the April and May numbers, and those temps have been deducted from the total by all.
As for the growth in the work force, those numbers tend to be dealt with according to which party controls the White House. Since most financial broadcasters support the GOP, they tend to disregard the temp and workforce growth numbers when a Republican is in the White House while suddenly discovering them when a Democrat lives there. During the entire term of Pres. G.W. Bush, I never heard Mr. Cavuto, et al voluntarily bring up growth in the work force to discount Ms. Chao’s job numbers, not once. Considering how bad her numbers were for most of his eight years, it’s no wonder they did not pile on with even more damning numbers.
As for how the current numbers reflect on the state of the economy, they give great pause to the notion that we are coming out of this Wall Street/financialization-induced recession/depression. Everything the mainstream economists and various other wackadoodles are hollering about is sure to turn us toward a second and far more severe drop. Jobs is the issue; jobs is the goal. Stabilizing the financial sector is only a preliminary means to the end of the productive economy we all seek. While census jobs are jobs that pay money, they are extremely unlikely to last for more than a few months. While they present some breathing room and an opportunity to work on plans to produce permanent job growth, they are hardly a long term positive worth crowing about. Real work needs to be done at creating real jobs. Unfortunately, the paralysis in the Senate is not very likely to be cured in time to do anything serious about real permanent jobs.
The gold stocks got hammered. Was that a result of margin calls or were they shorted out of an automatic trader reaction to a jobs’ report release?
Radwriter,
Don’t take this the wrong way. It appears that you are one of the majority that doesn’t have the slightest clue about what is really going on. In fact, you are denying this information and backing up those who falsify the information that forms the blanket of lies that is fueling this fire.
You need to evaluate what a real permanent job is. Ask yourself these questions:
Is this job a necessary position to provide results for the company or business?
Is this job a position in which the person performing the job will make enough money to support himself or herself financially?
Will this job be a true dependable permanent job that a person can retire from 30 to 40 years later?
Currently, a large portion of our working population will have to work 3 to 4 of these permanent jobs before retiring (if possible) due to the fact that these so-called “permanent” jobs are only semi-permanent and dissolve 8 to 10 years later on average through methods such as furloughs.
You preach about the workforce expanding every year in May and June as graduating students enter the workforce. I heard this very scary statistic this past week. As millions of students are graduating from college, only about 3 out of 100 have jobs lined up after graduation. The last time I checked my math this was 3%.
Granted, many of these graduates simply can’t find work. However, a large majority are looking for jobs in the wrong place. If your opinion of a permanent job is one sitting in the office goofing off and making $50 to $100 or more per hour, you are wasting your time. These are not jobs and will be quickly eliminated in due time. There are jobs out there that require physical labor. Unfortunately, our customs in the United States of America have led our workforce down the wrong path to become overwhelmingly lazy. These graduates don’t want a real permanent job that requires physical labor to get results. They are looking for high-paying office jobs that are being eliminated.
This should also send up a RED FLAG! All of these people are entering the workforce but only 3 percent of them are getting jobs! You must add these statistics to those already out of work and have been looking for jobs unsuccessfully over the past 2 years. The bubble of unemployed is getting much larger with the entrance of these graduates combined with those who cannot retire because they too are looking for work.
This country must re-evaluate what work is. It is unfortunate that jobs are out there, but none of these unemployed people want to take them because they think they are too good to perform a physical-labor job. Shame on you! We must accept the lower-paying jobs that require more effort to provide true results. Sitting in an office pushing a pencil doesn’t cut it!
-Richard Stinchcomb