Jim Sinclair interview with Greg Hunter

Very interesting interview between Greg Hunter and Jim Sinclair, a must watch.

The base case of gold going up is because of a loss of confidence in the U.S. dollar. This loss in confidence will accelerate when business conditions worsen. Let me just give 3 recent examples of worsening conditions.

1) ADP unemployment numbers signal that the unemployment rate is going up. With just 130000 jobs added the latest month we cannot keep pace with the growing population, which expands at around 170000 a month. So you can be sure that the unemployment picture is going to deteriorate.

2) The pending home sales have been worsening for the fourth consecutive month, due to higher mortgage rates. Not a great investing environment for the real estate market, right?

3) The durable goods orders posted a big decline the latest month (if Boeing’s one time sales is taken out of the picture), how can stocks keep going up at this pace?

Correlation: Employment-Population Ratio Vs. Real GDP per Capita

I like statistics that can’t be fudged by the government and this is one of them: The Civilian Employment-Population Ratio. This measure is one of the best to evaluate the labor market. Each time when this ratio declines, we enter a recession. So this is a very good gauge in predicting bad periods in the overall economy.

A high ratio (above 70%) means that a lot of people are employed and this will result in a high GDP per capita. A low ratio (under 50%) is considered bad for GDP.

If we take a look at the percentage change per annum, we see that the trend for the real GDP per capita growth rate is down (blue chart). So real GDP isn’t improving and this translates into a declining employment-population ratio (red chart).

As Karl Denninger explains, the amount of employed people as a percentage of the population hasn’t improved since 2008. So the economy hasn’t recovered a lot.