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Gold has recovered back above $1,700 after dipping as low as $1,682 this morning…as of 8:00 am Pacific, the yellow metal is up $2 at $1,702…Silver is 2 cents higher at $33.06…Copper has added 2 pennies to $3.63…Crude Oil is flat at $86.29 while the U.S. Dollar Index is up one-tenth of a point at 80.39…

Morgan Stanley Views Gold As Favorite Metal For 2013

Morgan Stanley says Gold is its “preferred fundamental metal exposure heading into 2013″…the third round of quantitative easing in the U.S. and European Central Bank’s unlimited bond-purchase program are the most important factors for a continuing weak trend in the U.S. dollar, and in turn a key for stronger Gold prices in the short term, according to Morgan Stanley…“However, low nominal and negative real interest rates, ongoing geopolitical risk in the Middle East and continued mine supply issues are also supportive,” the firm said…Morgan Stanley said it looks for continued support from central-bank buying and for a recovery in Indian demand as the country becomes more accustomed to higher prices…Morgan Stanley said Silver is a “cheap proxy to Gold” and said it looks for the metal to outperform Gold in 2013…

U.S. Jobs Report Shows Weaknesses Despite Headline Numbers

U.S. job growth picked up in November and the unemployment rate fell, as the economy seemed to shrug off Superstorm Sandy…that was a nice headline but these statistics nonetheless masked some internal weakness which is one reason why Gold has reversed this morning…non-farm payrolls increased by a seasonally adjusted 146,000 last month, the Labor Department said this morning…the unemployment rate, obtained by a separate survey of U.S. households, fell two-tenths of a percentage point to 7.7%, the lowest level since December, 2008…economists surveyed by Dow Jones Newswires expected a gain of 80,000 in payrolls and a 7.9% jobless rate…however, the drop in the unemployment rate appeared to reflect a continued exodus of workers from the labor force…the labor force participation rate, already around 30-year lows, fell further in the month to 63.6%…that represented 350,000 fewer workers…in all, there were a net 122,000 fewer people working in the United States last month compared to the month earlier…while November’s rise in employment was well ahead of expectations, it followed sharp downward revisions to the prior two months…October’s non-farm payrolls rose 138,000, versus the initially reported 171,000, and September was up 132,000, not 148,000…

Canadian Economy Adds Nearly 60,000 New Jobs Last Month

The Canadian economy created an impressive 59,300 new jobs last month, thanks to an increase in full-time work at private sector employers…that is a substantial improvement from October when the economy eked out a meagre 1,800 new jobs…and it’s an even better showing than August and September when 34,000 and 52,000 new jobs were created, respectively…

Draghi Sees Gradual Euro Zone Recovery Beginning Later In 2013

The European Central Bank slashed its euro zone economic outlook for next year yesterday, forecasting further contraction at a time of record unemployment, but decided to keep interest rates on hold as it saw no big threat from inflation…Mario Draghi, ECB president, said a “gradual recovery should start later in 2013”…speaking after a meeting of the interest rate-setting governing council, he said the “prevailing consensus” on the council was to keep the main refinancing rate on hold at 0.75%…

Today’s Markets

Asian markets were mixed overnight but China’s Shanghai Composite posted another strong gain, climbing 33 points to 2062…European shares are up modestly in late trading overseas, while North American markets are appear to be headed toward a positive finish to the week…as of 8:00 am Pacific, the Dow is 28 points higher, the TSX has gained 8 points while the Venture Exchange is off 3 points at 1184…

Some interesting market figures…while trading volume has languished in New York in 2012 – down 19% this year for equities and 13% for options – investor sentiment, strangely enough, entered December at its highest level since late March…bullish sentiment was at 42% while the bears were at 34.6%, according to the latest poll from the American Association of Individual Investors…total equity fund outflows have hit $125 billion and nearly $300 billion has poured into bonds…cash parked in money market funds, with near-zero interest rates, also has been on the rise, with $2.61 trillion tucked on the sidelines, according to the latest numbers from the Investment Company Institute…there’s no question, there’s lots of money sitting on the sidelines that potentially could be poured into the stock market, leading to an explosive upside move…what the trigger might be, though, is anyone’s guess…

U.S. Household Net Worth Rises To Highest level In 5 Years In Q3

The net wealth of U.S. households rose in the third quarter to its highest since late 2007, providing a hopeful sign for future consumer spending…net financial wealth grew $1.72 trillion to $64.77 trillion, the Federal Reserve said Thursday…that left household wealth $1.2 trillion short of where it stood in the fourth quarter of 2007, just as the economy was sinking into a severe recession…wealth peaked at $67.3 trillion in the third quarter of that year…rising home prices helped drive the increase in the latest quarter…the value of real estate owned by households rose about $300 billion, the Fed said…stock holdings climbed by about $520 billion…increases in wealth could make consumers feel more comfortable spending their money…many economists think consumers spend a few cents of every dollar they gain in wealth…the data, part of the Fed’s quarterly Flow of Funds report, also showed Americans continued their 4-year-old effort to shed debt…households cut debt at a 2% annual rate in the third quarter, the steepest drop since the second quarter of 2011…

John has three individual chart updates this morning – GoldQuest Mining (GQC, TSX-V), Everton Resources (EVR) and Critical Elements (CRE, TSX-V)…as always, perform your own due diligence…

GoldQuest Mining (GQC, TSX-V)

Everton Resources (EVR, TSX-V)

Critical Elements Corp. (CRE, TSX-V)

Note: Jon holds a share position in GQC.

Abbreviated part of an interesting piece at www.mineweb.com:

By Lawrence Williams

Paul Mylchreest’s occasionally-produced Thunder Road Report always makes for fascinating reading and delivers insights into the markets which most mainstream analysts miss – or choose to ignore. He’s now producing his unique view on the markets under the auspices of London broker, Seymour Pierce, which one hopes does not cramp his style too much!

The latest report, which he put out today, suggests that the insights are still incisive – and often worrying, for those looking to their financial futures, but there is the advantage that under the Seymour Pierce banner it is now available to those who may want it in hard copy, as well as online.

Mylchreest is a believer in the Kondratieff, or Long Wave economic theory. Wikipedia describes this as sinusoidal-like cycles in the modern capitalist world economy. Averaging fifty and ranging from approximately forty to sixty years, the cycles consist of alternating periods between high sectoral growth and periods of relatively slow growth. Unlike the short-term business cycle, the long wave of this theory is not accepted by current mainstream economics – which puts Mylchreest somewhat out on a limb, as he accepts himself. However to set against this the theory does support the ‘supercycle’ idea which gained a certain amount of mainstream acceptance during the recent commodities boom.

Mylchreest titles the Executive summary of his latest report – Inflationary Deflation: creating a new bubble in money and looks at the way excessive monetary stimulus, coupled with low interest rates, creates financial bubbles and reckons that Central Banks are now creating the ultimate bubble – in Money – in an attempt to counter what he sees as the downward leg in most recent Long Wave cycle. He notes “first it was NASDAQ, then it was real estate and now it is money” (He describes the “Inflationary Deflation” paradox as referring to the rise in price of almost everything in conventional money and simultaneous fall in terms of gold.)

“This”, Mylchreest notes referring to the QE policies being followed by most major governments and Central Banks “is the biggest debt bubble in history. Each time deflationary forces re-assert themselves, offsetting inflationary forces (monetary stimulus in some form) have to be correspondingly more aggressive to keep systemic failure at bay. The avoidance of a typical deflationary resolution of this long wave is incubating a coming wave of inflation. This will not be the conventional “demand pull” inflation understood by most economists.

“The end game is an inflationary/currency crisis, dislocation across credit and derivative markets, and the transition to a new monetary system, with a new reserve currency replacing the dollar. This makes gold and silver the “go-to”assets for capital preservation.”

As Mylchreest sees it physical gold is the ONLY financial asset with no counterparty risk and a several thousand year track record as a store of wealth par excellence. Furthermore, gold is the only asset which outperforms during both inflation and deflation and he reckons we are seeing a battle to the death in these opposing forces.

From www.mineweb.com