Brinker Comment: The big economic news this week was the employment report that came out on Friday morning. Private payroll rose in May by 83,000 jobs. However, government payrolls continue to shrink. The number of government jobs lost in May was 29,000. That means the total number of nonfarm payroll jobs net was 52,000. The previous three months averaged gains of 220,000, so this is a significant decline. This month is a light number in a slow-growing economy. Bob said if he had to point to the biggest problem the Obama administration has had now in its third year, it was not prioritizing the economy from the get go. Instead, they tried to do something about everything, such as health care. They took the eye off the ball and now 2-1/2 years and they are still looking at numbers they cannot be happy with. The national unemployment rate is 9.1% - just 1% below the peak!
Caller: This caller is worried about hyperinflation and is considering switching some of his Portfolio III which is held in a 403(b) plan into gold. He contacted a company on TV to get some literature and since then has been bombarded with telephone calls, some with high pressure sales tactics trying to persuade him to invest half of his portfolio in gold. Bob said there are a lot of gold sharks on the prowl right now, and if you want to implement a hedge in gold for your portfolio, use the GLD exchange traded fund for the investment. That will get you into gold without mark-ups. If you purchase gold coins, you can be paying up to 100% in mark-ups. The profits are huge for the gold numismatic coin sellers. It is an unregulated market and that is one of the reasons there is so many sharks in this area.
EC: The SPDR Gold Trust (GLD) is the biggest player in this area. Other ETFs to look at if you are interested in gold include the iShares Gold Trust (IAU), Market Vectors Gold Miners ETF (GDX) and Market Vectors Junior Gold Miners ETF (GDXJ).
Caller: This caller wants to know why the government is not investigating the banks for what they did in connection with mortgages that led to the financial crises. Bob said he thinks they are doing that and noted that the financial stocks have been under pressure lately. Bob said the stories about banks not having the proper mortgage paperwork, having “robot-signers” and the like have legs.
Read the rest of the summary at Moneytalk Show Review for June 5, 2011: