I May Have Made The Right Bets for (Partly) Wrong Reasons

Okay, so here’s what happened ...

132,000 were added to the payrolls … way more than the 100,000 estimated.

But that’s lower than the expectations ADP had set with its report earlier this week. Some traders were expecting 170,000 or so new jobs.

Manufacturing and construction jobs were decimated. All the growth came in the service sector.

And last week’s job growth was cut to 79,000 from an initial estimate of 92,000. Which makes traders think this one will be revised down as well, because it simply isn’t reflecting the slowing in GDP growth.

But at the same time, many people are saying “Goldilocks Scenario.” “This is what a soft landing looks like,” is what I heard on CNBC. So the bottom line is it challenges the growing view that a recession is coming – and that is VERY GOOD for commodities.

Oil and natural gas are both up today, helped along by more unrest in Nigeria and the OPEC meeting next week. But gold is up, too. Why would that be? After all, the higher jobs number means the Fed is less likely to cut rates, which keeps the US dollar stronger, right?

Nope! It’s all about expectations. Traders are telling the Fed: “We don’t believe this jobs number, and we don’t believe you when you say you’re going to keep raising rates.” That puts pressure on the dollar on the one hand – because it’s becoming clear in an ugly sort of way that one of the main things propping up the dollar has been the fact that the Fed pays higher interest rates than the European Central Bank -- and without rate hikes, inflation may rear its ugly head again (though it looks pretty darned comatose right now).

So, to cut to the quick: I expected a disappointing jobs number, which would boost precious metals prices. The number came in higher than the consensus expectations, but not as high as the ADP # predicted earlier in the week. Gold is up (for now) and the dollar is down.

Of course, that could all change by the end of the day, but for right now, it looks like I made the right bets for the wrong (or half-wrong, anyway) reasons. Good news is, I don’t care. RCS stocks are on fire lately! Two of them made SOARING gains yesterday.

And in Red-Hot Resources (the trading service, not this blog), we have a nat gas driller and a silver stock. The day’s not over yet -- this fickle market could turn against me and slap me down hard -- but this looks like a good time to be in both.

Are you in Red-Hot Resources yet? If not, click HERE, or call 1-800-291-8545 and we’ll hook you up IMMEDIATELY.

Not everyone is having a good day. A friend of mine – a better trader than I am – has been pretty bearish on commodities lately. Even though we disagree, I listen to him a lot. He’s a very sharp guy – we just don't see eye to eye on how commodities are going.

He shorted COPPER back in late November. Do you know how that worked out? Look at this chart he sent me this morning …

OUCH! Nothing hurts worse than being right, but being right at the WRONG TIME. After he got stopped out, copper tanked. It’s still tanking, on worries about rising inventories in China. My friend anticipated those rising inventories … too early for the market, as it turns out.

As the saying goes: “The market can remain irrational longer than you can remain solvent.”

Let that be a warning to us all. I’d rather make the right bets for the wrong reasons than be brilliant and make smart bets at the wrong time.

Check out my new gold and energy blog at MoneyAndMarkets.com