This weekly column has not been written since the Friday before the JCK Vegas Show, so since May 23rd gold has fallen 2.3 percent to $898.30oz. at 1:00 p.m. today. Platinum is 4.1 percent lower to $2,080oz, and sliver is down 3 percent to $17.45oz.

It is interesting to see how analysts immediately react to news when gold turned lower yesterday as oil prices declined and the dollar advanced ever-so slightly.

"Short-term improved dollar sentiment and easing oil prices are likely to weigh on gold," wrote James Moore, an analyst at TheBullionDesk.com.

He told clients on Thursday that inflation remains an issue, so expect investors to jump on safe-haven assets as inflation data points higher mostly due to oil. Gold's weaker showing for the past four days  appeared tied to comments from Federal Reserve chairman Ben Bernanke that interest rates were unlikely to keep falling, which gave a boost to the dollar and eased a rush into safe-haven investments.

Gold prices dropped 2 percent on Bernanke's comments, but it was "sort of a knee-jerk reaction," wrote Carlos Sanchez of CPM Group.

This was all before economic news dumped on Wall Street during morning trading today and caused the Dow Industrial Average to plummet 300 points, or 2.4 percent, before noon and the dollar to drop 1 percent against the euro (EUR1 = $1.576.)
 
The jobs report in the United States reflected a high unemployment rate, and a report by analysts at Morgan Stanley suggested oil would top $150 per barrel -- very soon -- by July 4th holiday week. That suggestion added a $7 per barrel spike to oil, to $135, as investors sought quick cash if the speculation holds true.

The Labor Department reported the largest monthly increase in the unemployment rate since February 1986, registering it at 5.5 percent. The nation lost about 49,000 jobs in May -- but this was the fifth consecutive monthly net loss.

Poor job creation helped move oil higher, wrote Ethan Harris of Lehman Brothers this morning. Stock traders are worried that unemployment would leave the Federal Reserve unwilling to raise interest rates. Harris wrote the Fed has few options remaining, and now the European Central Bank this week showed willingness to raise interest rates there --risking a recession across the Eurozone-- in order to help the dollar.

"The weaker dollar is pushing up oil prices because oil is denominated in dollars and oil sellers want to be compensated for the weaker dollar," Harris wrote.

But Harris contends the market is overdone. "While I'm skeptical of the whole thing in terms of whether it makes sense logically, this is the way the market behaves. It's like a Pavlovian response. If the Fed looks soft, oil prices go up," he wrote.

At MainStay Investments, Bill Knapp wrote to clients that he thinks the greatest  concern right now is oil and "it's potential for a stagflationary environment."

No Help from the Real Estate Sector

More than 40 percent of the nation's gross domestic product (GDP) is made up of services, which include the two most important measures -- health care (12 percent,) and real estate (10 percent.)

So, as the nation's  real estate market deteriorates further, this news does not bode well for the economic recovery some have been predicting for the second half. While  the majority of housing transactions are not related to foreclosures or repos, the numbers are now too high to be ignored experts say.

Vacancy numbers show a rate of 3 percent -- the highest since 1960 -- and 2.3 million empty homes were for sale in first quarter.

Typically, bank owned homes and owners who wish to sell but decide to wait for better times do not show up in the figures. There were 4.6 million homes for sale in April, according to the National Association of Realtors, which at the current rate of sale would take about 11 months to clear inventories. 

About 2.5 percent of home loans are in foreclosure now -- that is more than double the rate from one year ago, according to the Mortgage Bankers Association. But 6.4 percent of all loans are now in arrears. This figure is the highest delinquency rate in the history of tracking figures beginning in 1979.

Frustrated home sellers who pull out of the market are not counted, but the realtors association contends this figure is "significantly higher" than one year ago.

Home sales dropped 18 percent in April, and inventories rose 8 percent. The realtors association determined that more often now, lenders are listing repossessed homes in multiple listing services (MLS,) thus the spike in inventory was partly due to this change in how lenders are trying to dump properties.

Banks are also backlogged as the number of foreclosures are rising faster than they can be sold. In April, banks took control of 197,802  homes or a 118 percent increase from one year ago, according to RealtyTrac.

RealtyTrac's Rick Sharga told the Associated Press that, "Under normal circumstances, it would probably take a year or two to work through this kind of inventory. We're in anything but normal circumstances, and we see the housing slump going through at least 2009."

In April, there were 243,353 filings related to some stage of foreclosure made on properties, and about 1.5 million homes are in some phase of foreclosure. As these come online - the numbers will add to the inventory  and likely push prices lower, said  RealtyTrac CEO James Saccacio. That will push more homeowners underwater on their mortgages, fueling more foreclosures, he said.

IndyMac reported $257 million in nonperforming REO assets in the first quarter -- that is up from only  $33 million one