The January non-farm payroll report showed that there were 143,000 net new jobs created. This was short of the 175,000 jobs expected. The Bureau of Labor Statistics’ annual benchmark revisions showed that there were hundreds of thousands of jobs less than what was originally reported. In other words, once again the BLS’ birth/death model created more phantom businesses than there were in reality last year; and hence, the number of imaginary employees was greatly exaggerated and needed to be adjusted downwards.

Meanwhile, wages were up 4.1% year-over-year versus 3.8% expected and the unemployment fell to 4% from 4.1%. A weakening labor market with higher wages holds a whiff of stagflation. In my view, the numbers from the Labor Department will show much weaker job growth over the next few months.

Here’s why. First off, the greatly reduced benchmark revisions will lower the BLS’ birth/death model and thus bring down the number of new jobs assumed in each monthly report. Secondly, tighter immigration controls and deportations will significantly reduce the labor force and monthly hiring figures.

Also, stubbornly high inflation, along with the tariff threats, are leading to increased corporate uncertainty and consumer stress, which should negatively affect businesses hiring practices. Trump is also eliminating jobs by saying, “Your Fired” to a significant number of government employees.

And speaking of the flailing consumer and their battles with a weakening labor market and inflation, we look to the University of Michigan Consumer Confidence for more evidence. Consumer confidence in February fell to 67.8, from 71.1 expected. Consumer sentiment fell to the lowest since July 2024. Their one-year inflation expectation jumped to 4.3% vs. 3.3% in the prior month. Consumer inflation expectations are now at a 14-year high!

The Consumer Price Inflation data for January showed that the core rate of inflation rose to 3.3% y/y vs. the estimate of 3.1% and the 3.2% posted in December. Headline CPI came in at 3% vs. the estimate of 2.9% and the same 2.9% for December.

Of course, the 3% headline number and the 3.3% core rate is not 2%; it is 50% higher than the Fed's target. In fact, the Fed has missed it's 2% target for just 2 months shy of 4 years! Ironically, President Trump said minutes before the CPI release that interest rates should be lower. The Fed does not lower borrowing costs by decree; it does so by printing even more money to buy bonds that sends yields lower.

Artificially low rates and the creation of more new money is not the recipe for lower prices. In fact, it is the perfect prescription for more inflation. And incredibly, Fed Head Jerome Powell is on Capitol Hill this week taking a victory lap on inflation having been brought down from the 9%, to the 3% level. But in truth, the level of prices has already bankrupt the lower 3 quintiles of consumers as the prices for food, shelter, insurance, and many other staples of life continue to rise further and faster out of reach.

This persistent inflation problem dovetails nicely with the next topic, which is the record high price of gold. There are actually a few reasons why gold should be going down right now, instead of setting record highs. Foremost, a stronger dollar is a headwind for gold, along with rising nominal and real interest rates.

When you add in bitcoin stealing some of gold’s thunder, one would think gold could be in a bear market. However, it is nudging up against $3,000 per ounce and setting new record highs. The intractable $36 trillion national debt could be one reason. To this point, the House GOP just proposed a $4 trillion increase in the debt ceiling. Of course, we also have that inflation problem, which is pushing investors into gold. Also, foreign governments are eschewing dollars and Treasuries and instead have decided to place their trade surpluses in gold.

But there is another and totally new reason why gold has been shining brightly of late. There are some people in power who are trying to convince the Treasury to revalue its holding of gold from $42 per ounce to some level that is much higher level.

The U.S. Treasury owns 261 million ounces of gold that is currently valued at $42 per ounce, or about $10 billion. If the Treasury were to mark these gold ounces to market value, they would be worth about $750 billion. As to why the Treasury is still modeling the gold price at $42 is a mystery to me and whole lot of other people as well. But the point is, who cares? This is an internal accounting method for the Treasury. It does not change the fact that the Treasury’s gold holdings total about $750 billion.

However, and this is where it gets funky, if the Treasury were to revalue its gold to reflect a fair market value, this enables the Fed to repo the gold. In other words, print three quarters of a trillion dollars created by decree and hand it to the Treasury. It would be fine to say the Treasury could sell the gold on the open market and raise some money to pay down the debt. But to propose the Fed should monetize the gold with newly created dollars is insanity.

The Treasury would then use the new money to pay off some of our debt and flood the economy with a one-time humongous QE injection. Sadly, some are even calling for the Treasury to mark-to-model the gold at $142k per ounce and pay off the entire US debt!

What a recipe of hyperinflation! Of course, this would be great for gold. But $142,000 gold/ounce is not on the menu for the near term. But some other number, say $3,000, $4,000, or $5,000 could be. This is another reason why gold is shining more brightly than ever.

One final thought: Donal Trump has just put an end to the Treasury’s issuance of the penny. This is because inflation has pushed the cost to produce one penny to over 3x more than what a penny will buy. If we keep this profligate printing and borrowing up, we may soon retire all coinage—maybe even retire the one-dollar bill and begin printing one-thousand-dollar notes.

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Michael Pento is the President and Founder of Pento Portfolio Strategies, produces the weekly podcast called, “The Mid-week Reality Check”  and Author of the book “The Coming Bond Market Collapse.”