The Federal Reserve has supposedly gone to war with inflation and Fed chair Jerome Powell has allegedly turned into a hawk.
We’ll believe it when we see it.
I hope everybody had a great Christmas and found everything they wanted under their Christmas tree.
In the spirit of the season, I want to tell you about a Christmas present James Madison gave the United States way back in 1798. It is a bit of history that has fallen down the Orwellian memory hole. But it is extremely important to understand because it has a powerful application today.
Gold closed out the week before Christmas above $1,800 an ounce, despite rising bond yields. The $1,800 level has been viewed as a ceiling for the price of gold. In his podcast, Peter Schiff said people need to start thinking of $1,800 as a floor. And he said they will once they realize there is no ceiling on inflation.
Silver delivery in December surged to levels not seen since last spring and reversed the downward trend in place since last summer.
This analysis focuses on gold and silver physical delivery on the Comex. See the article What is the Comex for more detail.
With the “transitory” inflation narrative dead and buried, the powers that be have shifted to a new tactic to deflect their responsibility for rising prices – blame somebody else.
Elizabeth Warren recently claimed that rising prices were due to “price gouging” by “greedy” corporations. But the evidence says otherwise. In fact, producer prices have risen faster than consumer prices. That means businesses have only passed on some of their higher costs to consumers. If anything these “greedy” corporations have allowed consumers to gouge them.
Are we heading toward a Fed policy that fixes inflation at a permanent rate of five to six percent?
We could be.
But inflation is a policy that cannot last.
Peter Schiff appeared on Judging Freedom with Judge Napolitano to talk about inflation.
Why are we suffering from it? Who’s to blame? And where is this leading?
Inflation is sizzling hot. Gold has historically served as an inflation hedge. So, why hasn’t gold caught a bid?
In a word, confusion.
Taper tantrums and fear of Fed rate hikes have generated massive confusion in the markets. People are selling gold when they should be heavily buying gold in the dips.
And at the root of this confusion is the failure to account for real interest rates.
In October, Chinese gold imports reached the highest level since December of 2019 as the market continues to recover after taking a hard hit during the coronavirus pandemic.
According to the latest data from Chinese customs, the country imported 123 tons of gold in October. That was a 38-ton month-on-month increase.
China ranks as the world’s number one gold consumer.
Labor market productivity has been dropping for decades. And you can trace the plunge back to the demise of the gold standard.
US labor market productivity plummeted in the third quarter of 2021. Revisions to the data showed a 5.2% drop in productivity, even worse than the dismal initial reading last month. It was the worst productivity decline since 1960.
