We got the May Consumer Price (CPI) Index data last week. Once again, it came in hotter than expected. In this article, we break down the data and show that this surge of inflation is anything by transitory.
In the first place, it’s important to remember that the CPI is reverse-engineered to mask inflation. It doesn’t really tell the whole story. But even half the story is pretty bad.
A US coin with a face value of $20 just sold for $18.9 million.
That’s quite a nice little bit of appreciation right there. Or one heck of a premium, depending on how you look at it.
It shouldn’t shock you to know it was a gold coin.
We got another round of hotter than expected CPI data this week. The mainstream financial media is spinning this as good news. In this episode of the Friday Gold Wrap, host Mike Maharrey digs into the CPI data without the rose-colored glasses. He also talks about an announcement by a major restaurant chain that may well be a canary in the coal mine. His conclusion – in the end, economics wins.
Government programs, political campaigns and wishful thinking can’t trump economics. In the end, economics always wins.
Chipotle’s recently announced menu price hikes bear this out.
High inflation is the worst-kept secret out there, but the government, central bankers and financial media have all downplayed the threat. The folks at the Federal Reserve keep telling us that rising prices are “transitory,” the product of a robust and fast-moving post-pandemic economic recovery.
One of the reasons often given for rising prices is “supply chain bottlenecks” caused by the sudden recovery in demand. But a dive into the data reveals that most commodity prices have risen in tandem in an environment of wide levels of spare capacity, and in some cases, even overcapacity. The supply chain isn’t the problem. The money is the problem.
Central banks added gold to their reserves in record amounts in 2018 and 2019, but buying slowed last year with the onset of the COVID-19 pandemic. The slower pace has continued into 2021, but buying is ahead of last year as many countries continue to load up on the yellow metal. The World Gold Council projects gold will continue to play an important role in central bank reserves in the coming year.
Average Americans are worried about inflation, but the mainstream financial media doesn’t think they should be. Even though inflation is a hot topic, the conversation seems to primarily center around the notion that inflation is overblown. In this article, we explain why this mainstream media spin downplaying inflation is dead wrong.
In 2020, gold-backed ETFs recorded record net inflows of gold. Funds added nearly 231 more tons in 2020 than they did during the previous record year (2009/646 tons). But with declines in the price of gold and investors pivoting to riskier investments as economies improve, we’ve seen net outflows of gold from ETFs over the last three months.
That trend reversed in May as gold-backed funds globally added 61.3 tons of gold, according to the latest data from the World Gold Council.
Last week, Russia announced plans to completely eliminate dollars and dollar-denominated assets from its sovereign wealth fund. Is this another sign of erosion of dollar dominance?
The news from Russia dovetails with a warning by billionaire fund manager Stanley Druckenmiller that the dollar could cease to be the world’s reserve currency within the next 15 years.
The Fed claims inflation isn’t a concern. The central bankers don’t want us to worry about it. In fact, they would just as soon keep the whole inflation issue a secret. But Americans are worried. Searches for the word “inflation” hit an all-time high on Google trends in May.
In fact, inflation is the worst-kept secret out there.
