They say perception is reality. Based on the October CPI data, the perception is inflation has peaked. But what’s the reality? In this episode of the Friday Gold Wrap podcast, host Mike Maharrey digs into the CPI data along with the markets’ reaction to it and wonders if the inflation victory dance is a little premature. He also talks about the big rally in gold and central bank gold buying.
The perception is that CPI cooled significantly in October, but the data doesn’t quite bear this out.
The latest seasonally adjusted inflation rate for September came in at 0.44%. The YoY rate was 7.7%, or 7.8% when adjusting for Household Ops. which has not been consistently reported over the last year. The increase was actually above the previous month of 0.38%, but the YoY number fell because last October was 0.87% and fell off the report this month.
There are plenty of signs that the economy is teetering on the brink as the Federal Reserve ratchets up interest rates. The air is coming out of the housing bubble, PMI has tanked, more Americans are living paycheck to paycheck, and debt is spiraling upward. Those claiming the economy remains strong have one peg to hang their hats on – the “strong” labor market.
But in fact, the labor market is anything but strong.
With prices rising and real wages falling, many Americans are struggling to make ends meet. They are increasingly turning to credit cards and other debt to fill the gap. But that creates other problems. Debt has to be repaid and a growing number of Americans are struggling to keep up with payments.
Auto loan delinquencies have risen to the highest level in over 10 years, according to TransUnion.
American consumers continue to dig deeper into debt as they try to cope with rising prices using credit cards. Americans added another $25 billion to their record levels of debt in September, according to the latest data from the Federal Reserve.
Gold rallied by over $50 an ounce last Friday and the rally has extended into this week with the yellow metal moving back above $1,700 an ounce. In his podcast, Peter Schiff explained why he thinks that gold has bottomed and this is a significant reversal.
Multi-asset portfolios would benefit by adding a 4 to 6 percent silver allocation, according to new research by Oxford Economics.
This is one of several silver-related stories in the latest edition of Silver News published by the Silver Institute.
Central banks added nearly 400 tons of gold in the third quarter, according to data compiled by the World Gold Council.
This was 300% higher than Q3 2021 and came in as the largest quarterly increase in central bank gold reserves since the World Gold Council started keeping records in 2000.
Last week, the Federal Reserve delivered a 75-basis point rate hike, but Fed Chair Jerome Powell failed to deliver the more doveish rhetoric that many expected. The messaging did not indicate much softening in the stance on the future trajectory of rate hikes, despite an apparent “soft pivot” the week before.
In his podcast, Peter broke down Powell’s messaging and pointed out a number of very scary admissions that came out of the Fed meeting.
Another debt ceiling fight is looming on the horizon and it appears the US Treasury Department is preparing for the drama. Meanwhile, rising interest rates are rapidly increasing the cost of the massive national debt.
