Watch out, inflation is heading in the wrong direction again.
CPI came in at 3.5% year-over-year and 0.4% month-over-month. Both higher than expected.
What now?
This is a big problem for the Fed who has been promising interest rate cuts since last year. Raise rates now and push the economy into a recession. Leave them and let inflation run wild.
As I said last week, when Gold starts to run, you need to be asking why? For a long time, people have touted gold as the 'canary in the coalmine' and it has been sounding the alarm.
Heck, we can look to what central banks have been doing over the last several years to get a clue.
Central Bank Gold buying has been at record highs as we've mentioned many times. That foundation has kicked off what appears to be a major start to a gold bull market.
Now that Silver is off to its own race, things are becoming more clear that this is in fact the case.
We've been highlighting this for a while. As the months pass, we get better insight into why precious metals prices have been rising.
Here are some numbers on Gold:
- Up 13% YTD
- Up 17% in 1 year
- Up 83% in 5 years
- Has outperformed the S&P in 5 years
Pretty impressive.
Silver is up 18% YTD and 85% in the last 5 years.
Throw in an election and a national debt that is accelerating by $1 Trillion every 100 days and you can see why gold and silver have been soaring.
And yes, when gold and silver soar like this it typically means there is a downside in some other area of the economy. One downside for you and me is the 25% loss of purchasing power our dollars have experienced over the last 4 years. That means the $1's you had in 2020 are now only worth $0.75 due to compounding inflation.
Gold and silver offer protection of wealth outside the US Dollar. Purchasing power will always decrease over time, but the speed at which it decreases is uncertain. Recently, that speed has been increasing and the next few months are setting up to be dicey.
In other news, I sat down with Ted Butler last week and revisited everything that is has happened and is happening with silver.
Ted is a young, brilliant analyst who's starting to make a name for himself in the precious metals space. He'll be writing the chapter on silver in this years In Gold We Trust Report that releases in May.
You can watch mine and Ted's entire conversation by clicking the image above.
As always, if you'd like to discuss any of these topics further, I'm always available. Feel free to give me a call anytime.
