Inflation Continues to Record Highs, Good for Gold?

Price inflation in the USA continues to come in at record high levels. 

The current head of the US Treasury's public policy on raging price inflation has now apparently been reduced to…

Hopium - (n) an irrational or unwarranted optimism that things might change sooner rather than later (in this case, regarding raging price inflation escalations to come).

Last week's +8.6% consumer price inflation year over year data point is still only underreporting price escalation facts of real-world costs rising. More often now legit journalists are finally beginning to expose how bad real price inflation has been underreported and compounding for decades. This brutal price inflation information becoming more common knowledge better clears runways for precious metals to eventually ramp manically in price and value ahead.

Even official price inflation is already at a level the nation has not seen since the last time gold manically revalued upwards to a spot price so big for some time (1980), the USA could have gone back on a more disciplined quasi-gold standard had it so chosen.

Janet Yellen was correct with her statement last week about price inflation raging globally. Seemingly all fiat currencies are increasingly losing value versus goods, services, and items of real value worldwide. 

But we'll kick off this week's SD Bullion market update by remaining focused on the USA, and its growing price inflation problem. As the United States is where our bullion buying and stacking customer base lives, as well the majority of our video viewing audience.

Instead of burying our heads in the sand, we'll take a hard look at some daming data and charts to better understand where things are and where they may be going.

Price escalations for basic things like food to eat in your home, gasoline to get to work, and travel have exploded in price in the last year and a half.

Even if this chart highlighted in the video went back into the 1970s, I doubt we would see price escalations of this size in essential food staples and fuel cost rises. I can make this statement rather confidently because we have US consumer sentiment data that goes back to 1952. We've never been at levels this low before.

Gallup poll data also illustrates that US consumers, who drive about 70% of the nation's economic output, are highly concerned about escalating price inflation.

Generally, most US workers' wages are not keeping up with inflation.

And we can see that effect with a plummeting personal savings rate.

As well as ramping credit card debts in a seemingly desperate attempt to make up for household budget gaps and make ends meet.

If the next recession is not here, it can't be too far from around the corner.

We might want to stop listening to those who have historically proven themselves to be both inaccurate and misleading, especially in lifelong proclamations.

The silver and gold markets closed this week's trading somewhat firmly, particularly in gold.

The gold-silver ratio thus climbed to 85.

And while the silver spot price continues languishing along in the low $20s per ounce consolidation, the most encouraging move this week was gold's response to this latest price inflation data ramp.

Perhaps early next week, we'll see some follow-through and a gold price run towards $1,900 oz.

In a secular bullion bull market, when nearing a potential mania phase, revaluation prices climb higher.

Studied bullion bulls typically want to see gold lead and only later enjoy the typical outperformance the silver price contributes, as average investors swarm into more proven precious stores of value.

You can see how that played out in the 2009 to 2011 run. We now have a massive base building for the next exponential bullion price climbs.

In terms of not storing value well of late, the still near-universal institutional prominent money investor's 60% stock and 40% bond portfolio allocations continue to get their teeth kicked in thus far in 2022. Either they change their investment in these paradigms and portfolio allocations, or they will likely continue losing big time in absolute value terms to come.

The next significant move for the monetary precious metals is likely when large institutional investors and momentum swing traders finally return to the precious metals markets. Increased capital inflows into leveraged precious metals derivatives to significant increases in physical bullion demand to come.

Central banks worldwide are not waiting, and recently one in four or 25% surveyed stated they plan to increase their official gold reserves in 2022. That is up from only 8% in a somewhat recent 2019 survey.

Following up on a popular video we released in late April of 2022.

More concerning news reports continue during out-of-the-base metal price discovery markets.

Particularly in the consistently scandalous aluminum market. In a foreshadowing of the coming commotion in gold and silver price discovery markets using excessive leverage with unknowable unsecured bullion supply levels supposedly warehoused and commingled amongst too many naive parties.

Apparently, base metals traders in China have lost confidence that varying aluminum inventory levels even exist and or are not commingled amongst other unsecured parties with supposed claims.

In my longer-term view, each week that passes, we move closer to an era where global precious metals price discovery markets get called into question in large public forums for trillions upon trillions of wealth transferring reasons. To see this happen in base metals is not a surprise.

For most of the world, by the time massive scandals like that hit the global precious metals markets, it will be too late to secure bullion in large size at any price premiums reasonably close to spot delivered within reasonable timeframes.

I vigorously suggest you get prudently positioned outright with bullion in hand and potentially also with proven dependable counter-parties you can trust to help secure your foundational precious metals wealth along the way.

From here to there, things are only likely to become more unprecedented and volatile.

That is all for this week, as always, to you out there. 

Take great care of yourselves and those you love.

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James Anderson
James Anderson
Senior Market Analyst & Content

A bullion buyer years before the 2008 Global Financial Crisis, James Anderson is a grounded precious metals researcher, content creator, and physical investment grade bullion professional. He has authored several Gold & Silver Guides and has been featured on the History Channel, Zero Hedge, Gold-Eagle, Silver Seek, Value Walk and many more. You can pick up Jame's most recent, comprehensive 200+ Page book here at SD Bullion.

Given that repressed commodity values are now near 100-year low level valuations versus large US stocks, James remains convinced investors and savers should buy and maintain a prudent physical bullion position now, before more unfunded promises debase away in the coming decades...