05 Mar

Up, Up, and Away!

Posted by RME Gold In Gold Market Discussion 0 comment

The Inflation outlook… Grim!

Our adjoining post this week STAGFLATION HERE AND NOW? focuses mostly on evidence of the slowing US economy. That is the stagnation part of stagflation. Now we look a little more closely at the inflation component of stagflation.

Let’s start here. The Consumer Price Index has been higher than the Federal Reserve’s entirely arbitrary two percent target for 16 consecutive quarters, for 47 months in a row! From the first quarter of 2021 until now, the Fed has been unable to reach its own inflation target.

Meanwhile… lingering, prolonged inflation has now turned into reinflation. As we have noted, the Consumer Price Index for January has climbed for the fourth straight month. The month over month numbers, increase for the same period one year earlier have risen for the seventh straight month.

Reporting that inflation is moving up again, Bloomberg News writes that, “No matter what metric you’re looking at, US inflation is moving in the wrong direction again.”

Americans are convinced reinflation is real.

Here is some of the evidence that they are right from Bloomberg:

Costs of materials like lumber and steel have been high for several years coming out of the pandemic and are moving up even more. A measure of input prices for manufacturers this month reached the highest since October 2022, according to S&P Global.
Businesses surveyed by the Dallas Fed in February reported that an index of prices for raw materials doubled to the highest since September 2022….
Groceries have come back into the spotlight again largely because of record-high egg prices, due to the worst-ever bird flu outbreak in the US.
Persistent price increases in areas like food, as well as other big expenses like housing, healthcare and car insurance, are hindering progress on broader inflation.

Gold’s remarkable rise of about 11 percent in just the first two months of this year, combined with its stellar performance last year has triggered Wall Street speculators take some quick profits. The resulting pullback in prices provides you an opportunity to build your profit and protection gold holdings at more favorable prices. To learn more and to take advantage of what may be a fleeting opportunity, speak with an RME gold and silver professional today.