The official figures from the US Consumer Price Index (CPI) show a 2.6% increase, the highest figure in almost three years, but that goes nowhere close to showing the real picture on inflation, a wealth of industry experts have said this week. They say there are numerous signs that inflation is already present and already spiking, something that is overwhelmingly bullish for gold and makes a strong case to buy the precious metal right now.
The former managing director of American bank JP Morgan, Jon Deane says the CPI is no longer the best measure of inflation as a result of changes to shopping habits caused by the inflation. He says that looking outside of that index gives clear signals that inflation is spiking, “We are already seeing inflation. And the CPI might not be the best benchmark for looking at inflation these days. If you look around the world, you see real estate prices skyrocket. You see building supply costs rise and services prices increase.”
Real estate prices have grown by 17% in the last 12 months, with many selling within mere days of going on the market. Speaking to Reuters, the author Manoj Pradhan, who wrote The Great Demographic Reversal said, “The debate of whether we actually are reflecting inflation properly will come up more and more. House prices will start getting a lot of attention.”
Commodity prices are also soaring exponentially, which is another sign that inflation is soaring. Writing on Twitter, Charlie Bilello, founder and CEO of investment firm Compound Capital Advisors said, “The definition of inflation is too much money chasing too few goods. We have precisely that in the US housing market with demand going through the roof and supply near record lows.” He also shared date which showed commodity prices peaking, with lumber up 265%, WTI Crude up 210% and agricultural commodities such as corn and soybean at their highest levels since 2013 and 2014 respectively.
The managing partner of investment firm Goehring & Rozencwajg, Leigh Goehring also concurs, noting “We are firm believers that inflation is going to return with a vengeance in the next year. Even though we only just beginning to emerge from all the global COVID-19 related economic setbacks of the last year, shortages are beginning to emerge in almost everything. Semiconductors, lumber, building products, restaurant workers, and ketchup packets. M-2, in response to all the incredible Fed money creation, is now growing at 27%- the fastest rate ever.”
Soaring inflation is great news for gold with industry analysts agreeing that higher inflation supports higher gold prices. And, because the reality of inflation right now hasn’t been reflected as yet in the markets due to the traditional reliance on CPI data which lags behind actual conditions, now is the opportune moment to buy. Act fast.