Our economic issues don’t seem to be getting any better.
Data released Wednesday indicated that the Consumer Price Index (or CPI) jumped 6.2% from one year ago in October, creating the biggest spike we’ve seen since December of 1990 – that’s nearly 31 years ago.
It’s recorded that annual core inflation, which doesn’t include food and energy, increased 4.6%, the fastest gain since 1991.
According to Goldman Sachs, those higher price tags won’t be dropping soon.
In a recent research report, the bank’s economists wrote that “the inflation overshoot will likely get worse before it gets better.”
That new data we just talked about caused gold prices to hit a nearly five-month high in early U.S. dealings on Wednesday.
The yellow metal has actually been doing well since the Fed announced that it will begin bond tapering this month.
Kitco News reports gold hit a two-month high on Monday because it appears metal traders are now focusing on rising inflation within the coming months rather than a tighter monetary policy.
In fact, gold strategist George Milling-Stanley told CNBC that lasting inflation will likely draw gold back into favor.
He said, “Gold is a very good preserver of purchasing power during periods of sustained high inflation, by which I mean many months with inflation at over 5% a year. In those kind of periods, which we last saw sustained in the 1970s, then gold gave annual capital appreciation equivalent to about 16% a year or a real return of around 11%.”
He also said, “Right now, we’ve had inflation around 5% for maybe three or four months with everybody telling us it’s transitory, it’s going to pass, so I’m not at all surprised that gold hasn’t responded to these inflation numbers just yet.”
If you’d like to invest in precious metals, we can help!
Give us a call at 855-905-5317 for a one-on-one consultation. We’ll answer all your questions without any obligations or fees.