Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
BREWING FINANCIAL CRISIS 2.0 Suggests RECESSION 2022 - 28th Jan 22
Financial Stocks Sector ETF XLF $37.50 Continues To Present Opportunities - 28th Jan 22
Stock Market Rushing Headlong - 28th Jan 22
The right way to play Climate Change Investing (not green energy stocks) - 28th Jan 22
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Wall Street Roiled by Hot Inflation Data: Is This REALLY “Transitory”?

Stock-Markets / Inflation May 16, 2021 - 06:41 PM GMT

By: MoneyMetals

Stock-Markets

The Labor Department reported yesterday that the Consumer Price Index jumped 4.2% from the prior year. Although a big rise in the CPI had been expected, the actual number came in even higher than economists had forecast. 

According to the CPI data, inflation in April accelerated at its fastest pace in more than 12 years. Higher prices showed up everything from used cars to lumber to energy to food.

If April’s rate of price increases were to persist for another 11 months, the annual CPI growth rate would be 10.3%. And that wouldn’t even account for items that the CPI excludes or understates.

Jerome Powell and other Federal Reserve officials have repeatedly insisted than any rise in inflation this year will be “transitory.” They cite base effects from last year’s economic lockdown and supply bottlenecks they expect to be temporary.


But investors appear to be concerned that inflation is now becoming a much bigger problem than the Fed acknowledges.

Emergency government benefits pumped into pocketbooks and a record-high budget deficit that shows no signs of narrowing will have lasting effects. The cycle of spending, borrowing, and printing by the trillions looks to be more of a permanent than a transitory practice in Washington.

Stocks, bonds, and even precious metals got hit with selling following the CPI report. However, gold did show relative strength versus the S&P 500, which lost 4% for the week through Wednesday’s close. Gold was down a mere 0.5% over that period.

Gold and silver also succumbed to some modest selling pressure through Wednesday – though they both held up better than the stock market.

Naturally, many precious metals bulls were disappointed that gold and silver didn’t scream higher on the inflation news. The reason they didn’t has a lot to do with interest rates. Bond yields moved up and futures markets began pricing in higher probabilities for a Fed rate hike by the end of the year.

When it becomes clear that central bankers won’t get out in front of inflation with a sufficient number of rate hikes anytime soon, that’s when precious metals markets can be expected to take off. Gold and silver thrive during periods of negative-trending real interest rates – and that includes rate-hiking cycles where the Fed is almost always behind the curve.

Although bullion buying has been strong in 2021, precious metals markets have continued to be overshadowed by the cryptocurrency craze.  Bitcoin and more recently Dogecoin have been all the rage among digital speculators.

Last weekend, billionaire Tesla CEO and cryptocurrency aficionado Elon Musk hosted Saturday Night Live.  During the “Weekend Update” segment, Musk’s character was repeatedly asked to explain what Dogecoin is. He retorted that it’s just as real as the U.S. dollar, which isn’t far from the truth.

SNL Weekend Update Anchor #1: So, what is Dogecoin?

Elon Musk: Yeah, like I said, it's a digital currency.

SNL Weekend Update Anchor #1: Like, okay, for instance, this is a dollar, right? It's real. See?

Elon Musk: Sort of. Sort of real. Yeah.

SNL Weekend Update Anchor #1: So, what is Dogecoin?

Elon Musk: About as real as that dollar.

SNL Weekend Update Anchor #1: Now Colin, are you making any sense of this?

SNL Weekend Update Anchor #2: I've actually been reading a lot about it, yeah. I'm trying to diversify my investment portfolio. My question is what is Dogecoin?

Elon Musk: I'm glad you asked.

SNL Weekend Update Anchor #1: It's a good question.

Elon Musk: Well, it's the future of currency. It's an unstoppable financial vehicle that's going to take over the world.

SNL Weekend Update Anchor #1: I get that, but what is it, man?

Elon Musk: I keep telling you. It's a cryptocurrency you can trade for conventional money.

SNL Weekend Update Anchor #1: Oh, so it's a hustle.

Elon Musk: Yeah, it's a hustle.

Musk has been accused of using his platforms to manipulate crypto markets. Some say he single-handedly caused the recent price explosion in Dogecoin with his constant tweeting about it. But after confessing on SNL that it’s a “hustle,” the cryptocurrency promptly sold off.

Dogecoin began as a joke based on an internet meme and it may well have peaked as a result of jokes made by Elon Musk.

Bitcoin is regarded as a more serious cryptocurrency by way of gaining wider acceptance by the public and businesses.

But Musk shocked Bitcoin enthusiasts on Wednesday when he announced that Tesla would no longer accept the cryptocurrency as payment. He cited Bitcoin’s hefty energy use as being environmentally unfriendly.

Bitcoin prices plunged as much as 17% on the news.

Pressure from social activists and government regulators who have long opposed cryptocurrency could force other major corporations and financial institutions to blacklist Bitcoin.

All this goes to show that despite their massive run-ups to market capitalizations that rival top blue-chip stocks, cryptocurrencies remain fragile. They rest entirely on confidence that can erode in an instant.

By contrast, precious metals don’t derive their value from any celebrity’s comments and don’t depend on the approval of big corporations.

Gold and silver are valuable based on their history, their aesthetic properties, their scarcity, and their utility. These fundamentals will never go away regardless of where precious metals ultimately fit in the universe of alternative currencies.

By Mike Gleason

MoneyMetals.com

Mike Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2021 Mike Gleason - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in