Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24
How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - 17th Feb 24
Why Rising Shipping Costs Won't Cause Inflation - 17th Feb 24
Intensive 6 Week Stock Market Elliott Wave Training Course - 17th Feb 24
INFLATION and the Stock Market Trend - 17th Feb 24
GameStop (GME): 88% Shellacking Yet No Lesson Learned - 17th Feb 24
Nick Millican Explains Real Estate Investment in a Changing World - 17th Feb 24
US Stock Market Addicted to Deficit Spending - 7th Feb 24
Stocks Bull Market Commands It All For Now - 7th Feb 24
Financial Markets Narrative Nonsense - 7th Feb 24
Gold Price Long-Term Outlook Could Not Look Better - 7th Feb 24
Stock Market QE4EVER - 7th Feb 24
Learn How to Accumulate and Distribute (Trim) Stock Positions to Maximise Profits - Investing 101 - 5th Feb 24
US Exponential Budget Deficit - 5th Feb 24
Gold Tipping Points That Investors Shouldn’t Miss - 5th Feb 24
Banking Crisis Quietly Brewing - 5th Feb 24
Stock Market Major Market lows by Calendar Month - 4th Feb 24
Gold Price’s Rally is Normal, but Is It Really Bullish? - 4th Feb 24
More Problems in US Regional Banking System: Where There's Fire There's Smoke - 4th Feb 24
New Hints of US Election Year Market Interventions & Turmoil - 4th Feb 24
Watch Consumer Spending to Know When the Fed Will Cut Interest Rates - 4th Feb 24
STOCK MARKET DISCOUNTING EVENTS BIG PICTURE - 31st Jan 24
Blue Skies Ahead As Stock Market Is Expected To Continue Much Higher - 31st Jan 24
What the Stock Market "Fear Index" VIX May Be Signaling - 31st Jan 24
Stock Market Trend Forecast Review - 31st Jan 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Talking Heads Predict No Recession While Shrinkflation Clips Consumers

Economics / Inflation Aug 19, 2023 - 08:44 PM GMT

By: MoneyMetals

Economics Precious metals markets are extending their losing streak as the U.S. dollar pushes higher. The Dollar Index rose for a fifth straight week through Thursday's close.
Although the downward momentum in metals markets has been fairly steady for over a month, the total amount of price retracement has been modest. Volatility in gold and silver markets has actually been coming down.

When volatility gets compressed, that tends to precede a big move – often in the opposite direction of the prevailing trend, which has been down.



But for the time being, superficially good news on the economy is depressing investment demand for gold and silver. The talking heads on CNBC are now confidently declaring there will be no recession. The official unemployment remains low while inflation measures are moderating.

Meanwhile, though, the average 30-year mortgage rate climbed this week to its highest level in more than two decades. Higher borrowing costs are eating into consumers’ pocketbooks as well as the balance sheets of businesses. The full effects of tighter credit conditions won’t make their way through the economy for months.

Given the risks, the Federal Reserve may finally be ready to wind down its rate hiking campaign.

It won’t be able to declare victory over inflation just yet, though. Both consumer and producer price indicators continue to run above target. And these official measures of inflation likely understate the rate of price increases families face at the grocery store.

Manufacturers of food and other consumer goods are trying to disguise some of the price hikes they are passing along. In a phenomenon known as “shrinkflation,” the sizes and portions of various packaged items ranging from rolls of paper towels to bags of potato chips are getting smaller.

News Anchor: We all notice it. You buy a bag of chips expecting it to be full, but once you open it, you realize it's only halfway filled. So this is actually called shrinkflation, and chip companies aren't the only ones doing it.

Economic Analyist: So, this is really a sneaky way to pass on a price increase because you're getting less for your money.

CNBC Anchor: Paper towels quietly also a victim of shrinkflation.

Economic Analyist: Well, just the way a viewer said toilet paper, fewer sheets, fewer sheets on Bounty and other brands. When I've spoken to manufacturers, they tell me the raw ingredients costs have gone up, transportation costs have gone up, labor has gone up, and they have a couple of choices… they can raise the price directly, but they know consumers will catch that, or they can do it the sneaky way, give you a little bit less because they know that most consumers are not net weight conscious. We all have to pay more attention to the fine print on all those package labels.

Savvy shoppers know that price isn’t the same thing as value. What matters is the cost per ounce of a box of cereal or bottle of detergent. The best value is usually found in larger sized products.

That is also true to a significant extent when it comes to bullion products. Fractional sized coins of less than one-ounce tend to cost more than full ounce or larger coins when calculating the costs per ounce. Large bullion bars often provide the best value in terms of metal content.

But there are exceptions to be aware of. Sometimes premiums on pre-1965 silver coins or scratched and dented gold coins are among the lowest available.

And sometimes buyers find utility in fractional sized items or aesthetic value in coins that arrive in mint condition.

Bargain hunters at the grocery store will often opt for generic or store-branded products. In many cases, they have exactly the same ingredients as pricier counterparts next to them on the shelf that are put out by more recognized name brands.

This principle also applies to bullion shopping. A popular name brand such as the U.S. Mint’s American Eagle will carry a sizeable premium over a round issued by a private mint that is less well known.

A Walking Liberty Silver Round meanwhile, produced by Money Metals Exchange, has the same .999 purity as a Silver Eagle. If they were both melted down, they would have exactly the same physical properties and be worth exactly the same amount.

But silver stackers who opt for the Walking Liberty will save a few bucks per ounce compared to the American Eagle, which is manufactured by the poorly run U.S. Mint.

Thanks to the Mint’s general failure to produce Eagles in quantities sufficient to meet demand, premiums on these coins have been elevated even more than usual over the past three years.

Premiums on other common silver bullion products are currently minimal. With spot prices down as well, bargain hunters are finding great value in physical bullion.

Dealers who try to generate business by advertising too-good-to-be-true pricing on products are not likely offering customers the best overall value.

They may have scant or non-existent customer service. They may be undercapitalized and at higher risk of failure. They may not be able to fulfill orders in a timely fashion. They may even have dishonesty and deception at the heart of their business model.

Several precious metals dealers in recent years, some of which ran high-profile radio and TV ads, have been exposed for running Ponzi schemes or bilking customers with bait-and-switch sales tactics.

As legendary investor Warren Buffett once noted, “Price is what you pay. Value is what you get.”

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.

© 2023 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.


© 2005-2022 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