Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Gold Seeker Weekly Wrap-Up: Gold and Silver Fall Roughly 1% on the Week
By: Chris Mullen, Gold Seeker Report

Ira Epstein's Metals Video 2 23 2018
By: Ira Epstein

Unintended Consequences, Part 1: Bigger Deficits = Higher Interest Rates =…Many Bad Things
By: John Rubino

A Roman lesson on inflation
By: Alasdair Macleod

COT Gold, Silver and US Dollar Index Report - February 23, 2018
By: GoldSeek.com

One Belt, One Road, One Direction for Precious Metals
By: David Smith

How global growth and infrastructure are driving commodities
By: Richard (Rick) Mills

Gold’s Curious Sentiment
By: Adam Hamilton, CPA

Dow Jones Tanks As Silver Market Price Bottoming
By: Steve St. Angelo

GoldSeek Radio Nugget: Andy Schectman and Chris Waltzek
By: radio.GoldSeek.com

 
Search

GoldSeek Web

 
The Potential Big Surprise for 2018, and What It Means for Gold


 -- Published: Wednesday, 7 February 2018 | Print  | Disqus 

By Jeff Clark

There’s a sneaky development underway, one that’s been off the radar of most investors. It contributed to the recent stock market plunge, and if it really takes hold it has major ramifications for the three G’s: groceries, gas, and gold.

What is this development? Here are a few hints…

  • US Treasury yields are now at their highest level in four years, with the two-year note hitting a 10-year high
  • The five-year German bund (their government bond) traded in positive territory for the first time since 2015
  • The little-known ECEC (Employer Costs for Employee Compensation) jumped to 4.4% last year, more than triple the 1.3% reading in 2016
  • And perhaps the most obvious clue of what may be on the horizon: the gap between what TIPS (Treasury Inflation-Protected Securities) pay and the 10-year note is now at its widest range since September 2014. That means inflation has been rising much faster than what the 10-year bond pays.

That’s right: Inflation is sneaking up.

It’s not just me noticing. “Traders Bet on Faster Inflation in the World's Biggest Economy” declared The Street last week. The article points out that due to the rise in commodity prices (especially oil), a surge in manufacturing activity, and rising GDP in the US and around the world, investors are bracing for higher inflation than what they expected just one month earlier.

On top of that, the tax cuts, wage increases, and recently imposed trade tariffs are also all inflationary.

As we pointed out in our Gold Forecast 2018, many analysts now expect higher inflation this year:

  • Barron’s: “We expect to see inflation go up in 2018 across developed markets relative to where it is today, with the United States leading the way.”
  • Kiplinger: “Inflation will rise this year.”
  • PIMCO: “Global inflation is likely to rise in 2018.”
  • World Bank: “There could be faster than expected inflation…”
  • And The Wall Street Journal reported in mid-January that “Investors Prepare for Inflation.”

To whatever extent they’re right, it means the cost of gas and groceries will go up.

Does it mean the gold price will rise?

I’ll Give You 3 Guesses How Gold Performs during Rising Inflation, and the First 2 Don’t Count

The World Gold Council came out with an interesting study that examined gold’s performance during periods of low inflation (3% or less) vs. high inflation (over 3%). The results confirmed what many of us instinctively knew.

The data over the past 47 years is clear: Gold rises more when inflation is higher than when it is lower.

So if inflation heats up this year, history says the gold price will move higher. Throw in the possibility of a sudden increase in inflation, one that catches people off guard, and we could see a sharp rise in the gold price. And given the fact that inflation trends are not measured in months, but in years, you have the makings for a long-term move up in gold.

If inflation becomes a new reality, it could easily kick-start the next major bull market in gold.

Either way, investing in the current environment is less about a specific path and more about crisis.

  • More important than predicting the future is to prepare for it. Today that means holding a meaningful amount of physical gold and silver.

https://goldsilver.com/blog/the-potential-big-surprise-for-2018-and-what-it-means-for-gold/

 


| Digg This Article
 -- Published: Wednesday, 7 February 2018 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2017



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.