The Federal Reserve has been adamant that inflation of the U.S. dollar is almost non-existent. The rate of inflation most often quoted by Fed governors is the “target” rate of 2%, and we were told earlier today that we are below that target rate. Yes, the overall core inflation rate stands at 1.7% right now, so everything must be fine…right?
The Fed’s inflation calculator does not calculate food prices or energy (fuel) prices, so the numbers are skewed. Anyone who drives a car or shops for groceries can plainly see that prices are rising.
Gas prices did fall last month, by 1%, but in the months leading up to March prices were rising each month. We had an especially brutal winter and gas companies made us pay for it by raising prices on gasoline, kerosene, propane, crude oil – pretty much every form of fossil energy we use on a regular basis.
Meat prices are also on the rise at an exceptional rate. Droughts and the recent harsh winter caused farmers and ranchers to lose a lot of profit margin, at least until they realized they could raise prices without losing many customers. We need meat, poultry, eggs and vegetables and despite the fact that prices are sky-high and rising we will continue to consume those products.
Inflation and gold prices are inherently intertwined, but not necessarily on a day-to-day basis. The Fed can hold down gold prices for awhile but eventually hyperinflation will become the word of the day and household investors will flock to gold, even more so than they have been doing since 2001. The only questions remaining are: What will the gold price be when you decide you’ve experienced enough inflation, and at that point how much gold will you be able to buy?