Consumer Price Inflation Reaches 8.5% and Gold’s Rally Continues

Gold rallied from $1,950 to nearly $1,980 Tuesday morning April 12, following the release of the Consumer Price Index (CPI), which rose at the highest rate in 40 years. The U.S. Dollar index is also up 2.6% in the last two weeks, so both gold and the dollar are rising, which means that gold is rising even faster in terms of other currencies. In addition to runaway inflation, the war in Ukraine is likely to continue, despite Russia’s temporary setback.

Another fuel for gold’s increase is the renewed rise of COVID in China, especially in the large port city of Shanghai, which is now disrupting the normalization of the supply chain.

On Tuesday, the March Consumer Price Index (CPI) was released at a 40-year high of 8.5%, mostly due to energy and food price increases, plus supply disruptions amid strong consumer demand coming out of the two years of partial shutdowns during COVID-19. The 8.5% rate for the last 12 months tops the 7.9% annual rate released last month (for February’s prices). This marks six straight months of the CPI rising by over 6% on a 12-month basis – or three times the Federal Reserve’s long-time target of 2% inflation.

The big leap in March was in part due to Russia’s invasion of Ukraine on February 24. Early March saw a 50% or greater rise in some key commodity prices, which were reflected more fully in Wednesday’s Producer Price Index (PPI). Energy prices shot up 11% from February to March, the CPI report said.

Prices for groceries also accelerated in March, rising 1.5% from a month earlier, since Ukraine and Russia are major grain exporters. When subtracting energy and food, the core CPI still rose 6.5% year-over-year.

Here are some of the most dramatic 12-month consumer price increases, according to the CPI report:

Fuel Oil                  +70.1%

Gasoline                 +48.0%

Used Cars             +35.3%

On Wednesday morning, the Producer Price Index (PPI) reflected the fastest growth since these records were kept (starting in 2010). The PPI gained 1.4% last month (in March) and +11.2% for the last 12 months. Omitting food, energy and trade services, the core PPI rose 0.9% in March and 7% in 12 months.

For years, the Federal Reserve had minimized the influence of money supply on inflation. Universities have belittled the theories of the late economist Milton Friedman, who famously said that “inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”

After COVID began to spread in America two years ago, the Fed and Congress felt no fear of inflation when they printed trillions of new dollars and sent out way too much “free money” to millions who didn’t need it. The Fed’s 400+ PhD economists nearly all said in unison chorus last year that the latest inflation siege was “transitory.” We believed Friedman and other free-market economists were right – and now they (and we) have now been proven right – as the Fed has stopped using ‘transitory’ language and started raising rates, while tightening the money supply.

History and experience show it is far harder to stop inflation than it is to start a printing press run!

All this global uncertainty is typically good for gold and silver.

Expert Advice on Buying Gold & Silver Cheaper

Current year silver and gold bullion coins are very popular when they are first released but if you want to save on your bullion purchases, you can sometimes buy prior year (back-dated) bullion coins for less than the current year coin.  Remember, current year coins become prior year coins in less than 12 months, anyway.  I highly recommend, that if you are making large bullion purchases, to always ask us if a prior year’s product would save you money on your bullion purchases.

Five Women Nominated for the 2023 “Women’s Quarter” Mint Program

Back in 2014, 9-year-old Sofia was learning about women’s suffrage in school in Massachusetts and she was wondering why the same few “dead Presidents” (and no women) were on our dollar bills and coins?

However, she did more than wonder. Instead of asking her teacher or parents, she wrote a letter to then-President Barack Obama:

“Dear Mr. President,

“I am writing to know why there aren’t many [women] on the dollars/coins for the United States. I think there should be more women on a dollar/coin for the United States [because] if there [were] no women there wouldn’t be men…Also there are many [women] that could be on dollars/coins for the United [States] because of the important things [they’ve] done. [She added a list…] Please write back. Sofia”

She forgot about the letter and didn’t have a realistic hope for an answer, but she got a personal letter from the President, and then a campaign to put women on the $20 bill. That didn’t work out yet, but now women are on coins! The Circulating Collectible Coin Redesign Act of 2020 provides for the production of five quarter dollars each year from 2022 through 2025 with American women featured on the observe.

The five women in the 2022 circulating quarter series are (in alphabetical order):

• Maya Angelou, celebrated performer and social activist
• Wilma Mankiller, first female principal chief of the Cherokee Nation
• Nina Otera-Warren, a leader in New Mexico’s education and voting rights activism.
• Sally Ride, physicist astronaut, educator and first American woman in space.
• Anna May Wong, the first Chinese American film star in Hollywood

The women nominated on March 31 for the 2023 Quarter series are:

• Bessie Coleman, first African American and first Native American woman pilot
• Jovita Idar, Mexican American journalist, activist, teacher and suffragist
• Edith Kanaka’ole, indigenous Hawaiian composer, dancer and teacher.
• Eleanor Roosevelt, First Lady, author, reformer and women’s leader
• Maria Tallchief, America’s first ballerina

Congratulations Sofia, your letter helped make an impact on American history!