Outpacing Inflation

Quote of the Day

Gold surged to a new record on Tuesday, as geopolitical tensions and interest rate speculation drove a rally in the yellow metal.

The commodity rose to as high $2,141.79 per ounce, eclipsing its December all-time high of $2,135.39, according to Bloomberg data.

Gold’s rise is in part due to its safe-haven status, which investors are increasingly seeking out amid ongoing international turmoil. With the Ukraine war and the Gaza Strip conflict still raging, the asset’s spot price has risen 3.2% year-to-date.

But the metal saw a much sharper increase since mid-February, and has added around $100 in the past week.

Filip De Mott
March 5, 2024
Gold Price Hits New All-Time High on Rate-Cut Hopes, Geopolitical Turmoil (businessinsider.com)

That was March 5th. This is the last 24 hours (as of about 9:00 PM PDT):


The all time high referenced in the article has been eclipsed by nearly 6% with the all time high of yesterday morning and yet a new one this morning ($2,268.26).

Gold is either outpacing inflation or inflation is much greater than the Fed is telling us.

I would think that in general gold should be essentially in sync with inflation.

I’ve been asking people, chat bots, and reading articles trying to find a reason I am satisfied with which would account for the rapid rise in the price of gold relative to the dollar in the last month. Nothing is particularly convincing. The following are in the order I find most likely to least likely:

  1. China is buying gold.
  2. Non-U.S. markets are doing poorly.
  3. Fighting in Gaza.
  4. War in Ukraine.
  5. Speculation the Federal Reserve will cut interest rates in the coming months.
  6. People are concerned Trump will win the election and are buying gold because of the chaos he will bring.

Unless China is buying at a greater rate than previously none of those things are new in the last month.

See also:

Prepare appropriately.


17 thoughts on “Outpacing Inflation

  1. 6a. People are concerned Trump will win the election and are buying gold because of the chaos he will bring.
    6b. People are concerned Biden will win the election and are buying gold because of the chaos he will bring.

    • Really think we’re going to make it to the election?
      To me one of the real questions is with all the jahidi’s come across the border.
      Where’s the terrorism? Who/what is holding them back and why?
      Methinks were about to find out.

      • If Trump wins, the invaders/revcoms attack in November to show he can’t do anything, which he can’t, and by the time he actually takes office in January, the political heat has cooled and he can’t get the votes to do anything that isn’t already law.

        If Biden wins, the invaders/revcoms attack after Jan 21st to send the message that Biden and his handlers won’t do anything, or they’ll lash out unproductively, but they certainly won’t let a crisis go to waste when it comes to suppressing groups that don’t full-throatedly support their agenda of the day.

  2. Fake, gay, and manipulated. The cost of gold is. And a lot of it is the rest of the world side stepping American dollars.
    Cost of production is pretty much set. With the cost of labor, explosives, diesel, sodium cyanide, and spare parts adding to that cost. But in no way could account for those price variations.
    Think Libor. With once again London bankers playing games in the markets.
    Russia is a net producer of gold. And China was buying way back when gold was at $300 an OZ. Because the plan was to supplant an over-inflated American world reserve currency with a basket of gold backed ones in the multipolar world order.
    Von Mises and a host of others told us Keynesian economics always reaches a culmination point, then crashes. (And the closer the crash, the wilder the market swings. Much like what we’re seeing.)
    China and Russia simply saw it coming and planned accordingly. China it seems, has a much more aggressive plan for America as they desperately need a breadbasket. I’m thinking the central valley of California will be a major target.
    But they are Chinese. The worst of racists and the most predatory of capitalist. So, nothing and nowhere is off limits.
    (Don’t be a Uyghur, when the Mandarins show up.)
    As they have no problem sponsoring 110,000 OD’s deaths every year as it is. And paying Joke Biden and Obama to help them invade. (The Africans and So. Americans are cover for the real take-over.)
    Gold is a good trade for dollars if you got money. My bet is much lower, canned goods and ammo.
    Wonder how many OZ. of gold one could get for an old .22 with a brick of ammo and a can of beans, when things get hungry?

    • While mining costs are going up along with everything else, this price increase has nothing to do with mining companies (though they love seeing it).
      The biggest issues the gold mines I deal with are facing is getting and keeping workers, The second is getting the parts to keep running. 6 months ago I had a discussion with the guy who runs the heavy equipment shop at a local mine. He is responsible for 160 pieces of heavy equipment, starting with 150 ton trucks and going up from there (haul trucks, dozers, graders, shovels, etc). He normally has about 30 down for maintenance at any given time. That time he had 65 down, primarily due to parts delays.

      I’ve noticed that premiums on both gold and silver are dropping; 8 months ago the premium on junk silver was 40% and fractional gold almost as much – now they are mostly 6 to 12%; I wonder if this reflects lower demand or selling inventories bought cheaply then.
      Most people I know, even with high salaries, are feeling very tight due to rising costs, so I wonder how much gold and silver is actually moving now.

  3. “Wonder how many OZ. of gold one could get for an old .22 with a brick of ammo and a can of beans, when things get hungry?”

    All of it, assuming the .22 is functional, loaded and you know how to use it.

    • It depends on the context. You don’t say that about all temperature graphs that don’t include absolute zero, do you?

      In this case, the context is the peak price in the last 24 hours. Including zero makes it harder to find the peak.

      • Actually, I would if absolute zero was something that happened in the real world instead of (almost) in a lab. Non-zero origins exaggerate changes and lead to hysteria. I would suggest the lowest temperature ever recorded on Earth as an origin.

        You could do something similar for gold prices which have been tracked far longer than temperatures. Conversion from ducats to dollars does involve some technical issues. How about a dollar price for as long a US dollars have existed.

  4. On the relation between USD and gold, imagine, if you will, a blonde on the Titanic looking over the rail and saying “Oh look, the ocean is getting higher!”

  5. Immigration has downward forces on inflation by increasing the number of pockets, increasing the proportion of population that can’t bank or distrust banks and thus keep cash on hand instead of banking it into circulation, and increasing the exports of cash via mail out to foreign family members.

    Came to this conclusion a couple weeks ago wondering the same thing. I’ve not seen this measured or described by economists, but haven’t exactly looked for it either.

    • Interesting. I wonder how many dollars per month that consumes. Does it make a significant difference in relation to the increasing debt?

    • Yes.
      As more than half of US dollars are outside the country. It has allowed us to export our inflation all over the world.
      When it comes back to us and lands on our goods and services inside the US is when we a “feel the bite”.
      If not for world reserve currency status, we won’t have allowed our government to sale us down the river as they have because we would have been screaming our heads off long ago.
      An OZ of gold is an OZ of gold, same as a 1 lb. loave of bread.
      How many dollars it costs us compared to wages is the problem.
      So the real problem is as always, manipulation. Especially when it’s controlled by fake and gay bureaucratic communists.

      • Next please leave out “fake” and “gay”. They are superfluous. Communism destroys everything it touches eventually

        • Yes, and well ya, but superfluous for me would have been;
          Minor-attracted, trans-phallic, analily- fixated, homo-erotically motivated, bureaucratic communists.
          (As most everything comes straight out of their ass.)
          And using “Gay”, would include lesbians. Which isn’t correct as that’s OK as long as there’s a guy watching.
          So, sorry, bro.

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