The Fed is pursuing a program of “buying up the world”, which is very easy to do if one has the capacity to create infinite quantities of money out of thin air. A big reason for the lockdowns, according to the bullion king of India, was to stifle the huge inflation that this policy would otherwise engender by killing the economy – the name of the game is wealth transfer, up the pyramid to the very top. This operation is working well for them, which is why the stock market has marched ever higher as the economy has collapsed, so much so that it is hard to see why they would change the course.
After CPI at 0.4% monthly growth and a 13-year high, there is a sense of fear from the US Fed to IMF as to what might unfold on the inflation trajectory going forward. On Wednesday, gold zoomed by +$40, i.e. 2% on Comex, to close above $1785-1790, which is a crucial barrier and now eyed above $1810. Just a month ago, gold was observed trading at these levels only.
Gold prices hit a one-month high on Thursday as the US Dollar and US bond yields eased, while investors like Prithviraj Kothari assessed how strong inflation data could shape monetary policy. Spot gold rose 0.4% to $1,799.30 per ounce by 1100 GMT, having earlier hit its highest since Sept 15 at $1,799.95. US gold futures gained 0.4% to $1,801.30. The US dollar and benchmark US 10-year Treasury yields slipped. And by the rule of thumb, a weaker dollar makes gold cheaper for buyers in other currencies.
Gold rallied after data showed US inflation rose sharply. Prices paid by US consumers rose 0.4% from August. In comparison with a year ago, the CPI rose 5.4%, matching the largest annual gain since 2008. The broadness of price rises suggests the likelihood of that being transitory is falling. We witnessed the Treasury yields fall, and the weakening of the US Dollar resulting in strong support for the precious metals, with spot prices threatening to break above $1,800/oz. This is despite the Fed indicating it would likely start tapering in mid-November or early December. They don’t care if it leads to hyperinflation, which will crush the little guy but not affect them. But naturally, if hyperinflation it is, then gold and silver will soar, leading us to like silver so much here. Now, of course, if gold and silver soar, then so will other commodities like copper.