Inflationary pressures persist despite Biden propaganda

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As the summer doldrums drag on, precious metals bulls look to potential levels of support for a seasonal low.

The gold market found support at the $ 1,750 level last month and has been trading on a slight upward trend since then. While price action hasn’t been particularly exciting, building base during this summer months in the context of a larger bull market can be a healthy technical process.

Meanwhile, investors are weighing worrying developments on the inflation front. Price hikes hit consumers every time they shop, and that trend is not going to let up.

Equipment manufacturers such as Whirlpool are announcing price increases of up to 12% due to higher labor and material costs.

Unilever, which owns some of the leading brands on grocery store shelves, warned Thursday that rising costs are hurting profitability. From the ingredients to the packaging to the transport, everything is becoming more expensive – and in the end, of course, that has to be passed on to the consumer.

You can expect to pay more for Cheerios and Tide laundry detergents. Parcel giants General Mills and Proctor & Gamble recently implemented price increases. Some of these increases can be masked by reducing the piece sizes of certain products – a phenomenon known as “shrinkage inflation”.

But savvy buyers are not fooled. They know that price is not value. What matters is the cost per ounce of a box of cereal or a bottle of laundry detergent. The best value in terms of cost per ounce is usually found on larger products.

This also applies to a considerable extent to precious metal products. When calculating the cost per ounce, fractions of coins less than an ounce tend to cost more than full ounces or larger coins. Large precious metal bars often offer the best value in terms of metal content.

But there are exceptions that you should be aware of. Sometimes the premiums for pre-1965 silver coins or scratched and dented gold coins are among the lowest available.

And sometimes buyers find utility in small parts or aesthetic value in coins that arrive in mint condition.

Bargain hunters in the grocery store often opt for generic or branded products. In many cases, they have exactly the same ingredients as more expensive counterparts offered by more well-known brands next to them on the shelf.

This principle also applies to buying gold. A popular brand name such as the US Mint’s American Eagle will have a sizable premium over a round issued by a lesser-known private mint.

A Walking Liberty Silver Round produced by Money Metals Exchange has the same purity of 0.999 as a Silver Eagle. If they were both melted down, they would look exactly the same, have exactly the same physical properties, and have exactly the same value. But silver stackers who opt for the Walking Liberty save a few dollars an ounce compared to the American Eagle, which is made by the poorly managed US Mint.

At some point, prices will rise again on the precious metal markets. When they move, expect them to move much more dramatically than cereal and soap.

Consumers looking to protect themselves from soaring shopping bills should consider buying precious metal products while they are still available at bargain prices.

The underlying drivers of soaring inflation will not wane anytime soon, despite Federal Reserve officials and President Joe Biden insisting that the inflation problem is temporary.

The White House budget office had forecast inflation of 2.1% in its latest budget proposal for 2021. Inflation is more than twice as high. According to the latest consumer price index, it is 5.4% – and even higher according to other, possibly more accurate measurements.

The Wall Street Journal recently reported that the M2 money supply has grown at an annualized rate of 23.9% since March 2020.

It typically takes several months for a barrage of new currencies to work its way through the financial system and producers’ supply chains before they finally show up in retail prices. The monetary inflation currently being pumped out will therefore have consequences well into next year.

It is difficult to predict where the next inflation hotspots will arise. But it is fairly certain that the gold and silver markets will not be spared the price consequences of both existing and future inflation.

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