Gold takes a southerly turn in early U.S. trading
Wisdom Tree sees inflation as ‘far from transitory’

(USAGOLD – 7/16/2021) – Gold took a southerly turn in early U.S. trading despite yesterday’s comments from Treasury Secretary Yellen that we are “likely to see several more months of rapid inflation.” It is down $8 at $1823. Silver is down 24¢ at $26.16. Belying the annual summer slowdown, gold is up 2.75% in the month of July, mostly in response to elevated inflation concerns. Silver is level on the month thus far. Yellen’s comments – along with the Fed chair’s stay the course testimony before Congress this week – are likely to raise suspicions on Wall Street that inflation will be more of a problem than the Fed had anticipated. Wisdom Tree, the Ireland-based investment firm, sees it as “far from transitory.”

“While we believe that inflation will ease a little in the short-term after the enormous base-effect from ultra-low energy prices last year pass,” writes Nitesh Shah, the firm’s director of research in an in-depth review published recently, “we believe that inflation is far from transitory. Looking at the detail behind the CP readings, inflation seems to be broad-based. The scale of monetary growth, combined with the pent-up demand for many goods and services will be a recipe for continued price inflation even after the extraordinary base effects pass. Inflation may very well rise again after the base effects are behind us. Broad commodities and gold are likely to be essential assets to protect your portfolio against inflation.”

Chart of the Day

Gold-Dow Jones Industrial Average
(50-year performance, in percent)

overlay line chart showing the 50-year performances of gold and stocks at the fifty-year anniversary of the fiat money system

Chart courtesy of • • • Click to enlarge

Chart note: As we approach the fiftieth anniversary of the fiat money system’s introduction on August 15, 1971, we thought it would be interesting to take a snapshot of gold and stocks’ performances over the period. Many will be surprised to learn that gold has outperformed stocks since 1971 – up 4498% to stocks 3733%. (All data as of 6/18/2021)

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