Gold pushes higher on hot inflation data
Top Wall Street firms say a storm is brewing in the stock market. Will gold be a beneficiary?

(USAGOLD – 9/14/2021) – Gold pushed higher as consumer prices came in a hot 5.3% higher adding to concerns that inflation might be something other than transitory. It is up $4 at $1799. Silver is up 4¢ at $23.83. Today’s price report is unlikely to move financial markets out of their quandary on the inflation question or settle nervousness about the Fed’s direction on tapering and rates. Bloomberg reported last week that strategists from five top Wall Street firms – Deutsch Bank, Goldman Sachs, Morgan Stanley, Citigroup, and Bank of America – have warned of a storm brewing in the U.S. stock market.

Mike McGlone, Bloomberg’s senior commodity market strategist, believes that a breakdown in stocks might be just what the doctor ordered for gold. “Just some reversion in the steepest gold discount to the S&P 500 since 2005,” he says in a recently posted Kitco News report, “may indicate a spark to break the metal out of its bull-market cage. The gold-to-S&P 500 ratio has dipped below the extreme from about three years ago that broke gold away from the gravity pull around $1,270 an ounce toward its record high of about $2,075 in 2020. About $1,800 is the lock-in price since July 2020. When equities eventually revert a bit, gold stands to be a primary beneficiary, as we see it.”

Chart of the Day

United States Consumer Inflation Rate
(Bureau of Labor Statistics, August 2021)

bar chart showing the increase in consumer prices over the past five months
Chart and commentary (below) courtesy of

Chart note:The annual inflation rate in the US,” reports Trading Economics, “eased to 5.3% in August from a 13-year high of 5.4% reported in June and July, matching market expectations. A slowdown was seen in cost of used cars and trucks (31.9% percent vs 41.7% in July) and transportation services (4.6% vs 6.4%) and inflation was steady for shelter (2.8%) and apparel (4.2%). On the other hand, faster price increases were seen for food (3.7% vs 3.4%), namely food at home (3% vs 2.6%) and food away from home (4.7% vs 4.6%); new vehicles (7.6% vs 6.4%); energy (25% vs 23.8%); and medical care services (1% vs 0.8%). The monthly rate eased to 0.3% from 0.5% in July, better than forecasts of 0.4%. Prices of airline fares, used cars and trucks, and motor vehicle insurance all declined over the month while increases were seen in cost of gasoline, household furnishings and operations, food, and shelter.”

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