Gold pushes over $1800 market as consensus shifts to persistent inflation
‘No longer any sensible way to dismiss this inflation episode as merely transitory.’

(USAGOLD – 10/14/2021) – Gold pushed past the $1800 mark overnight in a continuation of yesterday’s reaction to the September inflation report, growing concern about the debt defaults in China, and the developing energy crunch. It is up $6.50 at $1801. Silver is up 25¢ at $23.43. Yesterday’s inflation report raised the prospect of a more persistent version of the problem in the United States. “The U.S. consumer price inflation data for September is with us,” writes Bloomberg’s John Authers in his regular column this morning. “With it, I will say tentatively, the debate over whether the current dose of inflation is merely transitory is almost at an end. There’s room for much argument about what should be done about rising prices, but there’s no longer any sensible way to dismiss this inflation episode as merely transitory.” If the past two days are an indication, gold has begun to react directly to that shifting consensus. Some believe that a runaway, 1970s-style runaway stagflation is a strong possibility – a consequence of the massive money creation over the past nearly two years (some of which has leaked into the money supply).

Chart of the Day

line chart showing the hyperinflation of the Venezuela bolivar
Sources: St. Louis Federal Reserve, Board of Governors of the Federal Reserve System (U.S.)

Chart note: While hyperinflation in the U.S. economy is unlikely, It is a reality in Venezuela. One of the characteristics of hyperinflation is how quickly it can impose itself on an economy. The chart above shows the rapid depreciation in the value of Venezuela’s bolivar over the past nearly two years. At the end of 2019, it took, as you can see, 45,760 bolivars to buy a dollar. The exchange rate is now 4,133,144 bolivars per dollar. Yesterday, the price of gold in Venezuela was 383,207,885,304,659.50 bolivars per troy ounce, according to Goldrate24 – an indication of its utility as a long-term store of value under even the most extreme circumstances.

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