The coming “price inflation”

The coming “price inflation”, by Steven Saville.

The year-over-year rate of growth in US True Money Supply (TMS), a.k.a. the US monetary inflation rate, has continued its journey “to da moon.” Based on the monthly monetary data for May-2020, it is now at 27% and still rising rapidly.

Anyone who thinks that this year’s monetary inflation moon-shot won’t lead to much higher prices for many things is kidding themselves. It has already fuelled the fastest 40% rise in the S&P500 Index in history, but unlike the other money-supply growth surges of the past 20 years the current episode also should lead to substantial gains in what most people think of as “inflation”. Not so much this year, because in the short-term there are counter-balancing forces such as an increasing desire to hold cash, but during 2021-2022. …

The second reason to think that this year’s money-supply growth surge will be followed by substantial “price inflation” is that the lockdowns of the past few months have damaged supply chains. This, combined with the shift away from globalisation, will lead to reduced supply and/or less efficient production of goods.

Gold and silver prices are advancing rapidly, as demand for physical (as opposed to paper promises) skyrockets and finally overwhelms the decades-long suppression effort (gold is the old currency, the competitor to what the banks and governments produce).

It might be an historically good time for gold miners. But what would I know — and I would say that, wouldn’t I? I’m the editor and owner of GoldNerds, which sell information comparing all the 230+ gold stocks on the ASX. GoldNerds just had its best quarter of our 13 years.