Consumer Price Index Goes Totally 80s

Hey There Income Hunters,

 

It’s official …

 

Yesterday’s CPI was the highest since the inflation in the 1980s. 

 

 

But don’t worry, Fed Chairman Jerome “J-Pow” Powell found another way to reduce inflation …

 

 

Today, we’ll take a look at yesterday’s worst bond auction in history and a potential major breakout for Gold.

 

Lights, Camera, Auction

 

30-year Treasury bonds were auctioned yesterday afternoon. They have been trading incredibly well for a couple of weeks, so anticipation of a good auction was high. 

 

Well, it was the worst auction in history!

 

Of course it should have been when you look at the relative value of owning bonds with inflation at 6.2%.

 

As I like to hammer home: Inflation is the wealth killer.

 

And here is a perfect example … 

 

      • If you bought the 30-year Treasury Bond in the auction yesterday,your return would be 1.94%.

 

      • However, your REAL return would be 1.94% minus the inflation rate, because inflation measures the increase in costs per year that you must pay for essential items.

 

      • So, 1.94% – 6.2% = – 4.26%.  That means every year this relationship exists you LOSE 4.26% of your wealth. 

 

As you can see in the chart below, this is a common situation when you are in a serious inflationary environment like the 1940s and 1970s …

 

Is Gold Finally Joining the Inflation Party?

 

Gold was off and running after the CPI number yesterday morning. It reached a high of $1,870 right before the bond auction, which caused a pullback. It then held its ground and finished strong.

 

I love Gold, silver and copper. I think money managers will now be allocating funds out of energy into the metals in the short-term.

 

The $1920 level is next.

 

 

Bring It Home

 

I don’t think there will be any turning back, the atmosphere is turning so much more bullish for gold.

 

Changes at the Fed, based on four open seats that will be filled with money printers will raise Government stimulus to another level. 

 

And I’ll tell you how to profit from that when I go live this Friday at noon EST.

 

Stayed tuned and as always,

 

Live and Trade With Passion My Friends,

 

Griff

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