The ebb and flow of inflation and the POG
Now we have a higher than expected November PPI and a lower than expected November CPI.
The PPI (producer) inflation stats are generally indicative of higher inflation to come with a few months lag time before showing up on CPI (consumer) inflation stats.
With a lower CPI just out , what could possibly be driving gold up as the Fed will now ease off on rates and monetary tightening, believing inflation is starting to weaken?
Its a double edge sword and as I've been saying, any hint that the Fed will revert back to monetary easing (precarously and mistakenly beleiving inflation is being contained) will then beat up the dollar and by that factor, we'll see gold rise.
The big driver of the POG (the other side of the double edge sword) will come when the investing masses see the Fed do a hard pivot back to all out monetary easing (and that time is coming in 2023) and they then lose face over the inflation fight entirely.
With today's 'CPI report, this seems a little less likely , but don't be fooled by the ebb and flow of (entrenched) inflation currently. Much more inflation looms on the horizon as evidenced by the latest PPI.
The sick economy the Fed is covering up with skewed stats, is going to need a great deal more monetary easing than a little now, a little later.
Its going to take massive amounts of QE to keep what former QE's created in effect, the massive bubble economy we have now to sustain it any further.
The inflation fight will be abandoned later in 2023 for more QE by the Fed and it will iust plain soar to nosebleed heights.
You all know what that means for gold then.