The Sudden Onset of Inflation

68
Wed, Feb 15, 2017 - 11:09am

Isn't it interesting that, all of a sudden and after eight years of supposedly flat prices and deflation fears, all the rage is "surging inflation" and this phenomena may "force the Fed to act" to raise rates again as soon as March?

I don't know. Maybe there really is a sudden surge of price inflation? How would I know when I'm just a dope with a MacBook? However, I think it's fair to be more than a little skeptical..especially when it comes to the efficacy of government-created data. Is it possible for prices at both the wholesale and consumer level to suddenly surge to multi-year highs simply because Trump was elected? I'm having a hard time connecting the dots because that doesn't seem likely or possible. Instead, it's almost as if The Fed is dying to hike rates for their Banks and they're getting the data they want/need to justify their ends.

To that point, check this chart that I pulled from Twitter. Note that it's another one of those FRED charts from the Fed's own database. So, help me out with this...If the purchasing power of the dollar is down 30% over the past 17 years, how is it that NOW is the first time that we're actually seeing significant MoM and YoY inflation numbers??

Instead and once again, are the numbers simply being cooked/fabricated/made-up simply to fit the desired narrative? Want to run rates to historically low levels? Have the BLS (yes the same Bureau of Labor Statistics that cooks up the BLSBS each month!) print "inflation" at historically low levels, too! Need/want to hike rates for whatever reason? Have the BLS suddenly print that inflation "is surging"!

And you think that's not possible?? HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAH! Again, check that chart above from the Fed itself and tell me that inflation is only now beginning to pick up.

Why is the purchasing power of the dollar continually declining? Because The Fed is constantly increasing the supply of dollars in order to meet the liquidity demands of their Banks and the federal government!

Of course, many will then think of M2 "velocity" next. Granted, this chart is only updated through the end of Q4 but do you see anything here that suggests a sudden trend change? Me, neither.

So, of course what I'm suggesting here again is that it's all bullshit....just like everything else. Game the statistics into whatever you want/need them to show and then the Financial/Political/Media Complex reacts accordingly. All the while, the average person gets screwed. How?

  • The BLS deliberately understates inflation in order to constrain COLAs for retirees and Social Security recipients
  • The Fed decreases rates to zero and prints trillions of new greenback in order to save and shore up their member Banks
  • Now at the appointed hour, the Fed wants to hike rates so that their member Banks can charge more interest upon the vastly increased money supply, further strapping with higher interest costs the average individual or retiree.

Who wins? The Banks. Who gets screwed every time? The average, everyday American who is just trying to scrape by, working three jobs and desperately trying to hold it all together.

Only popular uprising or financial collapse exist as possibilities for changing this inherently corrupt and criminal system. Since popular uprising seems unlikely due to the complete lack of economic education in this country, we're left with only the option of financial collapse as a way of extricating ourselves from the serfdom of central bank control. And sadly, when it inevitably comes, global financial collapse is going to be an unmitigated disaster for nearly everyone.

But here's one more chart. Note that this covers about the same time period as the two FRED charts above. And be sure to note that, instead of declining like your purchasing power, this chart shows an increase of more than 4X over the same time period. And what is this? GOLD. Not the limitlessly-created fiat script of governments. Instead, REAL MONEY that has been recognized as such for millennia and, as always, your ONLY protection against the madness and criminality of the global bankers.

TF

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  68 Comments

Danforth Coxwell
Feb 15, 2017 - 12:33pm

Re:Kitco

Thanks

canary
Feb 15, 2017 - 12:39pm

Predicted Daily Trends for Gold and Silver...for the next day

(VentagePoint):

Thursday, February 16

Spot Gold Intra-Day Trend: Choppy-Sideways. VantagePoint’s short-term indicators are still conflicted.

Spot Silver Intra-Day Trend: Higher. VantagePoint’s short-term indicators are still bullish.

SteveW
Feb 15, 2017 - 12:43pm

@matt_ : Hedging miners

In reply to this morning's comment on yesterday's thread I'd be very wary of shorting shares, since as you point out the loss is potentially infinite. Moving from stock to cash and back again is quite conservative.

That leaves two strategies that are more radical, leveraged ETFs and options. Mickey seems to have experience with both these strategies and perhaps he will chime in.

In my limited experience the leveraged ETFs are very volatile and can produce big losses on overnight reversals in PMs when the shares will then open gap. So far as options are concerned the general rule is that writers make money although they obviously have a role as hedges. If you are in cash and mildly short term bearish you could write puts at or near the money so that if assigned your net price is one you find acceptable. If the market seems to be moving sideways you could write covered calls just out of the money to generate a net selling price you can accept if called.

Hope this helps.

Boxingbuddha
Feb 15, 2017 - 12:46pm

good read

Nice one Turd


Feb 15, 2017 - 12:56pm

This from Koos

TF Metals fan
Feb 15, 2017 - 12:57pm

Fool

I have this nice little junior mine in my portfolio. Not gold or silver but these guys (I presume; not many girls in this business) found cobalt. Handy stuff in batteries. Bought it in Oct 2014 as Formations metals and stayed after their name change to Ecobalt. Average purchase price: around 20 cts per share. Was sitting idle until the start of 2016. Last week it pushed through until slightly over 90 cts after which it immediately was pushed back under 80. So I sold ~65% and made a nice profit. Still kept a remainder.

Now the lesson: Of course I sold close to the bottom. Because now it is trading at 1.16, another 37 cts higher. Of course I am happy with the profit and my free play in this share. But how often have we seen the f..ing criminals chasing people out of shares only to shoot straight up afterwards. I know it, I have seen it too often but why did I fall again for this same old trick?

Reason for writing this? I hope somebody will not make the same mistake. Because you feel such a fool afterwards.....

dale Blaggers
Feb 15, 2017 - 12:58pm

Inflation is off the charts.

Inflation is off the charts. And the effects of inflation are certain to increase momentum this year. But the last place I look for this is in the CPI or the Core Producer Price Index; these have been skewed for years. Suggesting that the Fed is reacting to honest data somewhat misses the point of this post.

joeblack
Feb 15, 2017 - 1:17pm

Raise rates?

to crush Trump

billhilly
Feb 15, 2017 - 1:18pm
Angry Chef
Feb 15, 2017 - 1:40pm

Chapwood Inflation Index

https://www.chapwoodindex.com/

If you follow the Chapwood Index the REAL rate of inflation is roughly 10%. Nice to see the geniuses at the Fed feel we need more inflation. Could you imagine what would happen if the Government had to tie all public pensions to the real rate of inflation ?

We are soooooooo F'd !

ArtL
Feb 15, 2017 - 1:49pm

CDS up, silver miners down

is this manipulation and which way? will CDS drop or will Ag miners go up?

abundance TF
Feb 15, 2017 - 1:56pm
DOOGIE TF Metals fan
Feb 15, 2017 - 2:16pm

Ecobalt

TF Metals Fan, thanks for pointing out about Formation name change. I have had a small stake in that company for close to 10 years. Looks like it is finally having its day in the sun.

Don't feel like a fool it is very hard to make money in these stocks what I have found is when they start taking off, that is the time to really hang on to the bull as it will always try to buck you off too early. Easier said the done but the way I see it holding on to these stocks for years we are entitled to huge gains so when they start to take off I try to bite the bullet and not sell to early. Have I been burned, of course but I think overall my winners far have exceeded my losers by hanging in. Classic example being Ecobolt. KD

LostMind
Feb 15, 2017 - 2:27pm

Leaked video footage from BLM/Bundy showdown in 2014

Leaked Video Shows BLM Aggression At Bundy Ranch | Party of the Western Republic

Ask yourself who works for who? Watch these "federal agents" behave...

lakedweller2
Feb 15, 2017 - 2:38pm

Algos

Just not working right...What to do.

abundance
Feb 15, 2017 - 2:44pm

The guy from the IC

Is saying that they're about to "go nuclear" and that Trump will die in jail.

billhilly
Feb 15, 2017 - 2:47pm

encouraging action this week...

...so far;

- each dip has been bought

- no MAJOR smashes

- Silver especially hanging in there nicely

- miners basing and consolidating

- moving avg's holding

All in all, there seems to be a positive bias happening. And, it actually "feels" good. I am still heartened by the lack of MAJOR smash down's, esp. today. I was just waiting for the big guns to come in and hammer away after Gold broke 1220 and was holding at 1218 for what seemed forever. I am most happy for the rebound.

I am still wondering if the massive hits all at one time are things of the past. Maybe with the new sheriff in town, Trump, he has laid down the law. It sure seems that the levels are exactly where a big hit would happen but so far so good. Are those days behind us ????

And with Trump's statement about "level playing field", and after my reading of the FFTT article, maybe we are about to see some kind of move toward a Gold backed trade note/Oil settlement system. One can hope.

Keeping happy thoughts for the end of the week.

https://fftt-llc.com/index.php/strategies


Feb 15, 2017 - 3:00pm

Re "the average person" referenced in this post


Feb 15, 2017 - 3:08pm
Dr. P. Metals
Feb 15, 2017 - 3:23pm

now @info

you turning all "cynical" on us?

infometron
Feb 15, 2017 - 3:24pm

Re: Live update on Oroville

"Amazing" "Great progress" "Feeling very good about the reservoir conditions"

"We have an amazing about of storage that we continue to improve upon"

"We don't anticipate a rise in reservoir levels"

I have a bridge to sell ya!

Question from the press you won't hear: "Why should we believe you?"

"We don't anticipate the upcoming storm will cause any problems"

infometron
Feb 15, 2017 - 3:26pm

@Dr P Re: Oroville Dam

If you were following my posts from first thing Sunday morning, you will know that I was seething mad with those clowns all day long.

infometron
Feb 15, 2017 - 3:30pm

@info

Can you find a current picture? I'd be curious to know how far the main spillway has eroded back toward the top due to the undercutting from the unprecedented amount of water they're releasing.

lakedweller2
Feb 15, 2017 - 3:35pm

Sounds Like

They are spending so much time on Fake News there is no time left for the real news.

Mickey
Feb 15, 2017 - 3:41pm

leveraged etfs

few folks really understand them. I believe they are a better risk reward deal than underlying, esp in miners.

eg.

gdxj is 41.50, so 1000 shares gives you 41,500 exposure

JNUG is 11.63-so 1200 shares gives you the same exposure but you only need 13,833 bucks to get that. Keep the other 27,666 in cash or physical.

GDXJ goes up 30%--now worth 54,000-gain of 12,500 (thats a couple of bucks above last years high)

JNUG goes up more than 3:1 because in up markets it does due to compounding. it was going up 5:1 a year ago

but lets just say 3:1 so JNUG goes from 11.63 to 23.50 or a double, vs 30% for gdxj. The 1200 shares of JNUG are worth 28k, a profit of 14,000--same profit but less invested. And I think the profit is higher as the 3:1 gets compounded more than 3:1

On the downside JNUG has been losing less than 3:1 due to reverse compounding. (In theory gdxj could go to zero and JNUG would still have some value and in gdxj you lose 41,500 vs only 13,800 in JNUG)

However, more realistic would be a 30% decline in GDXJ or losing 12,500.JNUG would list around 85% to 2074 and everybody goes ballistic over a 85% loss, but that's 11,800. Advantage JNUG as you loss less and still have 27k cash.

Obviously the name of the game is to hold JNUG in up markets and sideline it in down markets. But short term, who here has an uncanny ability of knowing whats going to happen day to day week to week.

Some here are pretty good, I know that, Craig has as good a feel as anyone (and a contact list of some smart folks in the business)

But if this is 15 months into a new bull and in this case it might be better to buy and hold and ride the bull all over the place. Today is an example. Last weeks I think Thursday was an example of a reversal.

I continue to sell calls as a hedge and usually somewhere after I sell the call I have an opportunity to buy it back at lower price. and if the stock price goes above strike price, I can buy the option back near expiry without much premium, which is also a strategy riding the stock price up selling and keeping premium. The implied volatility on jnug options is triple digit while on GDXJ is around 45-both tied at the hip.

Just a thought.

lakedweller2
Feb 15, 2017 - 3:43pm

Judy Shelton on Cnbc

Advocates a standard to base currencies on...Like gold. Jim Grant thought she would be good for Fed. Sounds encouraging...does that mean it won't happen? Just said Fed model flawed.

TF Metals fan
Feb 15, 2017 - 3:43pm

Turn the machines back on......

Trading in the metals is slowing down? Spread is small, not much action today. Am I missing something?

Mickey
Feb 15, 2017 - 3:50pm

woudl today qualify

as a key reversal day for gold and silver

Gold was down $12 when CPI announced, now up 4.

surfeitndearth
Feb 15, 2017 - 3:54pm

re: Pan American Silver

from ceo.ca today...

Pan American Silver corrects error in February 14, 2017 earnings release @newswire/pan-american-silver-corrects-error-in-february-14 $PAAS $PAAS The error is due to net realizable value adjustments on the heap pad inventory at the Dolores mine. The impact of this error, after adjusting for the effect on taxes, was to overstate adjusted earnings for Q4 2016 and for the full 2016 year by $8.6 million. At time of publication, Pan American Silver shares were trading down $1.16 to $26.03 on 476,000 shares.

lakedweller2
Feb 15, 2017 - 3:55pm

Wait

USD/JPY down. Gold, silver, copper up. Shelton saying a sort of gold standard...Miners should sky rocket into close.

Edit: also soybeans up. The trifecta.

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