The Market Just Issued A MAJOR Warning of What’s to Come

The comments below are an edited and abridged synopsis of an article by Phoenix Capital Research

For the month of May 2021, the Markit’s US Manufacturing PMI revealed that the cost for input prices as well as new business at service providers have hit their highest levels since 2009.

The Market Just Issued A MAJOR Warning of What’s to Come | BullionBuzz | Nick's Top Six
Missile Launch From A Warship On The High Seas. 3D Illustration. Warning shot concept.

As one economist put it, “average selling prices for goods and services are both rising at unprecedented rates, which will feed through to higher consumer inflation in coming months.”                                                                                                         

Inflation doesn’t just appear overnight. Instead, it slowly works its way into the financial system in phases: First, raw material prices spike; second, factory gate prices spike; and third, retail prices spike.

The first stage occurs in the manufacturing/ production segment of the economy, when you see producers suddenly paying more for the raw goods and commodities that they use to manufacture/produce finished goods. We hit that stage several months ago.

One or two months of higher commodities or raw goods is no big deal, but once you’re talking 6 to 8 months of steadily rising prices, it’s significant. At that point, manufacturers/producers are forced to start raising the prices of finished goods or else face shrinking profit margins. We are now in the second stage.

Managers at US businesses are seeing the prices they have to pay to obtain commodities/raw goods and services rise faster than ever before. Never before have prices exploded this rapidly, which means inflation is now roaring.

It also explains why gold has exploded out of a 9-month downtrend. Gold is telling us that the Fed is not going to stop inflation. It is telling us that inflation is here, and it will only get worse.

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