Will Gold Save Souls During The Inflationary Apocalypse?

The comments below are an edited and abridged synopsis of an article by Arkadiusz Sieron

While inflation continues to wreak havoc, gold is reluctant to respond. When will the yellow metal rise?

silhouette of a religious icon against a background of hundred-dollar bills, the concept of bribes

The picture with respect to inflation doesn’t look good at all. The annual CPI rate has accelerated from 0.2% in May 2020 to over 8% in March and April 2022. Core CPI, which excludes food and energy, has also surged.

That’s a high increase in the cost of living. There are already reports of people taking desperate measures to save on everyday costs.

Inflation in April was slightly lower than in March, so it’s possible that it has already peaked. However, the rate was still higher than the consensus estimate of 8.1%, and it may be a temporary pullback. Inflation was less hot because gas prices declined in April before spiking again in May, which will contribute to the upcoming inflationary reading.

The shelter index has been constantly rising (as well as the producer price index), so there is ongoing upward pressure on prices. Widespread lockdowns and an economic slowdown would hit global supply chains again, strengthening inflationary forces. Lastly, the private savings boosted by the pandemic are still elevated, so consumers have resources they can tap, thus high inflation is likely to be with us for some time.

For how long? On one hand, the pace of growth in the money supply has slowed, which gives hope for normalization in the future. On the other hand, the pace hasn’t returned to pre-pandemic levels, so inflation won’t simply disappear.

Is this good news for gold? It should be; gold usually shines during periods of high and accelerating inflation.

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