When you look at gold, silver, the dollar, lumber, iron-ore, and inflation, what is happening right now is shocking.
May 10 (King World News) – Peter Boockvar: Not that we needed this stat because it is something I’ve talked a lot before but it is a good visual in case you didn’t see this chart from Steve Rattner on Twitter today, adding fuel to the debate about added unemployment benefits and what that does to the supply of labor.
WHY WORK AT ALL?
Regular Wages (BLACK) Unemployment (TAN)
Lumber And Iron-Ore Prices Have Been On A Tear
We will hear from a slew of Fed members this week and I hope to hear someone talk about the 12% rise in home prices and lumber prices rising to the point where builders are literally stopping construction at the same time the Fed is gobbling up MBS to the point they are buying all the new issuance and own more than 1/3 of the market. Lumber prices have had ONE red day since March 26th and is up 77% over this time frame. Iron ore prices after doubling in early April from its level a year ago are now going vertical (see chart below).
I’m already hearing from the inflation transitory believers that this rise in commodity prices is not sustainable and parabola’s never are but even if they fall sharply from here they will still be up a lot from where this rally began…
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Inflation Dangerous For Fed Credibility
I do want to say this about the Federal Reserve that if they are wrong on this inflation story and that the rise is not temporary, their credibility will be in tatters. Their reputation can’t afford to be wrong when it comes to this. I say this because this isn’t a theoretical debate on inflation where it’s ok if someone is wrong, this is real life with real world implications. As inflation is a tax, the higher it goes, the more difficult people will have in sustaining their standard of living, particularly the lower wage earner. And, what this could mean for the world’s bond markets and anything priced off interest rates could be profound.
As For Gasoline
As for gasoline prices now that we are approaching the summer driving season, as of Sunday AAA said the average gallon at $2.97 is now exceeding where it was two years ago and by 3.4% and is about to exceed where it was in May 2018.
Gold & Silver
Gold and silver are finally catching up to the broad commodity rally with the price of both at 3 month highs. Silver remains my favorite commodity.
Silver On The Cusp Of Another Major Upleg
US Dollar In Trouble…Again
Helping is the dollar index getting close to breaking below the 90 level again.
US Dollar Decisive Break Of 90 Level
May Trigger Panic Selling
To hear one of legend Rob Arnott’s (who oversees $160 billion) best interviews ever, where he discusses how investors can protect themselves from skyrocketing inflation and so much more CLICK HERE OR ON THE IMAGE BELOW.
***To hear Alasdair Macleod discuss the gold and silver markets and what to expect next CLICK HERE OR ON THE IMAGE BELOW.
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