The US government is telling everybody that inflation is 3.4% per year. That is not correct. Try 14.2% and that’s about right. Source : gold/usd 1 year simple moving average.
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I might accept the premise that inflation is higher than officially reported, but I don’t accept the relevance of your evidence in support of that premise.
Speculation on the price definitely occurs, which is why I chose to use the one-year simple moving average instead. Measure it from January 1st, 2024, till today, and you see that it’s risen 7.1%. So if inflation keeps up like it has been, and it appears to be, then it would be 14.2% higher by December 31st.
I think you wildly misunderstood what the other commenter was trying to get at, namely that you are trying to extrapolate a gobal and relatively volatile value of a single material to the scale of the entire gobal economy. If for instance a major mine was forced to shut down then you would see a major increase in the price of gold, but no change to the economy as a whole outside of a small fraction of the aforementioned change making its contribution to the outputs of a few niche industries.
Moreover if a commodity can work as a pure measure of inflation in the economy then we would expect the gobal price index of all commodities to provide a more accurate measure, right? Actually doing that relative to USD however actually shows minor deflation since Q3 2023, which itself saw a whopping 30% deflation between 2022 and 2023.
Given these numbers do not seem at all indicative of my personal or observed change in the average price of goods and services across the entire economy, it would seem that commodity prices don’t have a significant direct correlation with inflation.
Why do you think gold and inflation are related in any significant way? Nobody buys anything with gold, so I don’t see how it’s relevant.
Because gold is the traditional hedge against inflation. When inflation starts running rampant, people start taking their fiat currencies and trading them for hard assets such as gold.
It’s not, bonds (i.e. TIPS) and real estate are. As inflation goes up, so do coupon rates to counter inflation. As inflation goes down, so do rates, meaning older individual bonds can be liquidated for more money to free up cash for other investments.
Gold is a hedge against stocks. People think gold has value, so they buy it if they think there will be a recession. Inflation often goes up when stocks go down because the Fed slashes rates to encourage spending, and more spending (demand) drives up prices. So gold may appear correlated to inflation, but it’s really more inversely correlated to stocks.
So if you want to speculate on stocks going down, gold is a decent option. But if you think inflation will go up, bonds are the way to go.
The best way to go is to ditch their system entirely and stop using money that they can just print out of thin air and tax you through inflation at all. You’re right about the investment of bonds. When your bond has high rates and the rates go down, your bond can sell for more. But I don’t want the US dollar at all. Actually. In fact, I don’t want to buy a bond from any country, no matter where it’s at, because all countries have fiat currencies.
Hey, I can play this game, too! The real inflation rate is closer to 150%. Source: Bitcoin was $27k last year, now it’s $67k
My source sucks, but so does yours
Buy bitcoin, fuck the govetnmyth
The US is saying 3.4% because inflation is based on a consumer price index. It’s not a good metric because it doesn’t account for housing, education, healthcare and most other major expenses.
However, gold is an awful metric for the value of the currency. No single product can be a good metric alone. And gold is famously effected by speculation. People buy gold when the future of the currency seems uncertain.
Exactly. People buy gold when the future of the currency seems uncertain. And yet, the simple moving average of gold has risen 7.1% since January 1st of 2024. And so if inflation continues, at the pace it is, then it will be 14.2% by the time December 31st rolls around.
Did the USD deflate significantly between 2012 and 2016? Your gold based metric says yes.
From what I remember, those years were pretty steady and didn’t do much.
You’re speculating on what gold will be worth in six months. You have no idea if the current trends will hold or not. It’s not like the value of gold over the course of the past hundred years is a steady consistent climb. Past performance isn’t always indicative of future results.
You do have a point there. However, I would also point out that even the government inflation numbers say they are barely dropping and yet rates are the highest they’ve been in 20 years and the banking sector is going to have a big meltdown because of this commercial real estate. So yeah, it’s speculation, but it’s speculation based on data and trends.
But not all data is relevant. For some reason you’re comparing gold and inflation, but gold isn’t a currency (anymore) and thus isn’t really related to inflation.
Gold prices largely reflect concern about the direction of the economy, they don’t reflect currency valuations or costs of things. People move to gold when they think stocks are going to collapse, they don’t move to gold when prices for things go up.
In the words of Warren Buffett (from memory, not a direct quote):
Be fearful when others are greedy, and greedy when others are fearful.
The way I read this is:
- gold is high (people being greedy)
- stocks are recovering (hit in 2022)
- bonds are down (rates have been going up)
So I think gold will see a correction in the next 6 months, and those people will likely flock to stocks. But that depends on economic indicators remaining strong, inflation figures dropping, and bond rates staying steady or dropping a little. Depending on the election outcome, we may see stocks correct a bit as well.
But I don’t think we’ll see a “housing meltdown” because inventory is still low in many areas and new construction isn’t keeping up with demand. I think we’ll see housing level off once builders can catch up and real wages recover from the cash injection in 2020.
So in general, I’m bearish on gold, and “wait and see” on stocks until after the election. None of this impacts my investing strategy though, which is the same as it has always been, it only impacts my speculation budget.
I’ll accept without evidence that real inflation feels a lot higher than 3.4%, but proposing short term shifts in the price of gold, or any other single commodity as a better metric is just nuts.
Well, shadow stats agrees with me. According to the way they measured inflation in the 1980s, we are about 12%. So even if my estimate was wrong, it’s not off by far.
And the way they measured back then included things such as, oh, I don’t know, food and energy, which are two things everybody just happens to need.
shadow stats
Bruh.
Yes, measure the things people need, not gold.
So the government has gotten every university and financial institution on the planet to go along with their ruse? I mean after faking a moon landing that sounds trivial.
