Weekly Digest: Inflation Runs Hot, Gold and Silver Go Up
11/11/21: U.S. consumer prices hit their highest level in decades, gold price reaches a nearly five-month high, crypto market tops $3 trillion. And more.
🚨 New inflation data is out and it’s not pretty: U.S. consumer prices increased more than expected in October, hitting their highest point in more than 30 years — yet another sign that inflation could remain uncomfortably high well into next year amid global supply chain chaos. (Reuters)
In the past 12 months through October, the Consumer Price Index (CPI) accelerated 6.2% in the largest year-on-year increase since November 1990.
(The CPI* measures the average change in prices over time that consumers pay for a set basket of goods and services, it is used to measure inflation).
Although the Fed restated last week its view that current high inflation is “transitory," economists and investors are growing increasingly skeptical and are calling on the central bank to take action.
“The ‘transitory inflation’ call, and the associated downplaying of the consequences of high and persistent inflation, are ending up posing significant economic, political, and social issues,” economist Mohamed El-Erian says.
👉 Read our full story on how inflation will affect the gold price.
In reaction to hotter-than-expected inflation, the gold price went up close to 2% with a peak at $1,866 an ounce yesterday. This makes for a 4,35% increase over the week for gold: “With gold being the quintessential hedge against inflation, we believe inflation is the underlying positive environment that will foster the gold market rally in the weeks and months ahead.” (Reuters)
Meanwhile, the silver price rose to $24.90 an ounce, a 5,42% increase over the week, while platinum jumped 3,55% this week, reaching $1,085 an ounce today.
While inflation is accelerating and investors are sounding the alarm, U.S. Treasury Secretary Janet Yellen remains unfazed. She reiterated inflation won't last beyond next year and said the Fed will act if needed to prevent a return to the 1970s. (Bloomberg)
"I'd expect price increases to level off, and we'll go back to inflation that's closer to the 2% that we consider normal," she said.
The crypto market is now worth more than $3 trillion following last week’s rally from the seven biggest digital currencies, with Binance Coin (BNB) and Solana (SOL) adding more than 20%. (Bloomberg)
“Bitcoin appears to be pushing out of a bullish flag pattern, and Ether is likely to confirm a long-term breakout on a close above resistance this Friday,” said Katie Stockton, founder, and managing partner of Fairlead Strategies.
Analysts say the potential of cryptocurrencies is far greater today than that of Apple or Microsoft, but the risks are far higher. (Bloomberg Opinion)
Crypto may never generate significant profits to investors, while Apple and Microsoft have large revenues and profits. Even if crypto growth continues, the value may be captured by users and developers, not by people who own coins today. Regulation may force crypto investors to take profits in crypto services rather than traditional currency,” Aaron Brown writes.
What else is happening
Evergrande, the world's most indebted property giant, is on the edge of default as it is facing a final deadline to make an offshore bond coupon payment today. (Reuters)
In recent weeks, Evergrande has been stumbling from deadline to deadline as it grapples with more than $300 billion in debt, $19 billion of which are international market bonds.
Moscow keeps a firm grip on Europe’s fuel supplies: Russia’s energy giant Gazprom has made a slow start on boosting gas supplies to Europe but analysts think it might be too soon to say if that will be enough to avoid an energy shortage in the winter. (Reuters)
Dmitry Marinchenko, senior director at Fitch ratings agency, said Gazprom would need to pump around 170 million cubic meters more of gas each day for a month to get its European storage refilled.
Elon being Elon: Musk asked his followers on Twitter to vote on whether he should sell 10% of his Tesla stake, and the majority said "yes."
The world's richest man launched the poll as he’s facing a tax bill of more than $15 billion in the coming months on stock options.
Musk said he would “abide by the results of this poll, whichever way it goes.” The results were 58% in favor of selling and 42% against.
NYC Mayor-elect Eric Adams urged schools to teach cryptocurrency and blockchain technology, stressing the need to embrace "this new way of thinking." He also said he would encourage businesses to accept tokens and pledged to build a crypto-friendly city to rival other U.S. hubs. (Bloomberg)
Bitcoin means a “new way of paying for goods and services throughout the entire globe. And that’s what we must do - open our schools to teach the technology and teach this new way of thinking,” he said.
Oh really?? A woman from Michigan found a pile of coins and cash hidden in a WWI bomb. (Coinweek)
Alarmed by the discovery, she called the police, who examined the explosive device, and discovered that the mortar shell was being used to store coins and paper money.
The bomb was reportedly filled with coins, some of it dating back to the 1800s.
See you next week!