Weekly Digest: U.S. Inflation at 40-Year High, German Recession Risk


3 minutes read

Apr 14, 2022

High US inflation represented by a picture of a 100 dollar bill with Benjamin Franklin

14/4/22: U.S. inflation hit 8.5% in March, the highest since 1981, EU ban on Russian gas could spark a sharp recession in Germany, Ukraine peace talks “at a dead end.” And more.

Investment news

The prices of precious metals have been supported by the continued tensions in Ukraine and the broadening inflationary pressures.

Here’s how the prices of gold, silver, platinum, and palladium have changed over the past week:

A table that shows how precious metals prices have changed over the week

Inflation Alert 1: U.S. consumer prices hit 8.5% in March, the highest level since 1985 amid surging food, energy, and shelter costs. (CNBC)

Meanwhile, real worker earnings fell by 0.8% during the month as rising costs of living outpaced otherwise strong pay increases.

Inflation Alert 2: U.K. consumer prices reached a 30-year high of 7% in March, the highest level since 1992, mainly due to rising energy costs. (CNBC)

Because of the global supply shock caused by Russia’s invasion of Ukraine, inflation is expected to spike higher and might take longer to moderate, according to Ambrose Crofton, the global market strategist at JPMorgan Asset Management.

“As well as the obvious impact the war has had on consumers’ utility bills, Russia’s key role as a commodity producer extends beyond just energy to many industrial metals and fertilizers. As a result, consumers are likely to see further upward price pressure in goods and food products in the coming months,” Crofton said.

(Brutal) Inflation Alert 3: Turkey's annual inflation rate is expected to rise to 61.5% in March. (Reuters, CNBC)

Just to give you an example of how bad the situation is, let’s look at the price of plums:

The humble green plum ("erik" in Turkish) symbolizes the arrival of spring for Turks.

However, in recent years, rising prices and the falling value of the Turkish lira have swiped this "harbinger of spring" from Turkish tables.

Why? Because a kilogram of “erik” now costs 690-750 Turkish lira ($47-$51) - an amount many Turks would usually set aside for rent.

Turkey’s soaring inflation represented by a picture of the Turkish flag and Turkish lira banknotes stacked up

Anxiety about elevated inflation pushed European stocks down for a third straight session on Wednesday. (Reuters)

The pan-European STOXX 600 index dropped 0.1%, with retail and travel and leisure shares offsetting gains in oil & gas and mining stocks.

Read our SPOTLIGHT to see how high inflation could impact the global economy and gold price.

Germany risks falling into recession if gas supplies from Russia are suddenly cut off, German leading economic institutes said. (Reuters)

"If gas supplies were to be cut off, the German economy would undergo a sharp recession," said Stefan Kooths, vice president and research director business cycles and growth at the Kiel Institute for the World Economy.

In its monthly report, Germany's Economy Ministry said the war in Ukraine "poses substantial risks" for the country’s economy, but it’s hard to calculate the effects: "They depend heavily on the duration and intensity of the war," the ministry said.


Europe’s Gas Dilemma: Many have criticized Europe's hypocrisy in condemning Russia's war crimes while continuing to provide Russia with cash it requires to continue its war in Ukraine. Strangely enough, Russian President Vladimir Putin may be the one to put an end to this “cognitive dissonance.” (Bloomberg Opinion)

A graph showing Russian natural gas flows into Europe via Ukraine pipelines reached a four-year high this week
A graph showing Russian natural gas flows into Europe via Ukraine pipelines reached a four-year high this week

Bloomberg’s Javier Blas warns Putin will likely cut off Europe’s gas supply before it can do it itself: “This will be healthier for Europe and the world in the long run, but it will be painful. Like, recession painful.”

What else is happening

Putin says Ukraine talks have hit a dead end, mocks the West for “failing to bring Moscow to heel.” (Reuters)

"That Blitzkrieg on which our foes were counting did not work. The United States is ready to fight with Russia until the last Ukrainian - that is the way it is,” Putin said.

Read our SPOTLIGHT to find out how to protect your savings during geopolitical tensions.

burning tires on a street of a town in Ukraine devastated by the war

The World Bank is preparing a $1.5 billion aid package for war-torn Ukraine, as well as plans to help developing countries struggling to keep up with rising food and energy prices. (Reuters)

"The World Bank was created in 1944 to help Europe rebuild after World War Two. As we did then, we will be ready to help Ukraine with reconstruction when the time comes," World Bank President David Malpass said.

And finally…

In case of emergency, break glass! 🔨 (Le Figaro)

The famous Swiss watchmaker, Graham Watchmakers, has incorporated a 1 g gold bar into the dial of some of its signature Chronofighter Vintage watches.

This Emergency Gold watch even comes with a mini hammer to break the glass in case of emergency!

Yet another proof that gold is the ultimate safe haven.


See you next week!


Buy gold - buy silver


The Spotlight

The free newsletter helping you understand how to build your wealth.


Get the Spotlight

The free newsletter helping you understand how to build your wealth.