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Wolf Street/Wolf Richter/4-9-2021
“And companies have been reporting that they’re able to pass on those surging costs. So here we go with inflation.”
USAGOLD note: It doesn’t happen until it happens and when it happens nobody wants to believe it happened until it hits us between the eyes. From gold’s perspective, the producer price increases will ultimately translate to consumer prices and from there to the real rate of return we have talked about so much over the past few weeks. That, in turn, translates to the real rate of return which is likely to go deeply into the negative if these increases migrate to the consumer price index. (See chart below) Though gold did not go positive on Friday when the PPI was released, it did attempt a turnaround cutting its losses on the day by one-half.
Sources: St. Louis Federal Reserve, Bureau of Labor Statistices • • • Click to enlarge
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