Yes, Inflation is Transitory!

Yes, inflation is transitory! It’s transitioning higher! The CPI rose 1.3% month over month while the Core rate was higher by 0.7%. Both were two-tenths percent higher than expected and with that, some Fed economists are talking about a full 1% increase in the Fed Funds rate in September. Energy prices rose 7.5% month over month and 42% year over year. Food prices grew by 1% month over month and 12.2% year over year. These are serious issues for average Americans, a large percentage of whom live paycheck to paycheck and many times those paychecks don’t begin to allow wage earners make ends meet. Woke Democrats may not give two hoots about middle class Americans who have not graduated from an Ivy League College, but they sure do care about retaining their power through the ballot box. So Democrats are really worried about losing power in November because of inflation. Which is why David Stockman said on my radio show that he thinks the Fed isn’t even thinking about pivoting away from QT. While indeed the Fed was the brainchild of powerful rich bankers pretending to hunt ducks on Jekyll Island, they did have to go through Congress to manipulate the creation of the Fed. Politicians will seek to blame anyone but themselves and so David’s view is that visions of rabid masses of starving Americans coming at them with pitchforks and torches has Jerome Powell and his fellow partners in crime seeking to slay inflation at all costs. Americans are mad and they won’t take it anymore. That is showing up in President Biden’s polls, which show him to be the most unpopular President in history! 

But the cost is going to be unbearably high as the Fed and the Biden Administration with its green energy and sanctions against Russia push us into an economic depression. Then as Alasdair Macleod has been warning, there is a growing potential for a collapse of the euro because for various reasons the European Union is unable to raise rates to keep up with the Fed. Same is true, even more, for Japan. Michael Oliver as well as Alasdair have made the point that this issue alone may force Powell to pivot.

Time will tell, but I am very concerned that something is going to break in the U.S. and global economy if the Fed keeps pushing. On the other hand, if they don’t burst the everything bubble, there is a growing chance of a crack up boom hyperinflation. With regard to gold and gold shares, those markets are incredibly oversold. Bob Moriarty wrote an article that you can access via showing that sentiment readings are at or near low levels that have always represented turning points. Michael Oliver wrote on Thursday that this latest takedown for gold is likely to be seen in hindsight as more like the event in 2008 than that of 2013, as many are suggesting. What I can tell you is that the junior gold shares are looking extremely attractive to me. You can sense which are among my favorite by checking my current allocations noted above. The guys at Crescat said in their YouTube video today that Snowline may be on to one of the greatest gold discoveries in North American history. But there are many others that are extremely exciting. When the gold market turns, these micro-cap stocks can quickly become moonshots. Please pay attention!

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.