Today’s blow-out CPI numbers have catapulted gold through the resistance levels that had kept it in check since the summer.

November 10, 2021

Dear Fellow Investor,

Today’s CPI numbers were so hot, I wouldn’t have been shocked to see the Labor Department serve them up with pot holders.

Say goodbye to the “transitory inflation” narrative. It was always a farce, and now everyone knows it.

That reality was dealt to the markets today with the figurative force of a two-by-four to the head.

The Consumer Price Index rose 0.9% on a headline basis from last month (fully three-tenths more than consensus expectations), with the core rate rising 0.6% (which was two-tenths higher than expected).

Those translate to a 6.2% headline inflation rate year-over-year, and a 4.6% annual increase on a core basis.

These were blow-out numbers, and represented the greatest inflationary surge in over 30 years.

The market reactions were...let’s say “interesting.” U.S stock indices fell, and both the dollar and 10-Year Treasury yields rose, apparently in anticipation of more-aggressive tightening from the Fed. (The futures markets are now implying a 60% chance of an initial Fed rate hike not in 2023, but by next June.)

And gold? It’s up over $20. Silver has soared $0.80, or 3.3%, to bump up against the key $25 level that could serve as a technical trigger for much higher prices.

What’s interesting about all this is that gold and silver have been trading at the mercy of the dollar and yields. If even one of those indicators was rising, it was a safe bet that gold was dropping.

And of course, the dollar, yields and everything else have been moving in line with expectations for Fed monetary policy. So even higher inflation numbers haven’t been helping gold much (until today), because they implied a more-hawkish Fed.

That correlation has been broken today, with a vengeance.

More To Come...

The fact that gold may now be regaining its historic role as an inflation hedge is very encouraging for gold bugs, because there’s much more inflation to come.

Consider that food inflation, while up 0.9% month-over-month, is going to accelerate even more, as fertilizer prices are soaring. Also, significant wage hikes are only just beginning, and these will add to goods and service costs at every stage of the supply chain.

More immediately, we can expect a huge boost to come from housing in the CPI reports ahead. As our friend Peter Boockvar noted this morning:

So, higher inflation now implies much higher gold and silver prices.

Importantly, today’s move in gold has powerful technical implications. Prior to today, it had nosed up against strong resistance around $1,835, a level that had repeatedly turned back rallies since this past summer.

Now gold has blasted through that resistance, implying a move into the low $1,900s.

And, as I noted, silver is threatening to break through the key $25 level that could send it much higher.

Considering that this rally in gold and silver began, as expected, with the Fed’s announcement of QE tapering and has now gone on afterburner with the higher inflation numbers, the move is rooted in compelling, long-lasting fundamentals.

At the risk of understatement, that’s exciting for those positioned in metals and mining shares.

So how to play it?

First, if you’re not already subscribed to Gold Newsletter, now’s the time to do so. We’re putting our November issue to bed today, and it will feature a very exciting new gold stock recommendation, as well as coverage on many other junior mining stocks.

You can subscribe to Gold Newsletter here.

Second, the recordings from our recent New Orleans Investment Conference are now posted and available.

This access includes days of high-quality recordings featuring the picks, predictions and macro analyses of dozens of today’s top experts, including Dr. Ron Paul, Jim Rickards, George Gammon, Peter Boockvar, Jim Iuorio, Rick Rule, Doug Casey, Danielle DiMartino Booth, Grant Williams, Brent Johnson, Tavi Costa, Dave Collum, Lawrence Lepard and many more.

You can get full, on-demand access to all this invaluable content from the 2021 New Orleans Investment Conference, plus access to follow-up interviews, all for one low price.

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Whatever you do, make sure you’re well positioned in this sector now. We’re facing a new, multi-year bull run in gold, silver and mining stocks...one that could rival or surpass the fortune-making bull market of the early 2000s.

All the best,

Brien Lundin
Editor, Gold Newsletter
CEO, the New Orleans Investment Conference