Inflation Climbs at Fastest Pace in 5 Years

Data released last week showed that inflation, or the rate of price increases for goods and services in the US, climbed at its fastest pace in 5 years.

Rising gas prices, higher rent and medical care costs boosted the official Consumer Price Index for December, the government reported.

Most motorists have probably already noticed an increase in gasoline prices at the pump, and that trend is expected to continue. Motorists may get sticker shock in 2017, Gasbuddy.com warns. They predict that motorists will spend $52 billion more at the pump in 2017, as the yearly average for a gallon of gasoline rises 36 cents to $2.49 a gallon.

“Unfortunately, as OPEC tightened their grip on oil prices, Americans will be spending over $50 billion more on gasoline versus last, and unlike the Cubs winning the World Series, it may be years before some of the low prices we saw in 2016 come back." - Patrick DeHaan, senior petroleum analyst at Gasbuddy.com.

Energy prices have a spill-over impact resulting in higher prices for all goods and services throughout the economy. (Example: Rising transportation costs for the gallon of milk to be delivered to the local grocery story will be passed along to consumers.)

There are other factors that will put upward pressure on consumer goods and services in 2017, including the following:

  • A tight labor market is already putting upward pressure on wages.
  • Many economists warn that the fiscal stimulus and spending proposals by President Trump will push inflation even higher.
  • The high levels of liquidity in the economy after years of government money-printing leave the economy ripe for runaway inflation.

The federal government has been trying to spark inflation for the past several years by keeping official interest rates near zero. However, once inflation begins to surge throughout the economy it can become very difficult to control.

Inflation is a wealth-killer, and erodes individual purchasing power.

One way investors can prepare for its inevitable arrival is to invest in precious metals. It is well known that gold is a time-honored inflation hedge, and tends to rise as inflation creeps through the economy. What is less well known is that rare coins are an even better hedge as they tend to rise in price even faster than gold during inflationary periods.

According to the World Gold Council, “Inflation rates in major developed and developing economies are expected to rise, in part as a consequence of the financial crisis and subsequent mitigating actions such as quantitative easing. Historically, gold has been a hedge against inflation. It has retained its value through geopolitical shifts and market turbulence, outperforming most major currencies and many real assets.”

Diversifying your portfolio with even small amounts of gold can help hedge against inflation and protect your individual purchasing power in the future. Gold is a physical asset that individual investors can own outright. It is a highly liquid investment that is recognized and traded around the world. Unlike paper assets, holding physical gold has no credit- or counter-party risk. Protect your portfolio with gold now.

 

Contact Blanchard at 1-800-880-4653. We are a family-owned company that has helped clients protect and grow their wealth for over 40 years through investments in American numismatic rarities, and gold, silver, platinum, and palladium bullion.