When Inflation Becomes Overwhelming: A Look at the CPI Report and its Implications


Traders and investors closely awaited the release of the CPI report last week, which provided valuable insights into the current state of inflation. As expected, the report indicated that inflation had surpassed expectations and recorded its largest monthly increase in August this year, with a year-on-year increase of 3.7%. Surprisingly, the reaction in the market was relatively muted, with stock market futures initially falling and then recovering throughout the day.

The Impact of Inflation on Gold, Silver, and Treasury Yields

Notably, the rise in inflation has had adverse effects on gold and silver, as investors have been drawn towards the high yields offered by Treasury bonds and the strength of the US dollar. This short-term phenomenon is a consequence of the high levels of inflation in the economy, despite the negative implications it has for the currency and its citizens.

The Broadening Scope of Inflation

While certain sectors such as goods and rents continue to experience deflation, other areas, such as healthcare and household furnishings, are still grappling with rising prices. This widening scope of inflation may create the perception that its impact is less significant in the short-term.

An Apt Analogy: The Elephant on the Economy

One way to understand the evolving nature of inflation is to think of it as an elephant wearing different types of shoes. Initially, the spike in oil prices, often attributed to geopolitical tensions involving Russia, felt like an elephant wearing stiletto heels, creating a localized and intense pain. However, as a series of economic crises and policy failures unfolded, inflation began to feel more like an elephant wearing trainers, distributing its weight over a broader area and reducing the perceived pain.

The Implications of the FOMC Meeting and the ECB's Decision

The upcoming FOMC meeting is not expected to be eventful, with Federal Reserve members reiterating their commitment to combating inflation by maintaining higher interest rates. On the other hand, the recent ECB meeting held more intrigue, as the Eurozone is projected to exceed its 3% inflation target into the following year. The committee faced a difficult decision regarding whether to raise rates to curb inflation. Ultimately, they chose to increase rates to an all-time high of 4%, causing the Euro to weaken against the dollar. This decision underscores the ECB's prioritization of inflation control over concerns about a potential recession.

The Ongoing Struggle with Inflation

Central bankers across the globe continue to grapple with the challenge of reducing inflation to an arbitrary level. Yet, this pursuit often feels like an exercise in futility, as the intricacies of economics and life make accurate predictions and solutions elusive. While central bankers rely on models and data to guide their decisions, the unpredictability and complexity of economic dynamics suggest there is no ideal solution.

The Role of Gold in Uncertain Times

Despite the uncertainties surrounding inflation and central bank actions, gold has proven to be a resilient and attractive asset this year. Its performance has remained solid even in the face of a strong US dollar and high Treasury yields. As investors, it is essential to stand firm amidst the noise generated by central bankers and data releases and continue to recognize the strength and potential of gold in portfolios.

Article Source: GoldCore News

Frequently Asked Questions

How can I withdraw from a Precious metal IRA?

First decide if your IRA account allows you to withdraw funds. You should also ensure that you have enough money to cover any fees and penalties associated with withdrawing funds.

If you are willing to pay a penalty for early withdrawal, you should consider opening a taxable brokerage account instead of an IRA. You will also have to account for taxes due on any amount you withdraw if you choose this option.

Next, determine how much money you plan to withdraw from your IRA. The calculation is influenced by several factors such as your age at withdrawal, the length of time you have owned the account and whether or not you plan to continue contributing to retirement plans.

Once you know what percentage of your total savings you'd like to convert into cash, you'll need to determine which type of IRA you want to use. Traditional IRAs let you withdraw money tax-free after you turn 59 1/2, while Roth IRAs require you to pay income taxes upfront but allow you access the earnings later without paying any additional taxes.

Once these calculations have been completed you will need to open an account with a brokerage. Most brokers offer free signup bonuses and other promotions to entice people to open accounts. However, a debit card is better than a card. This will save you unnecessary fees.

You will need a safe place to store your coins when you are ready to withdraw from your precious metal IRA. While some storage facilities accept bullion bars and others require that you purchase individual coins, others will allow you to store your coins in their own safe. Before choosing one, consider the pros and disadvantages of each.

Bullion bars require less space, as they don't contain individual coins. But, each coin must be counted separately. On the flip side, storing individual coins allows you to easily track their value.

Some prefer to keep their money in a vault. Others prefer to store their coins in a vault. Whichever method you choose, make sure you store your bullion safely so you can enjoy its benefits for years to come.

Can the government steal your gold?

The government cannot take your gold because you own it. You worked hard to earn it. It is yours. However, there may be some exceptions to this rule. For example, if you were convicted of a crime involving fraud against the federal government, you can lose your gold. You can also lose precious metals if you owe taxes. However, even though your taxes have not been paid, you can still keep your precious metals, even though they are considered the property of United States Government.

How much do gold IRA fees cost?

The Individual Retirement Account (IRA), fee is $6 per monthly. This fee covers account maintenance fees, as well any investment costs that may be associated with your investments.

If you want to diversify, you may be required to pay extra fees. These fees can vary depending on which type of IRA account you choose. Some companies offer free checking accounts, but charge monthly fees to open IRA accounts.

Most providers also charge an annual management fee. These fees range between 0% and 1 percent. The average rate is.25% annually. These rates can be waived if the broker is TD Ameritrade.

What are the advantages of a IRA with a gold component?

The benefits of a gold IRA are many. It's an investment vehicle that allows you to diversify your portfolio. You decide how much money is put in each account and when it is withdrawn.

Another option is to rollover funds from another retirement account into a IRA with gold. If you are planning to retire early, this makes it easy to transition.

The best part? You don’t need to have any special skills to invest into gold IRAs. They are offered by most banks and brokerage companies. You don't have to worry about penalties or fees when withdrawing money.

There are, however, some drawbacks. Gold has historically been volatile. It is important to understand why you are investing in gold. Are you looking for safety or growth? Is it for insurance purposes or a long-term strategy? Only after you have this information will you make an informed decision.

You might want to buy more gold if you intend to keep your gold IRA for a long time. One ounce won't be enough to meet all your needs. Depending on the purpose of your gold, you might need more than one ounce.

You don't have to buy a lot of gold if your goal is to sell it. You can even manage with one ounce. You won't be capable of buying anything else with these funds.

Who holds the gold in a gold IRA?

The IRS considers an individual who owns gold as holding “a form of money” subject to taxation.

This tax-free status is only available to those who have owned at least $10,000 of gold and have kept it for at minimum five years.

The purchase of gold can protect you from inflation and price volatility. But it's not smart to hold it if your only intention is to use it.

You will need to declare the value of gold if you intend on selling it one day. This could impact how capital gains taxes you owe for cash investments.

A financial planner or accountant should be consulted to discuss your options.


  • Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
  • The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
  • This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
  • If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
  • (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)

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How To

Gold IRAs are a growing trend

The gold IRA trend is growing as investors seek ways to diversify their portfolios while protecting against inflation and other risks.

Gold IRA owners can now invest in physical gold bullion or bars. It can be used for tax-free growth and provides an alternative investment option for those concerned about stocks and bonds.

Investors can have confidence in their investments and avoid market volatility with a gold IRA. Investors can protect themselves from inflation and other possible problems by using the gold IRA.

Investors also have the benefit of physical gold, which has unique properties such durability, portability and divisibility.

The gold IRA also offers many other benefits, such as the ability to quickly transfer the ownership of the gold to heirs, and the fact the IRS doesn't consider gold a currency.

All this means that the gold IRA is becoming increasingly popular among investors seeking a haven during financial uncertainty.


By: Dave Russell
Title: When Inflation Becomes Overwhelming: A Look at the CPI Report and its Implications
Sourced From: news.goldcore.com/when-the-weight-of-inflation-becomes-too-much/
Published Date: Thu, 14 Sep 2023 12:34:12 +0000

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