Up the Price Pipeline, Inflation Rages at 20%

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By Wolf Richter for WOLF STREET.

We’re going to go step by step so you don’t get dizzy right away. The Producer Price Index for Final Demand – these are input prices for consumer-facing industries and are the next step up in the pipeline for consumer prices – jumped by 0.7% in August from July. This pushed the year-over-year increase of the PPI Final Demand to 8.3%, the biggest year-over-year jump in the data going back to 2010.

Prices for goods jumped by 1.0% month-over-month, including food up 2.9% (35% annualized), with meats up 8.5% (102% annualized), while energy rose 0.4%.

Prices for services jumped by 0.7% month-over-month, including a 2.8% spike in transportation and warehousing costs (34% annualized), reflecting port congestion, spiking container freight rates, backlogs, and general chaos in peak shipping season before the holidays.

Gold Leads the Way for Silver

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Last week we wrote about the gold to silver ratio. Our points were that it measures the price of one metal against the other, just as we use the dollars per ounce to measure daily metals prices, and just as we use ounces per Corvette to measure purchasing power preservation.

Also, we discussed the range of movement that silver has around gold over the past fifty years.  We laid out notes for when to buy silver against gold, and when not to.

The Long Run Relationship Between Gold and Silver

Today we expand on the gold to silver relationship. Traditionally, gold moves first, with silver following but moving relatively more. 

Since the 1970s, in all the big price moves studied, we find that although silver goes farther, gold leads the way by moving first. 

Theory of Relativity

From its source on the Tibetan plateau, the Yangtze River winds its way 3,900 miles through China and terminates near the mega-city of Shanghai.

The Yangtze is one of the world’s longest, most powerful rivers.

For more than 2,000 years, it has played a key role in Chinese history as a source of drinking water, a crop irrigator, and a transportation network.

Although the Yangtze has supported lives, it has ended many others. In 1931, torrential rains caused the Yangtze to flood its banks.

This wiped out crops and lead to the deaths of an estimated 3.7 million people, making it one of the deadliest natural disasters in history.

In 1954, another round of flooding resulted in the deaths of more than 30,000 people.

Buy Gold Before Economic Growth Grinds to a Halt

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By Andrey Dashkov, analyst, Casey Research

This week, Wall Street is watching the Fed.

On August 27, the country’s arguably most powerful financial institution provided the market with a clue as to how fast it would start tapering its asset purchase program.

In other words, we learned how soon the Fed is going to stop providing the market with a massive amount of support.

The majority of Fed officials believe that this “tapering” should start this year.

Fed Chair Jerome Powell said:

[…] I was of the view, as were most participants, that if the economy evolved broadly as anticipated, it could be appropriate to start reducing the pace of asset purchases this year.

Why would they stop this massive support program? Because, the theory goes, the economy is picking up, and the high inflation numbers we’re seeing are transitory.

My Three-Pronged Approach to Beating the Market

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By Steve Sjuggerued
The key to successful investing isn't what you'd expect...

You don't need to understand everything. You don't have to look at every number. And you can certainly know too much – which often leads to your ego getting in the way of common sense.

Instead, the key is finding the right things to study.

You simply need to figure out what really matters... what works... and then forget everything else. Everything else is just noise. And focusing on the noise will distract you from what's important.

I've spent thousands of hours researching what works in investing. And I've come up with a simple concept that has proven to be an incredibly successful way to make money.

International Crypto Adoption Is Looking Brighter Than Ever

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By Grant Wasylik

It’s been an up and down year for crypto and bitcoin, but the worst may be finally behind us…

After falling 54% from its $64,863 high in April, bitcoin now trades for around $46,000… That’s a 71% increase from its recent low just one month ago.

Ethereum now trades around $3,200… up 78% from its recent low and just 36% shy of its all-time high of $4,362 set back in May.

And the crypto market as a whole is up about 58% since in the last month… with a market cap just shy of $2 trillion.

In that time, we’ve told you to ignore the short-term, negative catalysts… like tweets from Elon Musk… and China’s crypto crackdown.

And we’ve reminded you that the continued growth of crypto mass adoption – the catalyst that actually matters – is gaining momentum like never before.

Dollar’s Purchasing Power Plunged at Constant Speed

By Wolf Richter for WOLF STREET.

The Consumer Price Index (CPI) jumped 0.5% in July from June, after having jumped 0.9% in June, 0.6% in May, for a three-month annualized rate – the three-month momentum – of 8.1%. Year-over-year, CPI jumped 5.4%, same pace as in June, and the fastest since June 2008 (5.6%), all of which had been the fastest since January 1991, according to data released by the Bureau of Labor Statistics today.

The CPI without the volatile food and energy components (“core CPI”) rose by 0.3% for the month and by 4.3% year-over-year.

The CPI measures the loss of the purchasing power – well, part of the loss of the purchasing power, as we’ll see in a moment – of the consumer dollar and thereby the purchasing power of labor. In July, this purchasing power dropped another 0.5% for the month, and for the past three months annualized, it dropped by 8.6% – “Honey, where did my big raise go?”