this post was submitted on 31 May 2024
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I might accept the premise that inflation is higher than officially reported, but I don't accept the relevance of your evidence in support of that premise.
Speculation on the price definitely occurs, which is why I chose to use the one-year simple moving average instead. Measure it from January 1st, 2024, till today, and you see that it's risen 7.1%. So if inflation keeps up like it has been, and it appears to be, then it would be 14.2% higher by December 31st.
Why do you think gold and inflation are related in any significant way? Nobody buys anything with gold, so I don't see how it's relevant.
Because gold is the traditional hedge against inflation. When inflation starts running rampant, people start taking their fiat currencies and trading them for hard assets such as gold.
It's not, bonds (i.e. TIPS) and real estate are. As inflation goes up, so do coupon rates to counter inflation. As inflation goes down, so do rates, meaning older individual bonds can be liquidated for more money to free up cash for other investments.
Gold is a hedge against stocks. People think gold has value, so they buy it if they think there will be a recession. Inflation often goes up when stocks go down because the Fed slashes rates to encourage spending, and more spending (demand) drives up prices. So gold may appear correlated to inflation, but it's really more inversely correlated to stocks.
So if you want to speculate on stocks going down, gold is a decent option. But if you think inflation will go up, bonds are the way to go.
The best way to go is to ditch their system entirely and stop using money that they can just print out of thin air and tax you through inflation at all. You're right about the investment of bonds. When your bond has high rates and the rates go down, your bond can sell for more. But I don't want the US dollar at all. Actually. In fact, I don't want to buy a bond from any country, no matter where it's at, because all countries have fiat currencies.
I think you wildly misunderstood what the other commenter was trying to get at, namely that you are trying to extrapolate a gobal and relatively volatile value of a single material to the scale of the entire gobal economy. If for instance a major mine was forced to shut down then you would see a major increase in the price of gold, but no change to the economy as a whole outside of a small fraction of the aforementioned change making its contribution to the outputs of a few niche industries.
Moreover if a commodity can work as a pure measure of inflation in the economy then we would expect the gobal price index of all commodities to provide a more accurate measure, right? Actually doing that relative to USD however actually shows minor deflation since Q3 2023, which itself saw a whopping 30% deflation between 2022 and 2023.
Given these numbers do not seem at all indicative of my personal or observed change in the average price of goods and services across the entire economy, it would seem that commodity prices don’t have a significant direct correlation with inflation.