How We Know Inflation Is Here

Over the last two days, I’ve been outlining how policymakers’ responses to the COVID-19 pandemic have finally ignited inflation.

By way of review:

  1. Their recent monetary policies have been MUCH more aggressive than they were in response to the 2008 crisis ($15 trillion in six months vs. $12 trillion in eight years).
  2. This time around, a large portion of this money is actually making its way into the real economy via stimulus payments and direct lending from central banks.

As a result, inflation is beginning to appear throughout the financial system.

Telltale Signs of Inflation

The biggest sign of this is the $USD, which is breaking down.

The $USD has lost 4% of its value thus far this year. However, that number is somewhat misleading since the $USD spiked during the March COVID-19 crisis. In reality, peak to trough, the $USD is down a whopping 12%.

TheUSDollarIsDown

During weak $USD/higher inflation regimes, real assets outperform. So, it’s no surprise that inflation hedges are breaking out to the upside.

Gold was the first.

GoldIsSpiking

Now Copper is joining in.

CopperIsSpiking

Energy might be next.

IsEnergyNext

In simple terms, higher inflation will mean real assets soaring. I’m talking about things like gold, copper, oil, real estate and the like.

Tomorrow, I’ll detail a specific inflation hedge that looks poised to explode higher.

Until then…

Best Regards,

Graham Summers
Editor, Money & Crisis

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Graham Summers

Editor Graham Summers has spent the last 15 years building a reputation as one of the most sought after and highly respected investment strategists on the planet. His work has been read and quoted by former Presidential advisors, award-winning institutional analysts, U.S. Senators, and more. He’s one of the few analysts on the planet to...

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