Hot US inflation print fans fears of Fed rate hike as energy costs spread - investingLive

The latest "hot" US inflation print, fueled by spreading energy costs, is being spun by the mainstream as a reason for the Fed to hike rates, which they'll tell you is bad for gold. This is backwards thinking. What this print confirms is the persistence of inflation, a direct attack on your purchasing power, and exactly why physical metal belongs in your stack. The market's knee-jerk fear of rate hikes misses the forest for the trees: the Fed is reacting to a problem that has already taken root, and their tools are blunt instruments against a systemic devaluation of fiat currency.

Think about it logically. Bond yields are indeed rising, but as Peter Schiff correctly points out, they're rising because inflation is accelerating, making long-term bonds an increasingly risky proposition. Who wants to hold a paper asset that pays you 5% when real inflation is running at 7% or higher? You're losing money, guaranteed. This dynamic should push capital into real assets, not away from them. Gold, currently holding at 4724.7 spot, and silver at 87.74, are the ultimate beneficiaries of this loss of confidence in fiat and the financial instruments built upon it.

Historically, periods of sustained, high inflation have been kind to precious metals. During the 1970s, as the Consumer Price Index soared, gold saw remarkable gains, even as the Fed attempted to tighten. The current environment, with global supply chain disruptions exacerbated by energy costs, mirrors those pressures. While the Fed may hike rates, they are ultimately fighting against an economy awash in debt and printed money, making any significant tightening a tightrope walk that risks severe recession. Central banks themselves are demonstrating this skepticism, increasingly buying gold and reducing their faith in Treasuries and other fiat instruments. They're telling you exactly what they think of the future of these paper assets.

For your stack, this hot inflation report should be seen as a reaffirmation of strategy. Any dip in spot on the back of misguided rate hike fears is a gift. Physical demand often disconnects from paper spot in these environments, with premiums widening as more people wake up to the reality that their paper wealth is eroding daily. The silver market, with its relatively small size and growing industrial demand, is particularly susceptible to upside volatility as global production continues to face impairment. The gold/silver ratio currently sits at 53.8:1, still offering an attractive entry for silver stackers given its historical performance in inflationary bursts.

We will continue to watch how energy prices transmit through the broader economy, as that will be the primary driver of persistent inflation.