Gold Rally Confirms Message From TIPS
Confirming the picture that inflationary expectations is one the rise, the classic inflation hedge gold has now risen above the $1,500 per ounce level for the first time ever. Another precious metal sometimes viewed as an inflation hedge, silver, has gained even more and is now at its highest level since the great 1980 spike in the price of silver.
It is thus as clear as it can get that inflationary expectations are rising. Such expectations can be partly self-fulfilling because it reduces money demand, something that has a similar effect as an increase in money supply.
And because the United States unlike certain European countries has a rising money supply, this means that U.S. inflation will likely continue to rise.