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| Money Metals News Alert | July 1, 2024 – Gold and silver are starting off the third quarter trading in range, moving up slightly this morning.
Key economic data is scheduled for release throughout this week, and signs of further weakening could impact the general markets as well as the Fed's interest-rate outlook.
Premiums on gold and silver remain extremely low, offering investors some nice cost efficiency.
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 | Gold : Silver Ratio (as of Friday's closing prices) – 79.2 to 1 | | |
| Price Inflation Isn't as Bad as You Think! It's Worse! | | | |
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The political class keeps gaslighting us and trying to convince us that price inflation isn't as bad as we think.
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The fact is it's probably worse than we think.
People like Paul Krugman keep saying Americans don't realize how good they have it. Treasury Secretary Janet Yellen recently said she doesn't experience sticker shock when she goes to the grocery. The White House spokesperson gets on the podium day after day telling us how great the economy is.
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Meanwhile, the rest of us are struggling to pay the bills.
How bad is it out there for the average person?
Well, a TikToker who goes by Sewerlidd discovered an option to reorder a 2022 grocery list from Walmart. The 45 essential items cost $127 when he ordered them two years ago.
And what did that same basket of items cost today?
$414.
You read that right. The cost of a basket of identical goods nearly quadrupled in just two years.
That's a 226 percent increase, making the annual food price inflation rate 113 percent.
"I feel like I'm going to be sick," Sewerlidd said.
We all feel that Sewerlidd. We all feel it.
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| Why Is There Such a Discrepancy Between Government Data and Real Life? | | |
How in the world did prices go up that much when the official CPI is only running 3.3 percent? Heck, even at its peak in June 2022, CPI was just a little over 9.1 percent.
If you think the government numbers might be understating the problem, you're right.
The government CPI formula was sketchy, to begin with, and then the government revised the formula in the 1990s so that it understates the actual rise in prices even more than it used to.
The BLS calculates CPI by analyzing the total price of a "basket of goods." Obviously, the things the government chooses to put in that basket and the weight it assigns to each category have a big impact on the final CPI number.
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Under the current formula, 10.9 percent of the CPI is based on durable goods (computers, automobiles, appliances, etc.).
Nondurable goods, primarily energy and food costs, make up 26.6 percent of CPI. Services including healthcare, rent, internet and cell phone service, etc. account for the remaining 62.5 percent of the basket.
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So, why these particular divisions and percentages?
Because the government number crunchers decided it should be that way.
In other words, it's arbitrary.
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| This week's Market Update was authored by Money Metals analyst Mike Maharrey. | | |
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