Wednesday, July 17, 2019

CONTRARIAN ALERT: Only 1% Of People Think This Bullish Gold Catalyst Will Trigger

It looks like another bullish gold catalyst is falling into place from a contrarian perspective because only 1% of people think this will happen.

Only 1% Believe This Bullish Gold Catalyst Will Trigger

July 17 (King World News) – Peter Boockvar: “It was 3 months ago when Business Week had a headline magazine cover titled “Is Inflation Dead?” Today, I heard that in the BoA monthly fund manager survey, all of 1% of those surveyed are predicting an increase in inflation over the coming 12 months. It was 80% one year ago. So yes, 99% of those surveyed see flat to lower inflation from here in the next year…

This Could Lead To A Rise In Prices

I’ve argued for years that with services inflation being so sticky mostly driven by housing, medical care and tuition, all we needed was a rise in goods prices to see a more notable rise in inflation. Goods deflation is prevalent and has been for hundreds of years as long as technology progresses and business becomes more efficient and thus is a good thing. Rises in goods prices tend to be more cyclical experiences rather than secular. The question before the house is now whether the tariffs and large disruptions in supply chains are the cyclical sparks that could lead to a rise in goods prices which combined with services would lead to a rise in inflation over the next 12 months.


We saw the .4% m/o/m gain in goods prices in last week’s CPI for June and while there were methodology issues surrounding apparel, home furnishings impacted by tariffs saw price gains of note. 

We’ll of course see whether this was a blip or not and somehow the tariffs will be eaten by companies (not from what I’m hearing from both private and public companies however) but if one tries to look at an extreme view point on something and tries to determine the odds of the possibility of an opposite outcome, this could be an area.

Considering where global bond yields are and with the Fed about to cut rates because of their worry about too low inflation, let’s hope that inflation doesn’t rise from here and the 99% are right.” King World News note: If we begin to see a significant increase in inflation, this will be yet another bullish gold catalyst. 

We have already seen iron-ore prices skyrocket more than 91% in the past year, and nickel has also been on the move, surging a violent 4.26% in yesterday’s trading. KWN will keep an eye on commodity prices and update as necessary.

- Source, King World News