Ferocious Inflation Showing Up in Most Goods & Services

Shortages, delays, higher premiums may emerge in physical gold and silver

Mike Gleason Mike Gleason
Interview with: Mike Gleason
November 12th, 2021 Comments

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Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Gold and silver markets are registering big breakouts this week as the latest reports on inflation send shockwaves through the Biden administration.

Tuesday’s headline Producer Price Index came in at an annual rate of 8.6%. Unrelenting inflation pressures at the wholesale level are hitting manufacturers – who will in turn pass those costs onto consumers.

The latest Consumer Price Index reading released on Wednesday was also a doozy. The CPI rose by a higher than expected 6.2% -- the biggest jump since 1990.

News Reporter: Whether you're filling your tank, stocking up at the grocery store, or dining out, the cost for just about everything is trending higher. The consumer price index spiking 6.2% for October, the largest inflation surge in more than three decades. Across the country, millions of people have now left the workforce.

Steve Liesman (CNBC): The economy is reopening, and employers are scrambling for workers, and they're having to pay more money to workers. What they're doing is they're passing along those higher costs in their prices.

Investors are growing increasingly concerned about the threat of persistently higher inflation. While all the recent monetary stimulus from the Federal Reserve has helped boost stock prices, the ugly side effects in the real economy are putting political pressure on the Fed to finally curtail the flow of newly created cash.

Of course, even if Fed officials called an emergency meeting next Monday to announce an immediate taper, they would still be way behind the curve.

Though there are no signs of panic over inflation yet on Wall Street, precious metals markets are seeing some significant inflows.

We’ve been anticipating a big gold price breakout here on this podcast and in our most recent articles on MoneyMetals.com. We are now getting confirmation that a major rally is underway.

Gold advanced to a five-month high of $1,865 an ounce on Thursday. As of this Friday recording, the yellow metal comes in at $1,866, up 2.2% for the week.

Silver is breaking out to the upside as well. The poor man’s gold trades higher by about a dollar or 4.2% this week to bring spot prices to $25.26 an ounce.

Turning to the platinum group metals, platinum shows a weekly gain of 3.6% to trade at $1,086. And finally, palladium is this week’s laggard – but is still up 1.6% to command $2,102 per ounce as of this Friday morning recording.

Robust bullion buying combined with insufficient production from mints is keeping coin premiums elevated.

Many newcomers to precious metals markets are confused about how product pricing works and why physical bullion prices are different from spot prices.

It’s true that certain disreputable dealers do artificially inflate premiums, particularly on coins they tout as being “rare” or “collectible.” But that does not explain what’s occurring throughout the entire retail bullion supply chain anymore than a random gas station gouging customers explains a broad, sustained rise in the price of fuel.

Yet President Joe Biden this week vowed to address rising energy costs by going after so-called price gouging. It’s nothing more than a red herring designed to distract the public from inflationary fiscal and monetary policies that are driving up costs throughout the economy.

Anyone who blames surging average costs for products on “price gouging” quite frankly doesn’t have a clue about how markets work. The reality is that most retail businesses including gas stations, grocery stores, restaurants, and yes, bullion shops, operate on slim profit margins.

When they face rising costs of acquiring inventory and staffing their operations, they must pass those higher costs onto consumers if they wish to stay in business.

Here at Money Metals Exchange, we specialize in selling low-premium products that enable customers to acquire the most ounces for their dollars. However, some popular products unfortunately no longer fall into the low-premium category.

The U.S. Mint’s Silver Eagles are now commanding premiums over spot prices of more than $10 per coin. That represents a huge spread in percentage terms.

Some might assume that dealers are making a killing by selling these coins. The reality is quite different. We’re having to pay high premiums on the wholesale market and when we buy Silver Eagles back from customers in order to make them available for sale.

This can be confirmed by going to MoneyMetals.com and checking the “Sell to Us” price on Silver Eagles. We are currently offering those who wish to sell us these coins at least dollars over the quoted spot price of silver.

That’s good news for those who hold Eagles. It means their investment is worth far more than the paper price of silver.

But they shouldn’t necessarily be in any hurry to sell. It’s possible that premiums could rise further still as the poorly managed U.S. Mint keeps failing so badly to meet market demand. And it’s very likely that silver spot prices will move higher over time.

Those looking to acquire low-premium bullion products at this time still have some good options. Money Metals has a variety of privately minted silver rounds and bars available for not much above spot.

Due to overwhelming demand, delivery delays of up to several days will apply on most orders. There may come a day when common bullion products are unavailable anywhere – or only to those who are willing to pay exorbitant premiums.

We hope that isn’t the case. Our mission remains to help as many people as possible secure their wealth in hard money. And given the inflation alarms now sounding, there has never been a more important time to do so.

Well, that will do it for this week. Be sure to check back next Friday for our next Weekly Market Wrap Podcast. Until then this has been Mike Gleason with Money Metals Exchange, thanks for listening and have a weekend everybody.

Mike Gleason

About the Author:

Mike Gleason is a Director with Money Metals Exchange, a precious metals dealer recently named "Best in the USA" by an independent global ratings group. Gleason is a hard money advocate and a strong proponent of personal liberty, limited government and the Austrian School of Economics. A graduate of the University of Florida, Gleason has extensive experience in management, sales and logistics as well as precious metals investing. He also puts his longtime broadcasting background to good use, hosting a weekly precious metals podcast since 2011, a program listened to by tens of thousands each week.