As noted earlier today, in Consumer Prices Jump 0.3% in April, two key takeaways from the latest inflation data are that annual price gains have again reached the two percent level and recent increases have been very broad-based.
When combined with what is now generally seen as an improving U.S. economy and the well known axiom that “when higher inflation arrives, it usually arrives very quickly,” today’s inflation report could signal the beginning of a sustained move higher for gold and silver prices.
Admittedly, inflation hasn’t been much of a factor for precious metals lately, but that could soon change, particularly if the recent upward trend in the year-over-year inflation rates continues.
Recall that the gold price reached its apex at above $1,920 an ounce back in the fall of 2011 that coincided with the recent peak in inflation at about 4 percent. There were a number of other important factors at the time, but elevated inflation was clearly one of them.
This point should be clear when reviewing the chart below that includes the SPDR Gold Shares ETF (GLD) alongside the Labor Department’s measure of consumer prices.