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« Agnico-Eagle Mines Limited: Record Quarterly Net Income of $121.5 million | Main | SK OptionTrader Trades Show The Importance Of Timing »
Tuesday
Oct262010

Chart of the Week: Inflation in the Real World

The Real Cost of Living 27 October 2010.JPG
By Jake Weber, Editor, The Casey Report

As is often the case, there is a big difference between what the government statistics are reporting and what’s going on in the real world. According to the most recent inflation reading published by the Bureau of Labor Statistics (BLS), consumer prices grew at an annual rate of just 1.1% in August.

The government has an incentive to distort CPI numbers, for reasons such as keeping the cost-of-living adjustment for Social Security payments low. While there’s no question that you may be able to get a good deal on a new car or a flat-screen TV today, how often are you really buying these things? When you look at the real costs of everyday life, prices have risen sharply over the last year. For simplicity’s sake, consider the cash market prices on some basic commodities.

On average, our basic food costs have increased by an incredible 48% over the last year (measured by wheat, corn, oats, and canola prices). From the price at the pump to heating your stove, energy costs are up 23% on average (heating oil, gasoline, natural gas). A little protein at dinner is now 39% higher (beef and pork), and your morning cup of coffee with a little sugar has risen by 36% since last October. 

You probably aren’t buying new linens or shopping for copper piping at the hardware store every day, but I included these items to show the inflationary pressures on some other basic materials that will likely affect consumer prices down the road. 

The jump in gold and silver prices illustrates that it’s not just supply and demand issues driving the precious metals higher – the decline in purchasing power of the dollar is also showing up in the price of physical goods. It is because stashing wheat and cotton in the garage is an impractical way to protect purchasing power that investors are increasingly looking to protect themselves with the monetary metals – a trend that is now very much in motion.
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[Jake is going to be digging deeper into the “secret” inflation in the next edition of The Casey Report, which will be released just following the upcoming midterm elections. Sign up today and make the powerful trends now sweeping the global economy and investment markets work in your favor. Our 3-month, 100% satisfaction guarantee assures you’ll love the publication or get a full no-questions-asked refund. Details here.]



Back to our latest venture which was the launch of an Options trading service we are pleased to report that it is going very well so its a big thanks to all those who have signed up for it and the supportive emails that you have sent us.

Our premium options trading service, SK OptionTrader, has opened and closed 12 trades in the last 6 weeks, banking an average profit of 70% on these trades.

This brings our total of closed trades to 38, with 36 winners. This means that a subscriber who had invested $1000 in each of our 38 trades would have banked profits of $15,636.00. We have just posted a set of charts demonstrating the importance of timing in any trade on gold-prices, please click here if you are interested.

SK Chart 23 Oct 2010.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

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Reader Comments (1)

It is pretty pointless to list inflation in commodity prices and compare to the consumer price index. For example, pork is up 60%, and yet in the supermarket it is up a small fraction of that increase. Similarly bread has not gone up the 75% that wheat has, nor gold jewelery the same % increase that gold bullion has. So, the CPI increase is not really the lie that this article makes it out to be. It is possible that consumption patterns have changed leading to the CPI calculation not representing the overall basket of goods and services that the average persone buys, but it is not out by a factor of 10 or more.

October 27, 2010 | Unregistered CommenterRoscoe Taylor

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