The Fed’s Federal Open Market Committee recently released a statement saying, in part, “policymakers signaled that they’re worried that inflation has fallen too low, with the ‘core’ consumer price index rising year-over-year at a rate of less than 1.0% in recent months, a 44-year low.”
Inflation is too low? That’s a novel idea. Those of us who had loans and mortgages back in the 1980’s remember just how damaging inflation can be.
The Committee went on to say, “Measures of underlying inflation are currently at levels somewhat below those the committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability.”
There is something wrong there. How can inflation contribute to price stability? That makes no sense at all. The only way prices remain stable is to have zero inflation.
Anyway, it’s this kind of talk from the Fed that has traders and private investors buying more gold.
Gold has always been the best hedge against inflation, and when the Fed itself is saying inflation is too low, it’s definitely time to put more of your wealth into a gold.
Is now a good time to buy? Tough call, as gold has been rising fast for some time now. History tells us it has to peak at some point.
But with the Fed’s apparent desperation coming through loud and clear, that peak may be higher than any of us can yet imagine.
Yes, keep buying. Average it out, buying during the pauses and troughs in what appears to be an ongoing rise in price.
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