by David Smith, Activist Post:
The Producer Price Index (PPI) is a measure of inflation expectations by industry producers. Most investors keep an eye on the Consumer Price Index (CPI).
However, the CPI gauge is not only incomplete, it is, as U.S. Global’s Frank Holmes likes to say, “backward looking” …and, as Graham Summers pointed out, “gimmicked to the point of fiction.”
The PPI is forward looking. Rambus Chartology at shows that this logarithmic chart mapped out the biggest rise in inflation since 1982 – only two years after the first $50 silver “bubble” burst.
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The PPI’s rising wedge began with the 2008 near-collapse of the global economy and by mid-2021 had broken out of a 12-year wedge formation to the upside.
Investors and ordinary folks who hope to protect their purchasing power would do well to reflect on this chart, build an understanding of it into their decision-making, and accept what it tells us as a long-term talisman for wealth-preservation.
Most of the commodity indices, across all subsectors, e.g. the CRB, DJP, GNX, XOI as well as GYX, an industrial metals index), are now surging to the upside.
For the last 12 years or so the PPI has built a bullish expanding rising wedge with the last reversal point being the 2020 crash low. The breakout from that massive bullish rising wedge consolidation pattern came this year in March… strongly suggesting that inflation is really just getting started and will last for many years to come. Keep in mind there will be corrections along the way because nothing goes straight up or down in the markets… Always remember big consolidation patterns leads to big moves which is clearly evident on this combo chart.
The current round of inflation that started in Argentina, Lebanon, Turkey – and the U.S. – as a tame, presumably short-term phenomenon has the potential to grow in the months and years into an all-consuming, systemic generational-destroyer of wealth, both accumulated and productive capacity yet to be.
Is this the fate mandated upon those in the West who fail to recognize and effectively deal with it?
Just because gold and silver don’t always respond on cue to inflationary warnings, should you ignore several thousand years of global history to the contrary and go about your business?
Odds are that sooner than we might expect, the metals, along with a surge in premiums, and questionable retail availability, are going to join the parade.