Metals Minute 66: High Inflation, Interest Rates and Buying Gold

It has been a mixed week for metals, with gold up 1% to $1,861, silver up a fraction to $23.48, platinum down 1% to $1,035, and palladium down 3% to $2,263. Looking out further to the 1-year mark, we have gold leading, up 4%, silver down 14%, platinum down 18%, and palladium 6% lower than a year ago.

A lot is going on in terms of inflation, interest rates, talks of war, and precious metals. Even as uncertainty clouds the discussion of when and how high interest rates are predicted to rise, inflation becomes increasingly evident. Gold and silver are beginning to respond higher to inflation, regardless of when the Federal Reserve takes action. Contrary to oft-repeated views, rising interest rates often coincide with explosive upward moves in gold and silver prices.

But it is not interest rates that trigger the move higher, and it is inflation. Gold doesn’t need a committee decision to move higher, and it only needs inflation.

We also have political shifts happening across Central and South America, which are beginning to affect mining operations negatively and restricting the future availability of metals, which bodes well for those who own precious metals.