CPI and Coin Prices

AValde

So the government says the prices have risen. What does it mean to coin prices ?

CPI rises unexpectedly............. is it really unexpected ?

cladking

Essentially what's happening here is that traders are expecting higher interest rates as
a result of the higher CPI numbers. This is pushing the dollar higher as people flock to it
for safety and more importantly a higher return. As the dollar recovers precious metals
are being dumped to buy more of them.

This will prove to be a self defeating strategy as inflation continues to accelerate and the
fed underreacts to it. This underreaction will likely be blamed on political causes but in point
of fact will be more caused by the fragility of the world economy. The fed will probably not
make any major move for months except to threaten higher rates. In the mean time the dollar
will have made adjustments for this and inflation will be firmly in control.

This inflation will not be the result of future problems but th result of the abuses to money sup-
ply and the structural economy since 1980, and triggered by the improving economy. Generally
coin and metals prices can be expected to overreact to such changes but this is hardly a given.