Market insights and analysis

How dynamic, risk-managed investment solutions are performing in the current market environment

4th Quarter | 2021

Market insights and analysis

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Updates on how dynamic, risk-managed investment solutions are performing in the current market environment.

Last week, gold prices continued to move up off their 50-day and 200-day moving averages. The metal closed the week at $1,826.80 per ounce.

We ended 2021 with consumer inflation (as measured by the consumer price index) at 6.8%. What will the new year bring on the inflation front? Although the Federal Reserve no longer refers to inflation as “transitory,” it stills predicts that it will eventually ease to 2.5% next year.

However, price inflation could lead to wage inflation as the rising costs of everyday needs causes workers to demand increased income.

According to CNBC, “Salary budget increases set by employers for 2022 are higher than they have been in at least a decade, with 99% of employers planning raises and many planning increases of 5% to 6% in 2022, according to compensation consulting firm surveys. … Top companies are aggressively fighting for talent and fighting their own employees’ demands for higher pay to fight inflation. But while the Federal Reserve says wage inflation is a factor to monitor in 2022, it is not a primary inflation driver yet. Some economists aren’t as sure as the central bank that rising pay isn’t already contributing to what is known as a wage-price spiral, a labor market dynamic in which wage inflation leads to higher prices, and higher prices lead to calls for even higher pay.”

Gold has historically been a hedge against the problem of persistent long-term inflation.

Rick Andrews is president of Avant Capital Management.



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