Market insights and analysis

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

3rd 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.

Stagflation paradox

Following the release of the U.S. employment report on Friday (October 8), gold prices shot up to the 50-day moving average and then settled back down to the support at $1,750 per ounce. The metal closed the week at $1,757.40 per ounce.

According to the employment report, the number of jobs created in September was shockingly low, just 194,000. The Bloomberg survey of economists’ median estimate was for an increase of 500,000.

The problem for the Federal Reserve now is the “stagflation paradox.” Stimulus for a weak economy (in the form of the Fed’s asset-purchasing program, which sends more dollars into circulation) is precisely the wrong action to slow down inflation.

Fortune reports, “The jobs figures risk not satisfying the Federal Reserve’s ‘substantial further progress’ criteria for labor market improvement, indicating the central bank could delay its plan to begin tapering asset purchases by year-end.

“Chair Jerome Powell said after last month’s policy meeting that ‘a reasonably good employment report’ for September would be needed to meet that test.”

Looks like inflation for Christmas. Investors may want to consider stuffing their stockings (and portfolios) with gold for the holidays!

Rick Andrews is president of Avant Capital Management.



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