Market insights and analysis

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

2nd 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 their upward trend, with the 50-day moving average crossing above the 200-day moving average. The yellow metal closed the week at $1,850.00 per ounce.

Three events last week illustrated the ongoing issues with inflation and the conundrum the Federal Reserve finds itself in.

The first was the consumer price index report. The index showed a 0.9% increase for June. When added to the previous five monthly reported increases for 2021, the cumulative total came to 3.6% for the first six months. If this pace continues until the end of the year, the index’s projected inflation for 2021 will be 7.2%.

The producer price index was even worse, coming in at 1.0% for June with a cumulative total of 5.4% for the year to date. If this pace continues until the end of the year, the index is projected to hit over 10% for 2021.

In testimony last week, Federal Reserve Chair Jerome Powell said that inflation, “will likely remain elevated in coming months” before “moderating.”

If “moderating” means inflation will continue but at a slower pace, then cumulative inflation could still reach runaway levels. Adding more gold to a portfolio may help hedge against this possibility.

Rick Andrews is president of Avant Capital Management.



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