The Wall Street Journal and New York Times, among many others, reported that consumer prices, as measured by the Consumer Price Index, rose 3% year-over-year.
And everybody seems to accept that story, that annual inflation is now up to 3%. This is a small uptick from the annual rate that was reported in December, which was 2.9%.
Federal Reserve Chairman Jerome Powell even told Congress yesterday that we’re “close” to the 2% inflation target, “but we’re not quite there yet,” as if things were moving in the right direction. And lawmakers just nodded along. No one challenges the Fed Chairman. Not the politicians. Not the media.
But anyone who actually looks at the full inflation report can see the real story.
It’s true that the annualized inflation rate increased from 2.9% to 3%. But month-over-month, prices increased 0.5% just between December 2024 to January 2025.
That 0.5% monthly increase in prices works out to be over 6% inflation on an annualized basis.
And in case you’re thinking that was just a single month aberration, it wasn’t. Look at the data. Over the past several months, inflation has been accelerating.
Last June, inflation actually didn’t rise at all month-over-month, i.e. 0.0%.
But then from June to July, it started to increase again, to 0.2%.
And then as the months went by the month-over-month numbers stayed at 0.2%, until November when they rose higher to 0.3%, then 0.4% in December, and now 0.5%.
This is clearly a trend. Inflation is accelerating.
Yet, bizarrely, Jerome Powell claims it’s in a “good place.”
There’s literally nothing in the data to suggest that inflation is in a “good place,” and I don’t understand how he can possibly say that with a straight face.
Honestly, this might go down on the Jerome Powell greatest hits list, right alongside when he claimed there were no problems in the financial system two days before Silicon Valley Bank went bust.
The Fed just doesn’t seem to get it. The politicians who are supposed to provide oversight don’t get it. The media which is supposed to hold all of them to account doesn’t seem to get it.
But you know who does get it?
The gold market.
Gold has been making fresh all time highs for most of the last year. And yet there has been a strange disconnect between the gold price, and gold-related companies. Traditionally, if the price of gold surges, gold-related companies will also increase in value— i.e. big mining companies see their stock prices surge.
But that hasn’t happened this time around.
And that’s because investors, up until now, seem to have believed that the gold bull market was going to come to an end and that gold prices would fall.
This inflation report proves the opposite.
Inflation is not over, which is very bullish for gold. And now we’re finally starting to see investor interest in gold companies.
Take Barrick Gold, for example. They just crushed earnings expectations, are flush with cash, and announced a $1 billion share buyback.
And other major producers are seeing their stock prices surge as well.
Investors are starting to wake up to the reality that the gold bull market is just beginning. And gold companies are laughably cheap.
Again, we’ve been saying this for a while: the fact that gold is at an all time high, and gold companies are cheap, is an opportunity that won’t last.
That window may finally be starting to close.
