The Federal Reserve’s battle against inflation is losing steam as consistently rising oil prices and growing inflation present a daunting challenge. Despite the government’s happy talk, cracks are being revealed in the US economy.
Watch this week’s The Gold Spot to hear Scottsdale Bullion & Coin Founder Eric Sepanek and Precious Metals Advisor Joe Elkjer explain the obstacles to full economic recovery, why some investors might feel delayed pain, and why buying gold is a must.
The $100 Oil Problem
In July, a year-long drop in inflation abruptly reverted primarily due to increasing energy prices. The Fed’s August CPI report confirmed the reversal as everyday costs continue rising steadily with no signs of slowing down. Given oil’s pervasive demand and influence, a surge in oil threatens to upend the US economy.
Experts anticipate costs to jump over $100 a barrel – the highest price in over a year. Saudi Arabia’s unilateral production cut is the principal driver behind the price hikes. In total, the Kingdom’s OPEC Plus group is reducing global supply by 5% at a time when the economy clings desperately to half-baked recovery efforts. Russia has imposed strict export limitations, too.
“Higher gas prices are…on the way, along with rising costs everywhere.”– Scottsdale Bullion & Coin Founder Eric Sepanek
A surge in oil prices impacts consumer costs across the board, including food, utilities, and transportation. Businesses must raise prices on goods and services as operating becomes more expensive.
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More Rate Hikes on the Horizon
As the economic forecast worsens, the Fed is abandoning its hopeful goal of a soft landing. Just this week, Minneapolis Fed President Neel Kashkari said there was a 40% chance interest rates would need to increase. Without giving meaningful details, Kashkari euphemistically suggested rates would be pushed “meaningfully higher.”
J.P. Morgan CEO Jamie Dimon is already warning investors of rates as high as 7%, which would be a considerable jump from the Fed’s current target of 5.25 – 5.5%. According to the head of the country’s largest bank, the US economy is on the brink of a comedown from a “sugar high” caused by government overprinting and overspending.
Weaknesses in the US Economy
Rampant inflation is revealing frightening weaknesses in the US economy. It’s important to remember that the most vulnerable individuals and families usually feel economic pain before reaching all corners of the economy.
“Inflation is trickle-up poverty. The lower end of it always feels it first.”– Precious Metals Advisor Joe Elkjer
Living Paycheck to Paycheck
A recent poll from Quickens revealed that nearly one-third of Americans earning $150,000 or more per year must live paycheck to paycheck. That number jumped to 36% for those earning between $50,000 to $150,000. These alarming rates of financial uncertainty are even scarier, given the threat of rising inflation.
The economic stress is reaching everyday workers and businesses. Recently, the United Auto Workers organized one of the largest strikes in American history against the Detroit Three automakers (Ford, GM, and Stellantis), and the union is threatening more strikes. These strikes exacerbate the cost of living as companies struggle with delays and higher labor expenses.
Surging Debt Crisis
Nearly every economic metric reveals the true state of the US economy. US national debt has shot past a staggering $33 trillion for the first time. Personal debt is notching new highs as consumer credit reached $1 trillion. More and more Americans are relying on credit cards to close the gap between rising costs and stagnant income.
“We’re going to have a debt crisis in this country.”– Founder Bridgewater Associates Ray Dalio (via CNBC interview)
These burdens are weighing heavy on an already vulnerable economy. There’s a limit to how much pressure stimulus packages and wishful thinking can withstand, and we’re inching closer and closer to that limit. With $100 oil and higher interest rates on the docket, it seems only a matter of time before markets topple.
The Shiny Protection From Economic Collapse
With the US economy buckling under increasing inflation, you probably can’t afford to take any chances. Bidenomics has proven to be an abject failure, and most Americans don’t trust their hard-earned money and financial stability with an inept government. Savvy investors are scooping up more gold to protect their wealth and hedge against inflation.
There’s a reason central banks have been buying gold at record rates: it has a proven track record as a reliable hedge against inflation. Now is the ideal time to buy gold before things really go south. Prices are at relative lows, but 2024 gold prices look bullish, with many experts predicting all-time highs.
Claim Your FREE Exposure Reports
Staying up-to-date with the latest economic developments can be challenging, but it’s crucial to making the right investment choices at the right time. That’s why Scottsdale Bullion & Coin provides a range of FREE reports to simplify the process of staying informed for our readers. Currently, we offer:
️️🛢️ Petrodollar Report – Uncover the story behind the US dollar’s ascent to the coveted position as the world reserve currency and follow its ongoing challenges to maintaining that status.
️️️🖨️ Modern Monetary Theory (MMT) Report – Learn about the secretive socialist fiscal policies the Fed has been pushing for decades and how they’re destroying our economy.
📉 Currency Collapse Report – Explore how currencies can collapse by understanding the reasons behind notable monetary breakdowns, and draw comparisons with today’s economic landscape.