The federal government’s spending reached unprecedented levels in 2020 and they’re not slowing down.
As a result American consumers are spending more on the basic necessities than they ever have before.
And now the price of gold is surging. But economists warn it could be the beginning of a disastrous situation for the U.S. economy.
Gold prices indicate unforeseen inflation is getting ready to set in
Gold is hitting record highs and that’s leading experts to warn about trouble ahead for the US economy.
The price of one ounce of gold broke $2,000 this week for just the third time in history.
The price rose on Tuesday to $2,020, just shy of the all-time high of $2,075 set in August 2020.
Experts point to a decline in international confidence in the U.S. dollar as the primary cause for concern.
They say that this loss of confidence will lead to a continual rise in consumer prices which will only make matters worse.
Pacific Asset Management CEO Peter Schiff told The Epoch Times that “it’s happening because the markets are just starting to price in much higher future inflation than they incorrectly expected.”
That means inflation isn’t going to stagnate, but rather, it will continue to increase.
Schiff says the situation is getting out of control, and “the Fed has lost its pretend fight against inflation.”
Inflation will remain “significantly” higher than we have previously expected
The Federal Reserve is mandated with keeping the value of the U.S. dollar up and keeping prices stable.
Federal Reserve Chairman Jerome Powell has been pushing for rate hikes in recent years to reduce the pressure on the dollar.
Schiff says that no matter how long they keep the rates high, it likely won’t help.
“Inflation will remain significantly above 2 percent as far as the eye can see,” Schiff explained.
He said that gold as a vehicle for investment should be “repriced much higher to reflect that reality. The adjustment still has a long way to go.”
Citigroup recently released a report that showed gold shooting as high as $2,300 per ounce very soon.
The report suggested that “gold has found itself on solid ground so far in 2023… as the U.S. dollar’s strength tapered and inflation abated slightly as oil came off its peaks.”
These circumstances are incredibly common in a time of economic turmoil.
Geopolitical conflict and crises continue to fuel the problem
Citigroup indicated that the interest from investors will only continue as people are looking for a less volatile investment vehicle to protect themselves from economic uncertainty.
As long as things are getting worse for fiat currencies, physical metals will continue to prosper.
Geo-political challenges and global crises have pushed the trend even harder in recent years.
The last time the price of gold exceeded $2,000 was at the start of the Russia-Ukraine war in 2022.
Economic sanctions restrict how much U.S. currency governments choose to hold.
The current prices are a result of a rally that began at the end of 2022 “on signs of sovereign accumulation,” according to Adam Button, an economic journalist at ForexLive.
Button said that China and Russia are growing “weary of holding U.S. dollars” as a result of such sanctions placed on Russia.
And he also said it’s beginning to look like that weariness will spread to Middle Eastern nations next, which could result in big problems for the U.S. dollar.
US Political Daily will keep you updated on any developments to this ongoing story.