Inflation
Posted: May 17th, 2021, 3:23 pm
For the first time since the 1970's we are seeing serious inflation. The price of lumber is up over 400% this year:
https://www.nbcnews.com/politics/white- ... s-n1267475
I was buying some wood in my local wood store and the guy next to me was complaining that the price of wood was massively up since a few weeks ago. The store man said they had to update wood price every morning. This is classic 1970's inflation where prices went up day by day.
Copper too has been strong:
https://twitter.com/0_ody/status/139429 ... 40706?s=20
There have been queues for gas following pipeline problems and there is a belief in some circles that Prez Biden's spending regime is so large that it can only be tamed by some 1970's style inflation.
Many argue that gold is the only safe place now, but on a 20 year chart it has not moved much:
https://twitter.com/0_ody/status/139429 ... 86210?s=20
By contrast Bitcoin has massively outperformed gold even after the last months sell off:
https://twitter.com/0_ody/status/139429 ... 81634?s=20
It is far from clear to me if this is all opportunist price gouging or the beginning of a huge rise in commodities.
If we really are about to see serious inflation the last place to be would be Fiat currencies that are likely to be effectively de-valued, but a return of inflation would also send yields on gilts and deposit accounts sky rocketing up. Yields on gilts in the 70's were for a period well over 15% giving a great rate of return and when the anti-inflation policies hit, a nice capital gain too. Hence investments in gilts may in the future become attractive although as gilt prices rise they are for now dangerous.
Equities also will in general do very well.
Are other investors concerned and if so what are they doing to defend against inflation?
Regards,
https://www.nbcnews.com/politics/white- ... s-n1267475
I was buying some wood in my local wood store and the guy next to me was complaining that the price of wood was massively up since a few weeks ago. The store man said they had to update wood price every morning. This is classic 1970's inflation where prices went up day by day.
Copper too has been strong:
https://twitter.com/0_ody/status/139429 ... 40706?s=20
There have been queues for gas following pipeline problems and there is a belief in some circles that Prez Biden's spending regime is so large that it can only be tamed by some 1970's style inflation.
Many argue that gold is the only safe place now, but on a 20 year chart it has not moved much:
https://twitter.com/0_ody/status/139429 ... 86210?s=20
By contrast Bitcoin has massively outperformed gold even after the last months sell off:
https://twitter.com/0_ody/status/139429 ... 81634?s=20
It is far from clear to me if this is all opportunist price gouging or the beginning of a huge rise in commodities.
If we really are about to see serious inflation the last place to be would be Fiat currencies that are likely to be effectively de-valued, but a return of inflation would also send yields on gilts and deposit accounts sky rocketing up. Yields on gilts in the 70's were for a period well over 15% giving a great rate of return and when the anti-inflation policies hit, a nice capital gain too. Hence investments in gilts may in the future become attractive although as gilt prices rise they are for now dangerous.
Equities also will in general do very well.
Are other investors concerned and if so what are they doing to defend against inflation?
Regards,