This week the government reported on two different inflation metrics: PPI and CPI.  The former is a producer level inflation report, while the latter is inflation at the consumer level.  The PPI data were relatively tame, but the CPI data came in a little hot.

The Producer Price Index (PPI) of the Bureau of Labor Statistics (BLS) is a family of indexes that measures the average change over time in the prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.  The headline PPI (for Final Demand) measures price changes for goods, services, and construction sold to final demand: personal consumption, capital investment, government purchases, and exports.  The Consumer Price Index is a measure of the change in the average price level of a fixed basket of goods and services purchased by consumers. That is the index shows the change in price levels since the index base period, currently 1982-84 = 100. Monthly changes in the CPI represent the rate of inflation.

Thursday morning’s CPI data were higher than expected at 0.4%, which shows inflation running at a steamy annual rate of 4.8% if it didn’t get any worse.   In the chart below you can see that the current year-over-year (YoY) inflation reading is 1.9%; however, you can also see that the trend is UP and quite possibly on its way to the previously mentioned 4.8%.

With this news, GOLD jumped + $12.50 per ounce in a matter of minutes.  Why, some may wonder?  Because the BEST way to protect yourself against the scourge of inflation IS TO BUY GOLD!!