Gold Becomes Inflation Hedge As Bond Markets Manipulated By Central Banks

Gold Break-Out Coming?

An interesting dynamic taking place in financial markets on Thursday as Gold saw some substantial buying interest up $22 to the $1295 an ounce area. It is obvious that inflation is picking up considerable steam as we just blew a 0.4% on the CPI Inflation Breathalyzer and believe it or not the 10-Year Yield is at 2.57% yield, welcome to mispriced and manipulated markets in the Central Bank manipulated markets era that we call free markets or bubbles galore.

Hot Philadelphia Fed Survey

At any rate since bonds are being bought and only sold when there is risk associated, i.e. Employment Reports, Fed Meetings, 10-Year Bond Auctions, Inflation Reports and as soon as those are finished the buying frenzy continues now that risk to their positions has subsided and they can load up on more free money chasing that Yield Carry Trade.

However, look at the Philadelphia Fed Survey – inflation is picking up, for example the prices paid component was 35, this is an extremely hot reading so there is definitely hotter inflation in the economy than the Fed is willing to admit. The small business optimism metric is near record highs, and job creation is really percolating right now all fueling into the hotter inflation equation. 

Gold as an Inflation Hedge

Therefore Investors need some way to hedge their portfolios to this trending inflation concern, and since Bonds are massively manipulated they are desperate for inflation hedging vehicles and believe it or not it looks like Gold is starting to serve as this substitute for inflation hedging. Whereas investors were weary of using Gold due to its lack of Yield and the Central Banks raising rates; however since they are stalling on that front for the time being, maybe investors feel more comfortable using Gold for this inflation hedging purpose.

Gold Highly Manipulated Market

Gold has its own problems with manipulation, it was almost a daily occurrence that traders would make a small fortune smashing through stops every 7:30 am trading day like clockwork, and there are many other manipulative trading techniques utilized that require an entire article just on that subject alone! Financial markets really are as wild west as ever, and they will only get worse once the Central Bank Shenanigans come back to bite financial markets and volatility shoots off the charts!