My Panera Barometer is on the move. Let me explain. A colleague and I have periodic lunches at the same Panera Bread café located half way between our two offices. We both order similar lunches each time and thus are accustomed to the total amount of the ticket. Panera has just increased their prices by 5% across the board and other local restaurants are doing the same. This is occurring all over the product spectrum. As a matter of fact, John Williams’ Shadowstats.com reports July’s Annual Inflation: 3.6% (CPI-U), 4.1% (CPI-W), 11.2% (SGS). SGS’s (Shadowstats Government Statistics) 11.2% is based on the pre-1990 government method of calculating inflation. They continue to report the raw numbers that allows John Williams to calculate an accurate comparison.
Because of the interconnectedness of the global financial network, money flows in microseconds around the world. Lately, the Swiss Franc has gained favor among investors for safety reasons. The problem is that the demand for their currency causes the currency price to go up making their exports more expensive and reduces demand. This forces the Swiss central bank to print more Francs to lower the exchange rate. Nobody wants their currency to be too expensive. The result is a currency war. Since there is no international gold standard, central banks can simply fight it out with money printing, flooding the market with more dollars, francs, yen, etc. However, the commodity prices will reflect this inflationary spiral with gold being the primary barometer. This is why there is such focus by governments to manipulate the price of gold, and to a lesser degree the price of silver.
If we took the amount of gold the U.S. Government claims to have and calculated the ratio of U.S. Dollars to gold reserves. gold would need to be at an official exchange rate exceeding $12,500. This in turn would pull the silver price up with it. Underlying precious metal stocks would appreciated in value as well. On the way up, the average investor would finally enter into the precious metal investing space. Result? A parabolic rise in prices and return on investment for those who invested early. What could keep this from happening? A global depression. Investors would sell anything (including gold and silver) to eat and survive. When the market drops, leveraged investors have to raise cash by any means including selling their good investments such as gold and silver.
This decade is going to be a wild ride for investors and those with heart problems will be stress-tested. Maalox stock should go up due to the high demand. Investors may find “religion” soon.