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But according to Peter Schiff, CEO and chief global strategist at Euro Pacific Capital, the problem of escalating prices in the U.S. is far from resolved.
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“If Americans thought #inflation of 9.1% was bad, wait until they experience what's coming,” he wrote in a recent tweet.
Schiff, an economist known for forecasting the 2008 financial crisis, now identifies both monetary and fiscal policies as the driving forces behind the looming inflation crisis.
“Thanks to the #Fed's reckless monetary policy and the #Biden administration's reckless fiscal policy, soon consumers will long for the good old days when inflation was in the single digits.”
The U.S. hasn't experienced double-digit inflation since the early 1980s.
‘The first digit may not be a one!’
Schiff also highlighted rising commodity prices as an indication that higher inflation is on the horizon.
“Look at this chart of the CRB,” he noted in a separate tweet, sharing a chart of the CRB Commodity Index that monitors the prices of a diverse range of commodities.
Commodity prices are commonly believed to be a leading indicator of inflation. When the cost of raw materials goes up, that eventually gets reflected in the price of final products — and consumer prices go up.
Schiff cautioned, “This will likely be the biggest commodity bull market since the 1970s. By 2025 #inflation will likely be in double digits, and the first digit may not be a one!”
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The message is alarming. The last time the country saw an inflation rate of over 20% was in 1947, driven by the elimination of war-time price controls, supply shortages and pent-up consumer demand.
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Protect your purchasing power
Inflation erodes the purchasing power of your hard-earned money. Due to the link between commodities and consumer prices, investing in commodities can serve as an effective hedge against inflation.
Investors can add commodity exposure to their portfolios through commodity futures, ETFs, or the stocks of companies that operate in this area.
Among various commodities, Schiff has a clear favorite: gold.
A long-time advocate for the yellow metal, Schiff described gold as a "safe haven" from inflation in 2021 — a time when inflation rates began to climb sharply in the U.S.
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Gold is regarded as a hedge against inflation for a simple reason: It can’t be printed out of thin air like fiat money and hence is a safe store of value.
Last year, Schiff renewed his call for investors to consider gold, suggesting that the metal was underpriced.
“... I think it has to be repriced higher to reflect the reality of much higher inflation. We’re not going to go back to 2%, probably in my lifetime. It’s going to be much higher than that, and when investors come to terms with that, they’re going to bid up the price of gold much higher,” he said.
Fast-forward to the present, the enthusiasm of investors has indeed propelled the price of gold to record levels. The precious metal recently broke through the $2,200 per ounce mark, setting a new milestone.
These days, there are many ways to gain exposure to gold. You can own bullion, buy shares of gold mining companies or ETFs, or even tap into potential tax advantages with a gold IRA.
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Jing is an investment reporter for Moneywise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.
