Today, I want to leave you with some thoughts with charts on inflation and, more specifically, 3 key inflation indicators to watch in 2025.
I call these indicators my trifecta of inflation. Let’s begin with the gold to silver ratio.
Looking at the chart above, we can see that the ratio favors gold. It’s 92.28 times greater price than silver shows no inflation.
What it does show is that gold is still a flight to safety investment.
It is historically high which means silver has room to catch up. And it must if we are to think more inflation is on the way, or stagflation. And not recession.
Should the ratio break down under 87, that could be a sign for more inflation pain and a great trade for silver.
The next important inflation indicator to watch is the dollar. A precipitous decline would be noteworthy, and most likely spur silver.
To date, the dollar is weak, but not critical.
Under 103, that could be the start of a bigger move down.
And while we still consider oil an X factor, you should watch that too. Over $80 that would also be disruptive and inflationary.
However, the 3rd in my trifecta of inflation indicators is sugar futures.
Sugar is our 3rd (and final) inflation indicator as it is a global food staple.
It is tied to oil as well. But its true nature comes out when sugar is in shortage during stressful economic times.
It measures both social and political distress. Folks will fight over the last pound of sugar in a supermarket. They do not do that with eggs.
It also measures the balance between supply and demand.
Looking at the chart, sugar through 20 cents a pound is notable.
After Covid sugar peaked at 28 cents a pound. That is the number to watch.
Looking at the trifecta, we have potential to see much higher inflation, but right now, it is mixed with no major concerns at this time.
Twitter: @marketminute
The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.
