Home > News & Commentary > Has Inflation Found a New Hiding Place?

Has Inflation Found a New Hiding Place?

Thomas MacLeod wrote a great piece last week talking about how the current prices of many commonly tracked commodities and inflation hedges are no longer acting as proper measures of true inflation in the real economy. He put together a basket consisting of rubber, coal, polyethylene, wool, and pulp which should offer a more transparent view of industrial activity (and serve as a better inflation indicator) due to the lack of speculative activity in those markets because of how they are traded.

The graph below tells the rest of the story.

Shadow Index

Shadow Index

Normal Index

Normal Index

I guess this is a case where speculators are actually keeping prices down… Inflation protected treasuries are starting to look a lot nicer and this makes me feel even happier about my strategy of pursuing growing and sustainable dividends…


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