The charts that matter: inflation fears give gold a much needed boost

US inflation hit its highest in 30 years this week, driving gold and bitcoin to new highs. Here’s how that has affected the charts that matter most to the global economy.

Welcome back. 

On the cover of this week’s magazine, we’ve got the “metaverse”. Discerning readers will recognise the term from Neal Stephenson’s 1992 dystopian sci-fi novel Snow Crash. Reality and virtual reality come together in an online universe controlled by mega-corporations, in which our heroic protagonist, called, er, Hiro Protagonist, grapples with a mystery computer virus that’s proving deadly in both the virtual world and the real world.

Anyway, Facebook’s Mark Zuckerberg has decided he’s going to build the metaverse, and has rebranded his company as “Meta Platforms”.

So, what does it all mean? Is it just marketing flannel to sell more Oculus VR headsets, or will it prove to be the beginning of a whole new way of living? Nobody really knows. But what’s certain is that it will open up some new opportunities for investors. 

Elsewhere, Dr Mike Tubbs picks nine of his favourite stocks that he reckons you should buy and hold forever; David Stevenson looks at four of the best new investment trusts coming to market; and we ask – is it worth taking out private health insurance?

If you’re not already a subscriber, sign up here and get your first six issues free

In this week’s podcast Merryn – fresh from her appearance at the COP26 Fringe – is joined by John. They discuss the climate conference and talk about nuclear power (it’s a lot safer than pretty much everybody thinks), the world’s ageing population and, of course, inflation. Listen to what they have to say here.

Here are the links for this week’s editions of Money Morning and other web articles you may have missed:

Now for the charts of the week. 

Gold really took off this week after a long time going nowhere. US inflation surpassing expectations to hit a 30-year high has driven investors into the arms of the yellow metal, who hope it will provide some protection.

(Gold: three months)

(Gold: three months)

Interestingly (given that it traditionally goes in the opposite direction to gold), the US dollar index (DXY – a measure of the strength of the dollar against a basket of the currencies of its major trading partners) also put on a show of strength.

(DXY: three months)

(DXY: three months)

While the Chinese yuan (or renminbi) weakened against the US dollar (when the red line is rising, the dollar is strengthening while the yuan is weakening). 

(Chinese yuan to the US dollar: since 25 Jun 2019)

(Chinese yuan to the US dollar: since 25 Jun 2019)

The yield on the ten-year US government bond turned back up after earlier falls, as investors bet on rates rising faster (in line with inflation).

(Ten-year US Treasury yield: three months)

(Ten-year US Treasury yield: three months)

The yield on the Japanese ten-year bond halted its recent slide and also turned back up.

(Ten-year Japanese government bond yield: three months)

(Ten-year Japanese government bond yield: three months)

A move which was mirrored in the yield on the ten-year German Bund

(Ten-year Bund yield: three months)

(Ten-year Bund yield: three months)

Copper traded sideways. 

(Copper: nine months)

(Copper: nine months)

The closely related Aussie dollar fell against the strengthening dollar. 

(Aussie dollar vs US dollar exchange rate: three months)

(Aussie dollar vs US dollar exchange rate: three months)

Bitcoin hit a new all-time high of around $68,500, then retreated a little. But, as Dominic said this week, the thing about new highs is that they tend to lead to more new highs

(Bitcoin: three months)

(Bitcoin: three months)

US weekly initial jobless claims fell by 4,000 to 267,000. The four-week moving average rose by 2,000 to 271,000. 

(US initial jobless claims, four-week moving average: since Jan 2020)

(US initial jobless claims, four-week moving average: since Jan 2020)

The oil price recovered somewhat. 

(Brent crude oil: three months)

(Brent crude oil: three months)

Amazon's share price turned down as growth stocks in general suffered an inflation-driven selloff (they don’t like the risk that interest rates will go up).

(Amazon: three months)

(Amazon: three months)

And Tesla’s share price took a battering from its own CEO, Elon Musk, who asked the Twitter hive mind if he should sell 10% of his holdings. Twitter said “yes”. So that’s what he did.

(Tesla: three months)

(Tesla: three months)

Have a great weekend. 

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