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February 23, 2010 – Although the United States government has been attempting to downplay their existence, building inflationary pressures are starting to favor gold investment. While the Consumer Price Index showed a modest rise in January, there is growing concern that the recession of the past two years will swing towards a strong inflationary cycle.

Although prices only rose slightly in January, those figures have some artificial support and do not reflect an accurate picture of the US economy. While domestic prices only rose slightly, shelter costs, import costs and producer prices all rose, troubling indicators of what lies ahead. Shelter prices are the number that the government uses to reflect housing costs and a lower number here indicates that the full effects of the recession have not disappeared. In addition, import and producer prices jumped by an alarming 1.4% for the month, indicating that the gains by the dollar are localized primarily to the euro and not representative of the dollar’s strength against the Chinese currency or that of any other commodity-producing countries.

These distorted numbers suggest that with the increasing reliance on other countries for manufactured products, there is already growing inflationary pressure on the US economy. This pressure suggests that now is the time to take advantage of the asset protection characteristics of gold. Investors have long used gold as a hedge against inflationary pressures; the current strengthening of gold prices, its high demand and the anomalies in the US economy all suggest that now is a good time for people to look to protect their assets and consider additional gold investments. 

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Stewart Lawson

Senior Staff Writer - Gold-Investment.info