Early warning signs of inflation

As discussed in today’s radio Weekly Wrap, there are very early signs all around the world that inflation is coming back.  When London’s The Telegraph runs a headline “Bond crash across the world as deflation trade goes horribly wrong” it gets your attention.” and reports of $1.2trillion of paper losses just in the last few months, you take notice.  Per the Weekly Wrap, PIMCO (the world’s largest bond fund manager) just dumped 2/3 of its US Treasuries and is another tangible sign of a bond rout that has started globally with unknown consequences.  After the US increased monetary supply by 400% in the 6 years since the GFC and similar money printing exercises repeated in Japan, EU, China and UK it should come as little surprise, but it is the pace of it that may surprise as that is quite simply an unprecedented increase in money (we prefer currency, gold is money).  Already Oxford Economics is reported narrow M1 supply is expanding at an alarming rate of 16.2% and even the wider M3 at 8.4%.  In the US M3 has just returned to post war averages of over 8%.  And all this before the Fed supposedly increases rates causing growing concerns of a much more serious bond rout.  One only has to look at what gold and silver did in the 70’s as inflation took off.  Remember this recent must read article too which applied the 70’s to now and forecast over $20,000 gold.  Finally this is how The Telegraph’s Ambrose Evans-Pritchard summarised it:

“The bond ructions this week are an early warning that it will not be easy to wean the world off six years of zero rates across the G10, and off dollar largesse on a scale never seen before. Central banks have no safe margin for error.”