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Category: Glint Special Report

Glint Special Report: Inflation slows, slowly

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Inflation in the US and the UK is slowing – but slower than a weak snail.

In the US, the consumer price inflation rate in November was 7.1%, down from 7.7% the previous month. In the UK, the rate was an annualized 10.7 last month compared to 11.1% in October. The core inflation rate (which excludes food and energy) in the US was up 6% from a year earlier; in the UK the core reading (which excludes not just food and energy but also alcohol and tobacco) was 6.3% against 6.5% in October.

Elsewhere inflation mostly seems to be inching down equally slowly; Eurostat expects November inflation in the Eurozone to be 10%, against 10.6% the month before; in the Baltic States, inflation is easing but remains above 20%; in Russia it fell to 12% versus 12.6% in October. Spain’s November figure was 6.8%, 0.5% less than October. Sweden provides an exception – there inflation was 11.5% last month versus 10.9% in October.

Should we give three cheers at the signs of slowing inflation, or just two because it’s taking its own sweet time getting back to a more ‘normal’ 2%/year that is ‘targeted’ by many central banks? Inflation, said one renowned economist, “is one form of taxation that can be imposed without legislation”.

Inflation steals wealth from our pockets. It’s difficult to feel gratitude that our fiat currency is not losing more than 11% or 7.7% of its purchasing power annually but ‘only’ 10.7% or 7.1%.

Moreover not everyone agrees with the US official figures – the inflation that “households are actually experiencing is raging and well in excess of reported gov’t statistics” tweeted Bill Ackman, CEO of Pershing Square, the hedge fund. In the UK the prices of food and non-alcoholic drinks in November was an annualized 16.5%, the highest since 1977, and slightly higher than October.

So the great inflation crisis of 2022 is ending, yes?

No one wants to be a party-pooper but it’s too soon to get out the party hats. 2022 is almost over, so this year’s great inflation crisis will certainly soon be done with.

But what will 2023 bring? Another black swan event, like Russia’s invasion of Ukraine?

Even if that doesn’t happen, another crude oil price spike seems on the cards, according to the International Energy Agency (IEA). Thanks to sanctions squeezing Russian supplies, and crude oil consumption growth growing by an estimated 1.7 million barrels per day in 2023, an inflationary rally in oil prices back to $100/barrel seems likely. “The full impact of embargoes on Russian crude and product supplies remains to be seen… As we move through the winter months and toward a tighter oil balance in the second quarter, another price rally cannot be ruled out” said the IEA. Falling Russian supply (as wells are shuttered as a result of sanctions) and partial embargoes on Russian oil imports will push up international crude oil prices. Commodity food prices in November were, notably, barely changed from the previous month, according to the UN Food and Agriculture Organization’s (FAO) food price index. A worsening of the Russia-Ukraine war could easily put fresh heat under cereals and edible oil prices.

The slowing inflation gave scope for the US central bank, the Federal Reserve, to ease off the interest rate pedal – just a little. Instead of putting the federal funds rate up by 0.75% (as it has done on four successive previous occasions) the Federal Open Market Committee (FOMC), which is responsible for interest rates, has raised rates by 0.5%, giving a range of 4.25% to 4.5%. The chairman of the Federal Reserve, Jay Powell, warned of more pain to come: “it will take substantially more evidence to give confidence that inflation is on a sustained downward path” he said. Consensus is that the federal funds rate by the end of 2023 will be above 5%, US unemployment will hit 4.6%, and economic growth will only be 0.5%. The Fed aims to achieve inflation of 2% but is that achievable? Or will 4% become the ‘new’ 2%?

The Bank of England (BoE) has the same 2% ‘target’ for inflation, which seems an equally distant prospect; the UK’s current inflation is five times greater than that. The BoE has now put up interest rates by 0.5%, bringing the rate to 3.5%. What is the Bank trying to do? This higher rate will do nothing to stifle such high inflation, indeed by pushing up mortgage rates it will worsen the cost of living crisis; it will cut people’s ability to spend but that will take months to make itself felt.

Understandably many British workers, especially in the public sector, have decided to go on strike. Standards of living in the UK are predicted by the Office for Budget Responsibility (OBR) to fall over the next two years by the largest amount in six decades. Nurses, ambulance crews, border officials, railway workers are all holding strike days, mostly pressing for wage increases in line with inflation, although nurses are demanding a 19% increase.

The government is adamant that such wage increases are unaffordable and would simply stoke inflation; but the cost of living crisis is hitting millions of people hard. Private sector wage rises have gone up by almost 7% on average in the past year, while public sector increases have been just 2.7%.

Some kind of compromise will need to be reached. But, as with many compromises, it will be a struggle to achieve and may leave both sides disgruntled. Uppermost in the mid of the Conservative government is that last time the UK experienced a ‘winter of discontent’, in 1978-79; the Labour government of the time was ejected a few months later and spent 18 years in opposition.


Glint Special Report: The UK’s soaring inflation

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“There may be a recession made in Russia but there is a recovery built in Britain.” With that rhetorical flourish Jeremy Hunt, the UK finance minister, wound up his Autumn Statement – a mini-Budget – delivered to Parliament yesterday.

In the UK wages are rising at their fastest rate in more than 20 years.

But wage rises are failing to keep pace with inflation. Adjusted for inflation that 5.7% pay increase (in the year to September) lags the cost of living pressure; real (i.e. adjusted for inflation) wages actually fell by 2.7%.

Now that inflation in the UK is officially 11.1% annually, wages are falling behind rising costs even faster. Frances O’Grady, general secretary of the UK’s Trades Union Congress, which has 48 member trade unions and claims to represent more than 5.5 million workers, has accused the government of overseeing the “longest squeeze on real wages since Napoleonic times”. She claimed in October this year that British workers are on course to suffer two decades of “lost living standards”.

October’s inflation figure was more than expected. Food and energy price rises were mainly responsible; according to the Office of National Statistics (ONS) food prices went up by 16.5% on an annualised basis. Clutching at straws, so-called core inflation – excluding food and energy, which are regarded as volatile – was 6.5% in October, unchanged from September.

How high might the UK’s inflation go? In August the US bank Citi forecast it would hit 18% in early 2023, substantially higher than the 13% forecast by the Bank of England (BoE), also in August. Goldman Sachs was even gloomier; its August estimate was that it could hit 22.4% in 2023.

Consumer price inflation was last above 18% in the UK in 1976. It’s perhaps predictable therefore that talk of a fresh ‘winter of discontent’ is gaining ground. The last such winter happened in 1978-79, when around 4.6 million British workers went on strike in a bitterly cold winter in support of demands for wage increases to match or exceed inflation, which in 1978 was running at 8.3% annualized.

There is one notable difference this time round. In 1978 the country was governed by a Labour government, which aimed to restrict pay increases, in both the private and public sectors, to 5%. The current Conservative government has stayed eerily quiet about trying to restrict wage increases, merely making discouraging noises about wage demands off-stage.

The Bank of England (BoE) is tasked with maintaining inflation at about 2% a year. It says its “mission is to promote the good of the people of the United Kingdom by maintaining monetary and financial stability” – on that basis its must be judged a failure now that inflation is more than five times its ‘target’. The BoE in August this year said that inflation would be “transitory” and that it expected it to rise to nearly 4% in the last quarter of this year.

It’s not just higher prices facing consumers – the money they use to pay those higher prices is crumbling before their eyes. Inflation has often been called the ‘invisible thief’ because it reduces the purchasing power of fiat money without people noticing. The difference this subtle thievery makes can be seen in all kinds of ways. The Pound Sterling has had an inflation rate averaging 5.75%/year since 1970, a cumulative price increase of 1,728.22%. What could be purchased for £1 in 1970 would require £18.28 today, simple because of inflation.

One way of combatting inflation is to use gold as money. One source suggests that when measured in Pounds Sterling, UK Houses are over 100 times more expensive than they were in the early 1950s. But measured in gold, house prices are about the same today as in 1952.

The ‘Autumn Statement’ by Chancellor Jeremy Hunt, signalled a major reverse of the proposals of his predecessor, Kwasi Kwarteng. This statement is one of the two statements the UK Treasury makes each year to Parliament upon publication of economic forecasts. Instead of a set of lavish reductions in taxation, the UK is now embarked on a subtle change to the way in which the government borrows money; no longer will the government pursue a target of avoiding borrowing for current spending, but instead will operate an all-purpose borrowing target. This means that targets can be hit by cutting investment spending and reducing capital budgets, which are politically easier to take an axe to than day-to-day spending on public services. His language was all about growth and investment, but the message was all about slowing public spending and higher taxes. The so-called ‘windfall’ taxes on oil and gas companies will go up from 25% to 35% from next year and a 45% levy on electricity generators will be introduced. The top rate of income tax is lowered from £150,000 to £124,140 a year. “We want Scandinavian quality with Singaporean efficiency” said Hunt, in relation to the National Health Service (NHS) but it could stand for his speech generally. He promised to turn the UK “into the world’s next Silicon Valley”.

Before he spoke, Hunt acknowledged that the Office for Budget Responsibility (OBR), a non-departmental public body funded by the UK Treasury, which provides independent economic forecasts and independent analysis of the public finances, said the UK is in a recession. In 2023 the OBR forecast that the economy will contract by 1.4%; unemployment will rise to almost 5% in 2024 said the OBR.

Hunt’s statement was less controversial than his predecessor’s, which threw financial markets into turmoil. He said that the government announced “fifty-five billion [pounds] of tax rises and spending cuts” – he even mentioned the need for “sound money” at one point. But with inflation further to run, and a recession already upon the country, that reference to ‘sound money’ seems flimsy. Next year will inescapably be harsh for the majority of British people.

At Glint, we make every effort to demonstrate a balanced conversation between gold, crypto and fiat currencies when it comes to purchasing power and, while we strongly believe that gold is the fairest and most reliable currency on the planet, we need to point out that it isn’t 100% risk free. While we have seen a steady increase over time, the value of gold can fall, which means that its purchasing power can also decline.

Glint Special Report: Inflation and rare honesty

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There’s good and less good news. First the good news. A central banker has come clean and delivered some rare honesty. He has acknowledged that creating lots of money and putting it into the financial system has contributed to inflation.

The Bank of England’s (BoE) chief economist, Huw Pill, told the House of Lords economic affairs committee this week that the BoE’s prolonging of its quantitative easing (QE) in the coronavirus pandemic may have contributed to the past year’s surge in inflation. The Bank’s QE programme saw it double its assets, mainly UK government bonds, to £895 billion (more than $1 trillion) by the end of 2021. QE is the process by which central banks buy government bonds, thus injecting bank reserves into the economy and increasing money supply, in turn lowering interest rates. Central banks do this to prevent a recession. But the more money there is sloshing around, and the cheaper that credit becomes, the greater the risk that inflation takes off.

That’s what has happened in the UK, the US, and other countries which have adopted QE policies. There is of course a time lag between increasing money supply and inflation creeping in – that lag is about 18 months. QE became a fashionable tool for central banks after the 2008-09 financial crash and again during the Covid-19 pandemic. The Covid-19 pandemic gripped the US and UK in 2020 and governments in the UK, the US, and elsewhere pumped trillions into the money supply to support individuals and businesses; the fear was economic recession. Yet the massive amounts of extra money pumped out have created inflation and, ironically, will produce economic recession – because central banks need to put interest rates higher and higher and those high interest rates create the conditions for recession – lower consumer spending, lower demand generally, and job losses.

UK inflation lags QE

Pill also said “we” (i.e. the UK) “are entering a recession”. That’s no news to those depending on food banks in the UK. The Trussell Trust, a charity that runs foodbanks across the UK, says that it served 40% more people between April and September this year than during the same period in 2021.

And then we have bad news, or at least not exactly good news. The latest consumer price index (CPI i.e. inflation) data came out from the US. According to this the CPI went up by an annualized 7.7% in October. This was the smallest increase since January. So a drop of 0.5% from September’s figure and 0.2% better than generally expected. US stock markets shot up on the news, the S&P500 going up by around 4%, the Nasdaq by 5.7%, and the US Dollar dropped by more than 1% against other currencies. The core CPI, excluding food and energy, rose by an annualized 6.3% against September’s 6.6%.

And now the less good news.

The stock markets leapt higher because they see the cooling inflation data as indicating that the Federal Reserve has some room to slow America’s interest rate rises. The expectation appears to be that the Fed’s benchmark interest rate will peak at around 4.8% in May 2023, against the former belief that 5% would be the high point. Some financial commentators have started to contemplate the possibility that the US will altogether avoid a recession. Americans have been cushioned against the worst ravages of the recent inflation by financial support from the government built up during the Covid-19 pandemic, but this is running low.

In any case it seems premature to celebrate the end of inflation. If the US inflation rate continues to reduce at this pace it will take until almost the end of 2024 for the Fed to return to its targeted interest rate of 2%/year. Americans have been relatively cushioned against rising prices by the government financial support gained during the pandemic, but their savings are running low. And, given international tensions – in particular the war in Ukraine, which could further disrupt supplies of energy and food and thus push up international prices – and the continuing competition for workers in the US, inflation may be hibernating.

Nevertheless, the weakening of the Dollar was good news for those who measure their gold holdings in Dollar terms – the price rose more than $45 Dollars yesterday.

At Glint, we make every effort to demonstrate a balanced conversation between gold, crypto and fiat currencies when it comes to purchasing power and, while we strongly believe that gold is the fairest and most reliable currency on the planet, we need to point out that it isn’t 100% risk free. While we have seen a steady increase over time, the value of gold can fall, which means that its purchasing power can also decline.

Glint Special Report: Inflation and Interest Rates

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The US Federal Reserve pushed its benchmark funds (base) interest rates up this week, by 0.75%, to a range of 3.75%-4%, in an entirely expected move. The Bank of England (BoE) followed suit two days later, raising the UK’s base rate to 3%, the “highest in 33 years” shouted the Twittersphere.

The two central banks appear to be in lockstep but there may be a parting of the ways from here on. While the underlying economic picture in the US still seems relatively strong, the UK stumbles closer towards a recession.

The US had a huge increase in job vacancies (seen as a proxy for labour demand) in September, with total openings at 10.7 million by the end of the month. Firms are competing to find unskilled or semi-skilled employees; wages in the 12 months up to September 2022 rose by 5%. In September wages in the US on average rose by 8.2% year-on-year. This kind of data makes the Fed’s anti-inflation drive complicated. In September, the US core consumer price index (CPI) – which excludes food and energy – rose by an annualized 6.6%, the highest since 1982. Do these figures reflect the inflation experience of consumers and businesses? After all, between May 2020 and June 2022 energy prices in the US have gone up by an astonishing 85%.

The Fed’s chairman, Jerome Powell, is desperately keen to stop raising interest rates, which obviously put up costs of borrowing across the economy and might topple economic growth. Many investors are speculating (hoping?) that at its next meeting in December the Federal Open Market Committee (FOMC), the body which sets rates, will signal that rate rises are slowing, and will put rates up then by 0.50%. The question for most investors is – what will the ‘terminal’ rate (i.e. end point) be? Will it be 4%, or might it be even higher? The Fed’s target is to achieve annual inflation of 2%. At the moment that seems very remote – so interest rates will continue to rise, the Dollar will strengthen further, and those holding debts in Dollars will find their costs rising. Meanwhile banks and other lenders, eager to take advantage of the central bank’s help for their profit margins, will put up their rates to borrowers with alacrity, but their rates to lenders more slowly. Powell said the Fed aims to “moderate demand so that it comes into better alignment with supply”. His hope for a Goldilocks outcome – neither too hot nor too cool – looks remote right now. The Financial Times put the outlook like this:

• “hike until something breaks
• try to fix whatever broke by cutting rates”

A Goldilocks outcome is just a distant dream for the UK, according to the latest reading from the BoE. It said the UK is facing its longest recession since the Great Depression (which lasted between 1929 and 1932). Inflation in the UK hit 10.1% in September and the Bank expects it to peak at 11%. The Bank said we should expect more interest rate hikes, in the hope of bringing inflation back to its target of 2%.

Christine Lagarde, president of the European Central Bank, voiced the fears of many when she said this week that a “mild recession” in the Eurozone (and elsewhere, maybe?) will not be enough to “tame inflation”.

An obvious, if tactless, question arises. Do the central bankers who are responsible in various guises for price stability have any real idea what they are doing? They have only a limited set of tools to manage the rise and fall of prices. When inflation threatens to get out of hand they raise interest rates; when an economic downturn threatens they cut interest rates.

The last time inflation was a threat was in the 1970s. Prices started climbing in the 1960s when the US funded its war in Vietnam. Then came the oil price shock. Sounds familiar. Inflation shot up to more than 20%/year. A previous Fed chairman, Paul Volcker, raised interest rates to 20% and eventually inflation fell to slightly more than 3% in 1983. But the pain was severe; almost four million lost their jobs in back-to-back recessions in the 1980s.

Given that we are now around half-way to that shocking inflation point, we ought probably to have higher interest rates – except that general elections in both the US and the UK are at most a couple of years away, and a recession is no vote-winner. Markets are febrile right now. People sense that they are strung between two unpleasant poles – rampant inflation, higher mortgage rates, poor returns on the obvious investments, or lower prices but at the cost of job losses and consequent hardship.

But maybe some central bankers are being cannier. According to the latest report from the World Gold Council (WGC) central banks bought almost 400 tonnes of gold in the third quarter of this year, four times more year-on-year. The total such buying this year is the biggest since 1967, when the Dollar was still backed by gold. Turkey, where inflation has just reached 85.51%, is the biggest reported buyer of gold so far this year, adding 31 tonnes in the third quarter, 95 tonnes since the start of 2022, bringing its total gold reserve to 489 tonnes.

Glint Special Report: 10 Years of Atlas Pulse

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Charlie Morris has been publishing his widely-read Atlas Pulse report for a decade. It all started in 2012 when he was in Hong Kong on a business trip. He bumped into Jason Cozens, an old school friend, in the hotel lobby and they got talking about gold.

Jason had set up Gold Made Simple (an online gold bullion dealership he set up before Glint). He wanted some gold commentary for his site and asked Charlie to help. He agreed but as he was working for HSBC, he did so under the pseudonym Atlas Pulse.

It led to a data-driven approach to gold analysis, which was needed at the time, as the discussion was limited to barbarous relic, conspiracy theories and the collapse of civilization. How little has changed!

Atlas Pulse created the gold regime model, the valuation model, and hard-to-create charts such as this little beauty.

Whatever you might think of gold, its aggregate value is just 27.7% of US equities, when in the past it has been over 140% during times of war or stress. Upside for sure.

In late 2013, Charlie “went nuts” about bitcoin, with the maiden call to expect an 80% price drop, but not to worry about that because it was going places thereafter. That proved correct, and he was so excited at the time that he founded ByteTree – a spin-off from Atlas Pulse, you might say.

In 2015, he was banging the drum to buy bitcoin at $300 as the 200-day moving average turned positive. More importantly, Atlas Pulse published the early bitcoin valuation metrics, such as the network to spend ratio, which was “reinvented” by Willy Woo in 2017 as the Network to Transaction Value ratio in 2017 (NVT).

One reader was Merryn Somerset-Webb, the editor of Money Week, and when Charlie left the bank in 2015, she asked him if he could write the Fleet Street Letter. That letter is still going strong seven years later.

In the end, all of these great things end up on ByteTree! It’s like a magnet for good ideas. And what would you do if you had spent several years writing about bitcoin and gold? You’d put them together in BOLD, which combines bitcoin and gold and rebalances monthly according to the inverse historic volatility (360-day) of each asset! Another Atlas Pulse spin-off.

In a sample of 500 equity ETFs, only five have 5-star trends on ByteTrend (ByteTree’s hugely popular trend analysis tool), when measured in BOLD, and they are all centred around Brazil and oil. Over half of the entire universe has 0-star trends when measured in BOLD, including the S&P 500, US Quality Factor, China, Japan, Developed Property, Quality dividend, Semiconductors and so on.

Looking to allocate to the world’s two most liquid alternative assets on a risk-weighted basis? Look no further than ByteTree BOLD.




Issue 76

by Charlie Morris


As a multi-asset fund manager by trade, I wanted to know the times you need to own gold and those you don’t. Through luck or judgement, the track record over ten years has been excellent.


  • MACRO: Dollar valuation screams bubble
  • VALUATION: Gold is 20% overvalued, but fortunately bonds are wrong
  • REGIME: Reiterating bull market#
  • FLOWS: Let’s not forget China



The recent slump in the pound was accompanied by a slump in the Yen, Swedish Krona, the Euro, and others. There was even a slump in gold when measured in dollar terms. There comes a time when you ask the question; maybe it’s the dollar?

Using purchasing power parity (long-term inflation differentials), I have valued the dollar on a weighted basis against the JPY, EUR, GBP, SEK, NOK, CHF, AUD and CAD. The dollar trades at a premium to all of them, the smallest being CHF at 3% and the largest, JPY at 48%.

The result is that the US dollar is 26% overvalued against a global basket of developed currencies. That beats 19% in late 2001 but lags the 34% premium logged in 1985. As US exporters lobbied for a weaker dollar, this led to the Plaza Accord, which brought down the value of the dollar through currency intervention.

In the end, there wasn’t much intervention. The overvaluation of the dollar caused US CPI to collapse. US interest rates generally fell faster than elsewhere, and the dollar duly fell. By 1995, the dollar was dirt cheap.

The dollar is in a bubble

Source: Bloomberg

It struck me that perhaps dollar valuation would impact gold. It turns out that it does, and by much more than the move in the exchange rate. In the chart below, I have highlighted the dollar highs to lows from the chart above with the gold price overlaid.

Gold likes a falling dollar

Source: Bloomberg

It is clear that gold likes the dollar to fall and vice versa, yet these moves can far exceed the inverse of the dollar move. In dollar bull markets, gold has been weak, and in bear markets, gold has been strong.

In period 2, you might say that a 28% gain isn’t much, but given real interest rates averaged 2.5% over the 10-year period, a positive return was a result. Normally speaking, positive real rates that high would cause gold to be crushed.

The point is that in my first decade writing Atlas Pulse, the dollar has been strong. Now it is massively overvalued, and we can look forward to a weaker dollar over the next decade. This will provide tailwinds for gold and is a good time to reiterate my forecast of $7,000 by 2030. That was published in LBMA’s Alchemist back in 2020.


There is just one small problem: gold’s valuation also seems to be high according to my model. Gold is now on a 23% premium to fair value, which is below $1,400.

Source: ByteTree Terminal. ByteTree Gold Fair Value and gold price.

The model is driven by bond yields and inflation. If you would like to understand more, I wrote this explanation for the World Gold Council.

Remarkably, I have not changed the model since 2013, and the price and fair value have seen an R squared of 0.86, which is an excellent fit. More to the point, this has been the most accurate gold valuation model in the world, and unlike most gold valuation models, the gold price is not even an input.

Valuation is all about the margin of safety. It is useful for analysing risk in the short-term and for estimating returns over the long term. Put simply, gold bought cheaply will deliver higher returns than gold bought at a premium. It’s as simple as that.

With gold in dollars, we have gold that is slightly overvalued (bad for gold), yet so is the dollar (good for gold). Might they cancel each other out?

I have added the gold premium with the dollar discount. In 2001, gold was undervalued while the dollar was overvalued. On that basis, gold in 2001 was 70% undervalued and very bullish for gold. No wonder the next decade turned out so well.

Gold risk – the gold premium plus the dollar discount highlights maximum risk

Source: Bloomberg

Then in 2011, the dollar was undervalued while gold was overvalued. That showed how gold was firmly in bubble territory and at risk. Today, with both the dollar and gold overvalued at the same time, they cancel each other out. In dollar terms, at least, gold is fine.

But the reason gold has jumped to a premium is currently the same as why the dollar has jumped to a premium. Real interest rates have surged under General Jay’s (Powell) assault on markets as he tries to recreate his version of 2008.

Rising interest rates have led to rising 20-year bond yields (gold’s sweet spot black line). That has coincided with lower expected inflation (blue), in line with softer commodities. This higher rate/ lower inflation combination has caused real rates (red) to surge. It has been an almighty move. When real rates ballooned in 2013, gold collapsed, so it’s not unreasonable that gold is down in dollar terms this year and remains under pressure.

General Jay’s assault

Source: Bloomberg

Despite the current consensus that the end of the financial world is nigh, and therefore gold must surge, there is a risk that the Fed follows through with the return to tight money, and gold falls to fair value.

There is an alternative explanation that the bond market is wrong. Regular readers also know my disdain for expected inflation derived from bond markets. I accept that expected inflation has cooled, with commodities etc., but not by this much.

Does inflation really collapse from 8.3% to 2.7% over the next two years? Probably not. In which case, my valuation model is understating fair value, and I will be delighted if that is true.

Imaginary Inflation expectations

Source: Bloomberg

You’d think the clever people buying Treasury Inflation Protected Securities (TIPS) by the boatload would have thought about future inflation. Not according to a paper by J. Gagnon and M. Sarsenbayev at the Peterson Institute.

Hat tip to James Ferguson from the Macro Strategy Partnership for highlighting this important point. The paper adds academic gravitas to what we have been thinking; that bond markets are not good predictors of inflation.

The paper shows how a 10-year average of past inflation is the best predictor for US yields. It appears that bond markets agree with Winston Churchill’s dictum, “The further back I look, the further forward I can see”.

Ferguson published this chart showing the 10-year gilt yield with 10-year average RPI + 2%. Magically, this seems to forecast the 10-year gilt yield quite accurately much of the time. More striking is how out of whack it has been since 2010.

Source: Macro Strategy Partnership

My valuation model highlights a risk that if inflation comes back towards 2%, then gold is overvalued. But maybe those inflation expectations are driven by past experience rather than any sense of what may lie over the horizon. In which case, gold is well supported and may even be undervalued.

Inflation expectations cannot ignore reality forever. If CPI keeps printing high single digits, at some point, gold will explode to the upside.


At times like these, best to check in. Historically gold has been a buy when two or more of the following have held true:

Short-term real interest rates are below 1.8%. TRUE

The gold price, measured in a basket of currencies is rising, measured by a 35-month exponential moving average. TRUE

The gold price relative to the S&P 500, measured by a 35-month exponential. TRUE (finally)

Regular readers will know how frustrated I have become around point 3. It is important that gold is beating the stock market because that attracts inflows. In recent months, money has been leaving the gold market at speed, reversing all the inflows seen in 2022.

Investors still dumping gold

Source: ByteTree Terminal. Gold held by funds since 2018.

As I said, when gold is beating the stockmarket, there is no need to sell. And when it leads the market, investors had better hurry up and buy.

The gold price is beating the S&P 500 as defined by the slope of the 35-month moving average turning positive. High time!

I came up with this idea over a decade ago, and this simple test reduced noise in what can be a volatile relationship. In early 2013, it was instrumental in downgrading gold from bull to bear market.

Gold leading equities in 2022

Source: Bloomberg

With gold down 6% this year and the S&P 500 down 20%, you’d think asset allocators would come flocking to gold, yet instead, they keep on buying treasuries. Where do they find these people?


Here is another of my old favourites that just made it into the Atlas Pulse Bumper 10-year special. That’s thanks to a chance call this morning with James Bennett, my former colleague who is on the cusp of being a major player in the gold market. I’ll spill the beans when he’s ready. James mentioned Chinese demand, and he’s right.

The blue line measures the Shanghai premium (inverted), whereby gold trades at a higher price in China than in London. When that happens, the Chinese buy gold by the truckload. Currently, the 30-day moving average is at -1.6%, which means gold is cheaper in London than in China.

Chinese gold demand

Source: Bloomberg

The Shanghai premium has been a good short-term indicator, as shown in 2013, 2016 and 2018 to the upside. Similarly, the Shanghai discount in 2020 was an excellent sell signal. Right now, the message is supportive.


Atlas Pulse first appeared on the Gold Made Simple website in 2012 before moving over to Glint a few years later. I thank Jason Cozens, Declan Cosgrove, and Tom Paterson for providing a platform in those early days.

Then in July 2021, Atlas Pulse moved over to ByteTree. Since we were planning to launch a bitcoin and gold ETF (BOLD) at the time, it made sense to cover gold. It demonstrated to people that knew us through bitcoin that we also knew a thing or two about the yellow metal.

Ten years of writing Atlas Pulse should make this issue number 120, but it is only number 76, which means, at times, I have been lazy. It’s true that in the quiet years between 2014 and 2018 when there was little to get excited about, Atlas Pulse made it to press quarterly or even less frequently. But so long as the dial has pointed towards bull market, Atlas Pulse has appeared each month.

As a multi-asset fund manager by trade, I wanted to know the times you need to own gold and those you don’t. I once carried out a study which concluded that investors should own gold around 40% of the time, avoid it 40% of the time, and sit on the fence the rest. The regime model does this effectively, with all the other things I mention, a bonus.

Time is money. An efficient portfolio owns assets that are likely to perform while avoiding those that don’t. By applying this principle, your money works harder, leading to higher returns. It’s ok to be a gold fan, yet periodically sell it to someone else for safe-keeping until you return. That is a key benefit of a deeply liquid market.

I never have, nor likely ever will, add value in short-term gold trading, but have consistently been on the right side of the long-term trend, with mixed results over the medium-term. Through luck or judgement, the track record over ten years has been excellent.


The dollar is high enough, the gold regime is fully bullish, and Chinese demand is strong. Yet the valuation poses a risk assuming the Fed follow through with the tightening programme to the bitter end. They likely won’t because the financial system will spectacularly blow up if they do. Besides, if gold returns to fair value, it may prove temporary.

Furthermore, the evidence builds that the bond market isn’t a great forecaster and inflation expectations are simply wrong. The real conundrum is why investors are selling gold when it is obvious that, at times like these, a little gold in a portfolio is unlikely to be a bad thing.

Here’s to the next decade of Atlas Pulse.


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Glint Special Report: Mario Innecco – “I’ve caught the Bank of England red handed, fudging the inflation data”

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Special Report Bank Of England

The financial markets and macroeconomics analyst reveals shocking evidence to Glint Founder and CEO, Jason Cozens that the UK’s central bank is manipulating data to make inflation look lower than it is.

Mario has been using the Bank of England’s inflation calculator for the last few years and has found it a useful tool to bring home the point that under a sound money system the currency maintains its value and there is virtually no inflation.

The Bank of England (BOE) inflation calculator goes as far back as 1209. “In my YouTube channel(3) I have focused on the period from 1821 to 1914, which is the period after the Restriction Period (1797 to 1821) which was when the Bank of England suspended the gold standard due to the Napoleonic wars”, Mario tells me.

And Mario knows the financial and monetary system. He’s spent over 30 years in the city dealing with everything from commodities and FX to equities, interest rates and government bonds. 60,000 have subscribed to his YouTube channel, that he runs under the name ‘maneco64’, to watch the informative 2,600 videos that he has posted and that have racked up over 18m views.

From 1821 to 1914, Britain went back on the gold standard and according to the BOE/IC inflation averaged -0.1% per annum and one only needed £0.95 in 1914 to buy the same basket of goods that cost £1 in 1821. “So for almost 100 years when Britannia ruled the waves the pound actually gained in purchasing power”.

“Up until June last year, which was the last time I referred to the BOE/IC I also checked the inflation rate from 1914 to 2020 and found that it averaged 4.6% per annum during that period and that one needed £118 in 2020 to purchase an equivalent basket of goods worth £1 in 1914!”

“I had also looked at the period from 1997 to 2020 as 1997 was when the Bank of England was granted independence by the Labour government and as a result given a 2% inflation target. In that 23-year period, the BOE/IC showed an average of 2.7% inflation per annum which clearly showed the Old Lady had missed its target”.

So when Mario did a recent report for his YouTube channel on the CPI he again referred to the BOE/IC and to his astonishment all the data that he had reported last year since 1914 had been dramatically changed to show much lower inflation.

“The 1914 to 2020 period now shows an average inflation per annum of 4.2% and one needing £78.53 in 2020 instead of £118 to purchase the equivalent of £1 worth of 1914 goods”.

The most shocking change for Mario was for the period (1997 to 2020) since the Bank of England was ‘granted independence’, (something we don’t think the bank really has as the Chancellor could at any time overrule the Governor of the Bank of England and the Bank’s Monetary Policy Committee).

“Instead of an average annual rate of 2.7% the BOE/IC now shows a much lower late of 1.9% which is actually under the 2% target!”

We leave it to you the reader to make up your mind about the Bank of England’s intention in appearing to revise history. Mario’s take is that along with the government they are likely to now try to make inflation look lower than it actually is.

Mario also thinks it’s probable that government or central bank officials might try and wriggle their way out of this and attempt a cover up when challenged. “Their excuse will be that they, with the number crunchers at the ONS, have found a “better” way to calculate inflation”.

Foot note:

Section 19 of the 1998 Act said:
19 Reserve powers.
(1)The Treasury, after consultation with the Governor of the Bank, may by order give the Bank directions with respect to monetary policy if they are satisfied that the directions are required in the public interest and by extreme economic circumstances.
(2)An order under this section may include such consequential modifications of the provisions of this Part relating to the Monetary Policy Committee as the Treasury think fit.


Glint Special Report: Now could be exactly the right time to buy gold, with Glint

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The asset management company and author of the ‘In Gold We Trust Report’, Incrementum recently published this compelling graph below, stating that gold is entering its ‘strongest seasonal phase’, with the suggestion that its recent lack-luster performance could now be close to a bottom before it begins to climb again. According to this graph, between the months of July and September could be the optimal time to buy gold.

Right now, the gold price is rallying against what so far this year has been a very strong dollar. Last week, we were looking at an eight month low of just over $1680/oz, but as I write this the precious metal is pushing over the $1727 mark and Wells Fargo is still supporting its prediction that it will end the year around $2050 an ounce and you can see from this next chart how some pundits are looking into the future.

Gold retreated around 6% in June and needs to surge around 17% to hit the Wells Fargo prediction, but with recession knocking on the door and gold being very reasonably priced right now against other commodities, it’s likely that investors and savers may find that right now is the perfect time to buy gold as a hedge against the coming months of uncertainty.

The US dollar has been unprecedentedly strong over the last year, but this is almost entirely due, not to any outperformance of the US economy, but rather to more weakness elsewhere in the world. Most world economies are now effectively in, or approaching, recession – as defined as two successive quarters in negative growth – a continuation of which could lead to a return to a 1930’s depression.

It’s likely that the crash in crypto, as well as the ongoing downslide for general equities will soon be joined by a slump in house prices, as mortgage rates increase along with higher interest charges, leaving disposable income falling in relative value against rising inflation.

So, in this crazy world that we live in right now, there are lots of reasons for considering gold as a potentially safer way to help protect your savings. Take the Gold Seasonality Chart above, historically, there are better months in which to purchase gold than others when it comes to a buying strategy. There are various reasons for this, notably events such as the wedding season in India; Diwali etc. which are annually repeatable patterns that have traditionally been used to help predict growth in the value of your gold.

According to, statistically speaking, September has shown the most positive returns, with July coming a close second, followed by November, but that doesn’t mean that you shouldn’t buy gold outside of these months. Clearly we’re not offering you any financial advice but, buying gold when the price is low may be a good strategy to see its growth. It’s worth noting that this year we have seen an anomaly, March is usually one of the worst performing months for gold, but on the back of Russia’s invasion of Ukraine on 24th February, we saw it doing its job protecting your savings as we watched its price spike in excess of $2000.

So, there’s no hard science about when you should or shouldn’t buy gold, but when the world economy seems to be on its uppers and we have the aftermath of the Covid pandemic, worker shortages in the US as well as geopolitical distress in central Europe; all this combined with the seasonally optimal summer gold buying months of July into September and you might consider that right now, today, is a pretty good time to top up your Glint account with some solid, allocated gold, kept safe in a non-government Brink’s vault, insured by Brink’s with Lloyds of London.

Add to this the unprecedented liquidity that Glint has brought to gold, enabling you to buy, sell, save, send and even spend the precious metal using your Glint app and debit Mastercard® then it stands to reason that (if you haven’t already) popping over to the app store and downloading the free Glint app might be the best decision you made this year… Clearly there are no guarantees, but if you need evidence that putting your money into gold is better value than keeping it in fiat currency or gambling with stocks and shares, take a look at the charts above and below – all charts from the

At Glint, we make every effort to demonstrate a balanced conversation between gold, crypto and fiat currencies when it comes to purchasing power and, while we strongly believe that gold is the fairest and most reliable currency on the planet, we need to point out that it isn’t 100% risk free. While we have seen a steady increase over time, the value of gold can fall, which means that its purchasing power can also decline.

Gold is security. Glint its key.

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