'Gold and silver advances on inflation concerns'

By Eric McWhinnie
On Thursday, Gold and Silver prices were essentially unchanged. Despite positive economic data being released, gold prices settled at $1,654, while silver closed at $30.51. Newly released inflation data from the Bureau of Labor Statistics shows that the prices consumers paid in December were roughly the same as they paid in November. However, investors are still showing a growing concern for inflation.

The monthly Consumer Price Index for all Urban Consumers survey shows a zero percent change on “All Items” on a seasonally adjusted basis, but a drop in energy commodities (-1.9 percent) helped to dampen the numbers. The inflation picture is somewhat clearer when using annual comparisons between 2010 and 2011.



As a result, some turn to Gold and Silver for inflation protection, even central banks, as they became net purchasers of gold for the first time in 20 years in 2010. Unlike current fiat currencies, both precious metals have survived thousands of years of global turmoil. Due to monetary policies over the past decade, gold prices have climbed from $250 to $1,660 per ounce today. Meanwhile, silver prices have surged from $4.50 to over $31.



Even though gold and silver have experienced a remarkable move, it comes at the cost of the U.S. dollar. As nations continue to struggle with a global insolvency crisis, central banks continue to provide stimulus measures that devalue fiat currencies. A growing consensus of economists predict that the Federal Reserve is likely to inject another $1 trillion worth of easing to stimulate the economy. Such a move, will provide yet another blow to the U.S. dollar, and another catalyst for higher gold and silver prices.