June 2012 Index

August 2, 2012

Important Note: Over the long term, the actuality is that the price of gold is not rising after considering inflation. We anticipate that over the long term gold will rise at rate of inflation. Data shows that, over the long run, the buying power of the currencies of all countries are falling when adjusted for inflation. Since the buying power of your home currency is falling, your buying power is falling — and this has been going on for decades.

For several years, we have been writing up the GBNI every two weeks in this letter. We suggest that you pay close attention the GBNI in coming weeks and months. There are many factors that point to a rise in the GBNI in coming months, including: the major changes in world food commodity prices; stable world energy prices; the fact that cotton and other apparel component prices appear to be bottoming; and the fact that shelter prices in the U.S. appear to have bottomed.

This, of course, means the cost of your basic needs: food, clothing, shelter, and energy for heating, cooling and transportation will begin to rise. It is important to remember how much the buying power of all major currencies has shrunk. Although we have been watching global economics for 50 years, we constantly have to remind ourselves of this fact. According to U.S. government statistics, CPI has risen from 30 to about 229.5 — about 600 percent — in 50 years. We know that the government is always shifting the components of the CPI to minimize its impact. Presidents Reagan and Clinton, among others, have instructed government statisticians to adjust the CPI by statistical methods. These statisticians, by changing components and the statistical analysis techniques, have been able to minimize the amount of inflation that was reported to the public.

It is a known fact that the U.S. government states that inflation has been 600 percent over the last 50 years and private forecasters — such as the well-known http://www.shadowstats.com/ — say that had government never changed its statistical approach, the components of the CPI, and the inflation rate, would both historically and currently be much higher.

After a Lull, will Prices of Basic Needs Resume their Ascent?
In the Guild Basic Needs IndexTM (GBNI), we track several components in the areas of food, clothing, shelter, and energy. Food, as we discuss above, is likely to get much more expensive unless global weather trends improve quickly. There is evidence that suggests the prices of other components that impact the prices of clothing, housing and energy have bottomed.
Given the amount of money that has been printed in recent years around the globe — and the even larger amount of money that will be printed in coming years — prices of items that are both limited in supply and necessities for living should rise. We expect price rises in such necessities will lead to a rising cost of living that will far outpace the official inflation data proffered by governments. You will be able to track this rise here in these letters and at a new web site devoted to tracking the rising cost of basic, essential needs in America: www.GBNI.info.
Consumer Price Index (CPI) data reflects the prices of thousands of items that American consumers choose to spend their money on. The GBNI reflects the changes in price of components that make up what all American have to spend money on in one way or another. Since more and more Americans are getting government assistance to help pay for these items, a continued understatement of the rising cost of living is to be expected.
We bring this to your attention, not to disparage government data, but so you can better prepare for what lies ahead. Spending patterns will be changed by what is happening in these GBNI charts and tables. If necessities take up more of your budget, discretionary spending on other items must be curtailed.

July 19, 2012

After a Lull, will Prices of Basic Needs Resume their Ascent?

In the Guild Basic Needs IndexTM (GBNI), we track several components in the areas of food, clothing, shelter, and energy. Food, as we discuss above, is likely to get much more expensive unless global weather trends improve quickly. There is evidence that suggests the prices of other components that impact the prices of clothing, housing and energy have bottomed.

Given the amount of money that has been printed in recent years around the globe — and the even larger amount of money that will be printed in coming years — prices of items that are both limited in supply and necessities for living should rise. We expect price rises in such necessities will lead to a rising cost of living that will far outpace the official inflation data proffered by governments. You will be able to track this rise here in these letters and at this new web site.

Consumer Price Index (CPI) data reflects the prices of thousands of items that American consumers choose to spend their money on. The GBNI reflects the changes in price of components that make up what all American have to spend money on in one way or another. Since more and more Americans are getting government assistance to help pay for these items, a continued understatement of the rising cost of living is to be expected.

We bring this to your attention, not to disparage government data, but so you can better prepare for what lies ahead. Spending patterns will be changed by what is happening in these GBNI charts and tables. If necessities take up more of your budget, discretionary spending on other items must be curtailed.

June 21, 2012


May 2012 Inflation Data Gives a Green Light to the Fed

People will realize it takes more notes and coins to secure basic necessities such as food, clothing, shelter, and energy. This is how a cycle of rising inflation becomes imbedded in the economy. To help you identify such changes in the consumption of basic needs, the Guild Basic Needs IndexTM tracks their prices.

June 7, 2012


What Happens to Prices During Competitive Devaluations?…

Informed investors should always be alert to the impact of money printing and currency devaluation on their buying power. In our opinion, they should hold commodities such as gold and other stores of value which will maintain their buying power in difficult economic times. We do not like to spread pessimism, but we are realists. In over 40 years of constant market observation, we have never seen more countries attempting to engineer a devalued currency, and we have never seen as many countries working to increase their money supply all at once. Both of these behaviors will cause the cost of basic needs to rise in your nation. Our readers will be able to track costs in these letters via the Guild Basic Needs IndexTM.