A Bale in the Wind

By: Adrian Ash | Fri, Nov 5, 2010
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Savers and merchants worldwide are being forced to price scarce resources in ever-depreciating money...

BLAME speculators, poor weather, global demand, or the Federal Reserve as you choose. Either way, sugar's up, wheat's up, and cotton's new record highs are starting to hurt Chinese textile makers.

Hence this bale in the wind. Clothing and footwear prices to UK consumers rose year-on-year in September for the first time since March 1992, hitting a two-year high in absolute terms.

Uk Consmer Clothing & Footwear Inflation

Yet only now do central bankers fear deflation ahead. C'mon...where do they find these people?

"The longevity of what appears to be a speculative bubble in cotton prices," will determine 2011 profits at UK clothes retailer Next, it warned this week, adding that rising costs will force it to raise shop prices.

Over in China - which uses some 40% of the world's raw cotton output...and accounts for one-third of global textile exports - textile manufacturers face a "shortage of raw material", said industry group the China Federation of Logistics and Purchasing meantime, with last month's record-high prices "endangering" their survival.

For our money here at BullionVault, we'll blame loose monetary policy...and not just from force of habit, either. The Pound Sterling, like the US Dollar, looks further than ever from paying a positive real rate of interest - leaving both savers and merchants to price scarce resources in ever-depreciating, ever-more generously supplied currencies.

Short of an about-turn in monetary policy, the near-halving of UK clothing and footwear prices since 1989 appears finished.

Shop - and invest - accordingly.

 


 

Adrian Ash

Author: Adrian Ash

Adrian Ash
BullionVault.com

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the head of research at BullionVault, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

About BullionVault

BullionVault is the secure, low-cost gold and silver exchange for private investors. It enables you to buy and sell professional-grade bullion at live prices online, storing your physical property in market-accredited, non-bank vaults in London, New York and Zurich.

By February 2011, less than six years after launch, more than 21,000 people from 97 countries used BullionVault, owning well over 21 tonnes of physical gold (US$940m) and 140 tonnes of physical silver (US$129m) as their outright property. There is no minimum investment and users can deal as little as one gram at a time. Each user's unique holding is proven, each day, by the public reconciliation of client property with formal bullion-market bar lists.

BullionVault is a full member of professional trade body the London Bullion Market Association (LBMA). Its innovative online platform was recognized in 2009 by the UK's prestigious Queen's Awards for Enterprise. In June 2010, the gold industry's key market-development body the World Gold Council (www.gold.org) joined with the internet and technology fund Augmentum Capital, which is backed by the London listed Rothschild Investment Trust (RIT Capital Partners), in making an $18.8 million (£12.5m) investment in the business.

For more information, visit http://www.bullionvault.com

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