Believe The Hype, Inflation Really Is Coming This Time [SPDR Gold Trust, iShares Barclays TIPS Bond Fund, iShares Silver Trust]

inflation“Inflation is coming!” We’ve heard it for what seems to be forever. Then came the report of the March leading economic index for March. It increased by 0.8% after rising 0.5% in February. It’s just the latest data point in a series of indicators that Hugh Johnson of Hugh Johnson Advisors says is evidence that this time inflation really is coming.

“We’re not talking about 3% or even 4% inflation,” Johnson told Breakout, “but we are talking about inflation rates as measured by the consumer price index of say 2.1% in 2014 and 2.3% in 2015. That’s stronger than the consensus and certainly stronger than Janet Yellen thinks is on the way.”

So what does that mean for Yellen and a Fed who have kept rates effectively at zero for as long as many young investors can recall?

Johnson says:

I think when you get to about the middle of 2015…you’re gonna start to see unemployment rate which are gonna be very low, somewhere around 6%, you’re gonna see inflation rates as I mentioned are gonna be a little bit higher and that’s when the Federal Reserve is gonna consider very seriously about raising it’s target for the federal funds rate from the 0-25 basis points to as much as the 25-50 basis point range.

That would force interest rates across the board higher, including the 10-year treasury Johnson notes.

You can see the full “Breakout” segment below:

Related: SPDR Gold Trust (ETF) (NYSEARCA:GLD), iShares Barclays TIPS Bond Fund (ETF)(NYSEARCA:TIP), iShares Silver Trust (ETF)(NYSEARCA:SLV)

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