By Peter Reagan
Your News to Know rounds up the most important stories about precious metals and the overall economy. This week, we’ll cover:
- How inflation can simultaneously be 3%, 4% and 7%?
- Why crypto “whales” are accumulating tokenized gold
- What Venezuela’s inaccessible gold reserves teach us about custody
How high is inflation? Pick a number…
Federal Reserve Chairman Kevin Warsh has repeatedly said that inflation is a “choice.” (That does not mean you or I chose to pay more for groceries, electricity and insurance.)
Warsh’s point is that inflation is driven by government spending, the Federal Reserve’s monetary policy and other institutional decisions. It’s not like weather – something that arrives without warning and changes from hour to hour, frustrating meteorologists and picknickers alike. Weather is beyond anyone’s control.
Inflation, on the other hand, is not.
Reporter Jeff Cox recently applied Warsh’s language to the way inflation itself is measured:
Federal Reserve Chairman Kevin Warsh has said that inflation is a “choice.” The same could also be true of how inflation is measured.
That second line deserves some attention.
Depending on which official measure you select, inflation in May was approximately 3%, 4% or 7%. The official Consumer Price Index rose 4.2% over the previous 12 months.
So-called “core CPI,” which leaves out food and energy prices, rose 2.9%.
The Federal Reserve’s preferred Personal Consumption Expenditures index rose 4.1%, while core PCE (which also excludes food and energy prices) rose 3.4%.
Then there are the Atlanta Fed’s sticky- and flexible-price indexes.
- Sticky-price inflation rose 3.1%
- Flexible-price inflation rose 7%
That is an awfully wide range… But it does not necessarily mean anyone is lying.
Each index measures something different. That’s why the numbers disagree.
The CPI measures changes in the prices paid by urban consumers for a broad basket of goods and services. The Bureau of Labor Statistics provides a detailed breakdown of the latest Consumer Price Index report.
The PCE also measures consumer prices, but it uses different weights and adjusts more readily when shoppers change their behavior. For example, if beef becomes expensive and households buy more chicken, PCE reflects that substitution more quickly. (CPI, on the other hand, tends to maintain its purchasing basket with less substitution.)
The Bureau of Economic Analysis detailed May’s Personal Consumption Expenditures report, which tracks changes in consumer spending and inflation.
By the way, “core” measures exclude both food and energy costs simply because their prices can move dramatically from month to month.
Now, economists use core indices to look for the underlying trend.
That makes sense from a forecasting perspective. But it can feel ridiculous from a household perspective.
Food and energy are not optional expenses. I don’t know about your family, but mine can’t simply remove gasoline, groceries and the electric bill from the monthly budget because they’re inconveniently volatile. Furthermore, speaking from my personal experience, my own family doesn’t eat twice as much when food costs fall. Nor do they go on diets or intermittently fast when food prices rise. I don’t drive more when gas prices fall, nor do I drive less when gas prices rise. From an economic perspective, expenses like food and energy are “inelastic,” meaning price shifts don’t change consumer behavior very much.
Then we have “sticky” and “flexible” prices.
The Atlanta Fed categorizes CPI components using its sticky-price CPI framework, which groups items based on how often prices change. “Sticky” prices include goods and services that are repriced relatively infrequently. “Flexible” prices, on the other hand, can change quickly in response to economic conditions.
Just so you have an idea of the difference, here’s a table from the “supplemental sources” document:
In May, the flexible-price index rose 7% from the previous year. (It rose at a 14.1% annualized rate during May alone!)
Now, that does not mean overall inflation was secretly 7%. It means that the part of the economy where prices adjust most rapidly to reflect cost increases became significantly, and notably more expensive.
That matters. Flexible prices can offer an early warning. They may respond to energy shocks, supply disruptions or sudden shifts in demand before those increases spread into slower-moving categories.
Sticky prices may tell us more about whether inflation is becoming embedded.
Some inflation indices watch the weather. Others monitor the overall climate.
Here is where I part company with anyone who treats one inflation statistic as the final word on anything: No national average can reproduce the cost of living for every American household.
In May, energy prices were 23.5% higher than a year earlier. Gasoline was up 40.5%.
Food prices rose 3.1%.
Fruits and vegetables rose 6.1%, while dairy prices fell 1%.
Someone who drives long distances and buys a lot of fresh produce experienced a very different rate of inflation from someone who works from home and chooses different groceries!
A senior paying for medical care has a different inflation rate from parents paying for child care.
A homeowner with a fixed-rate mortgage has a different experience from a family whose rent gets reset with every new annual lease.
Even when the official inflation rate is calculated correctly, it is still not your inflation rate.
Think of it like the “average temperature” across the United States. (Right now, it’s about 85°.) But that overlooks the difference between Yuma (100°) and San Francisco (65°), to pick just two examples from the same state.
National inflation statistics are useful for comparing broad changes over time.
They are much less useful when someone points to one number and tells a struggling household, “This is how much your cost of living increased.” The family’s bank account says otherwise. This is one reason so many families get confused about inflation: Their personal expenses feel so much worse than the official number.
Some argue that the variety of inflation indexes amounts to doublespeak intended to ease Americans into accepting well-above-official-target inflation. John Williams of Shadowstats is one such analyst, and he makes some good points.
I understand the suspicion here! Federal officials have a long history of communicating bad news through language designed to sound temporary, manageable or even beneficial. (Remember “transitory” inflation?)
And there’s a real risk officials will emphasize the measure that best supports the decision they already want to make. Want lower interest rates? Just highlight the softest underlying index. Want higher rates and tighter monetary policy? Simply point to the flexible price index.
That is selective framing, but it does not make the indexes themselves fraudulent.
Officials and mainstream media alike frequently present one narrow measure without explaining the others. And without showing how much the results vary among families.
Cox’s article actually acknowledges that problem. And so has Federal Reserve Chair Warsh, who’s created “task forces” to explore alternative data and more timely ways of understanding prices in the real economy.
Now, that could be useful. But could also give the Fed even more numbers to choose from, and further complicate our attempts to understand what’s really happening in the U.S. economy.
We already have plenty of inflation measures! More gauges don’t automatically create more clarity. Sometimes they merely provide ammunition to defend a policy officials already prefer.
Speaking of gauges and measures, there’s another one that’s caught my attention. The Federal Reserve stopped publishing the old weekly M1 and M2 money-supply indices in 2021 and shifted to monthly reporting.
The Fed continues to release monthly money supply statistics. Here’s an update: As of May 2026, seasonally-adjusted M2 stood at $23.1 trillion.
Personally, I keep a close eye on money-supply charts! That’s because I hold to the old-school definition of “inflation” as “the increase in the money supply, which drives down purchasing power and results in higher prices.” Read Ron Paul’s definition of inflation for more on this (I believe it’s important).
I believe money-supply growth deserves more public attention. I don’t understand the logic of switching from weekly to monthly reporting of this important number. Sure, the Federal Reserve says they switched to monthly reporting “as part of a broader overhaul following the elimination of reserve requirements and changes to Regulation D.” Seems rather convenient to me…
I apologize for nerding out on one specific (and arguably abstruse) Federal Reserve metric. Let me explain what these figures mean for you and your family – and what they do not.
Whether inflation is currently 2.9%, 4.2% or 7% depends on the question being asked.
But every one of those numbers points in the same direction: The purchasing power of our dollars is declining.
Even inflation at the Fed’s preferred 2% rate compounds into a substantial loss over time.
At 2% annual inflation, prices rise about 50% over 20 years. But 4%, prices more than double over the same period.
For a household preparing for the future, the difference is enormous. A “magic number” savings goal that looks sufficient today will likely prove inadequate after a few years of rising prices.
That is why preserving purchasing power matters more than accumulating dollars.
Now, physical gold does not track every inflation report from month to month. Its price can decline while consumer prices rise. However, over the long haul gold does preserve purchasing power.
The longer-term relevance of physical precious metals comes from existing outside the system that continuously creates (and then measures) declining purchasing power. Gold does not require the Fed to select the right gauge. Gold does not require economists to agree on what inflation “really” is, or how to stop it.
That’s a huge part of the reason a growing number of everyday Americans are choosing to buy gold bullion to diversify their savings. And it’s not just the everyday families making this decision…
Why are crypto “whales” accumulating tokenized gold?
Now, this story reads like it comes from a satire “news” site like The Onion or The Babylon Bee:
Crypto whales are moving their digital gold into cold storage.
Yet that is apparently what’s happening.
Yahoo Finance reported that Abraxas Capital withdrew 3,931 Tether Gold tokens ($16 million worth) from several cryptocurrency exchanges.
Another large wallet reportedly withdrew about 953 tokens after three years of inactivity. Altogether, Tether Gold saw $17.4 million in net exchange outflows during a 24-hour period – roughly 16 times its normal daily level.
Moving tokens off an exchange is often interpreted as “accumulation.” (A holder who plans to transact usually leaves assets on an exchange, where they can be traded quickly and easily.)
But we should be careful about reading too much into this. A transfer does not reveal intent. The digital gold tokens might have been moved for security, internal custody, collateral or even a private transaction. Blockchain data show which wallet transacted and where an asset moved – but not the owner’s reasons for making the move.
What is clear is that large, crypto-native traders (likely institutions) are seeking exposure to gold’s price.
Tether Gold, known by the symbol XAUT, is a cryptocurrency or digital token intended to represent ownership of physical bullion stored in Switzerland. Each XAUT represents one troy ounce of gold. Tether says its allocated bars can be identified by serial number and that verified customers can redeem their tokens for physical delivery. Interestingly, Tether publishes regular reserve and attestation reports detailing the assets backing Tether Gold. Note these “attestation reports” are not the same thing as a full financial-statement audit, something Tether has notoriously dodged since its founding in 2014 (but now, apparently, pinkie-swears they’ll finally get around to by the end of the year… We’ll see. I’ve written extensively about my concerns regarding so-called “digital gold” before and I don’t want to repeat myself here.)
Reuters reported that Tether held about 22 tons of bullion specifically to back XAUT at the end of the first quarter. Tether also owns gold as part of its USDT stablecoin reserves, and previously became the largest private gold owner… Today, across XAUT and the reserves backing its much larger dollar token, Tether held an estimated 154 tons of gold bullion (nearly as much as the central bank of Brazil).
Note the irony here… The entire cryptocurrency sector was built around the idea that digital assets could replace old monetary systems. Now one of crypto’s most important companies is accumulating the “barbarous relic” humanity has used as money for thousands of years. Shocking, isn’t it?
Apparently, the “future of money” requires quite a lot of history stored in its vault.
Venezuela needs the gold it cannot reach
The final story isn’t about gold price or digital gold. On June 24, two devastating earthquakes struck northern Venezuela within seconds of one another.
By July 12, the official death toll had reached 4,490. Another 16,740 people had been injured, and nearly 18,000 were homeless.
Venezuela was already struggling with years of economic deterioration, sanctions and an exhausted health-care system. Now it faces an enormous reconstruction bill.
Acting President Delcy Rodríguez says the country has resources overseas that could help. Among them are approximately 31 tonnes of Venezuelan gold held at the Bank of England. Rodríguez has appealed to King Charles III for help securing its release.
A campaign demanding the gold’s return has attracted thousands of signatures. British lawmakers have also introduced a parliamentary motion calling for its release for humanitarian relief and reconstruction.
Venezuela’s gold is now worth billions of dollars.
For an earthquake-stricken nation, that is not an accounting detail. Those funds could pay for housing, medicine, clean water and reconstruction. Yet the bullion remains inaccessible. The Bank of England will not release it.
See, Venezuela’s gold became entangled in a legal battle over who had authority to control the country’s central bank. Britain recognized opposition figure Juan Guaidó rather than Nicolás Maduro as Venezuela’s legitimate leader. Two rival central-bank boards each claimed authority over the nation’s gold bullion. British courts were asked to decide which board had the legal right to issue instructions back in 2019.
Maduro has since been removed from the immediate political equation, and Guaidó no longer occupies the role he once did. Yet the legal machinery has not changed course.
That is the problem with overseas custody during political upheaval.
The gold may legally belong to “Venezuela.” But “Venezuela” is not an individual. A nation isn’t a person. So when two different people in trench coats and fedoras show up at the Bank of England, both claiming to be Venezuela and asking if they can pretty-please have their gold, the Bank of England (like any good banker) calls the authorities.
Releasing the bullion requires the British government to recognize the correct Venezuelan authority, and then a British court agreeing the authority should legally have access to Venezuela’s deposited gold.
Venezuela’s gold may be safe and secure in the BoE’s vault… But does that really matter when Venezuela can’t access their emergency fund in the event of a genuine emergency?
Now, this is an unusually dramatic case, but it illustrates a trend among global central banks.
The World Gold Council’s 2026 central-bank survey found that reserve managers are reconsidering where they store their bullion.
The Bank of England remains the most popular foreign storage location, used by 57% of respondents. That’s because the BoE’s London vaults offer easy access to the world’s largest over-the-counter gold market. In other words, gold stored in the BoE’s vaults can be sold, leased or otherwise monetized when necessary.
Domestic storage came second at 49%.Nine percent of surveyed central banks said they had increased domestic storage during the previous 12 months, up from 5% in the prior survey. (Another 10% had diversified their foreign storage locations, compared with just 2% a year earlier.)
Looking forward, 7% plan to increase domestic storage and 9% plan to diversify among additional overseas vaults.
Here’s what this tells us: Most central banks still see substantial value in London’s deep gold market, security and trading infrastructure. For liquidity, it’s hard to beat BoE’s vaults.
But the change in direction is clear. More central bankers are asking a question that once seemed unnecessary: Will we be able to access our gold precisely when we need it most?
The Venezuela episode has revealed an important fact: When it comes to reserves and emergency funds, local gold is worth more.
Storing bullion overseas has advantages. Central banks can trade or transfer it more efficiently. Foreign vaults may offer exceptional security. Gold held in a major financial center can be mobilized quickly under normal conditions.
But “normal conditions” is not when you need to monetize your gold reserve!
During sanctions, war, disputed elections or a diplomatic rupture, access can disappear.
The same distinction applies at the household level.
A gold-backed token may follow the price of gold.
A futures contract may represent a valid legal claim to delivery of physical gold at some future date.
Both can be useful! But neither is the same as physical gold coins and bullion bars that an owner can access without asking for permission.
This does not mean every ounce must be stored under the mattress. It means that ownership is not merely a line on a statement. This is exactly why Birch Gold Group exclusively works with custodians who merely protect customer assets on behalf of customers. Legal ownership of your metals stored in a precious metals depository are never in question! Your property is your property, period.
That’s the beauty of physical precious metals ownership. They’re the only financial assets you can not only own outright, but you can hold in your hand.
Three big stories and one big lesson
This week’s stories seem unrelated. Inflation statistics, “digital gold” blockchain tokens and a legal dispute over a central bank’s gold reserve?
To me, all these stories share a common theme:
The difference between an abstraction and the underlying reality.
An inflation index represents changes in the cost of living. Yet it fails to capture what your family experiences.
A gold token symbolizes ownership of bullion. But it cannot provide the same direct access as a coin you can hold in your hand.
A foreign vault deposit slip represents national gold reserves. However, it does not guarantee a country can get those reserves during a crisis.
Don’t get me wrong here, abstractions are useful. Sometimes even necessary.
But they should never be confused with the thing itself. The map is not the terrain.
Here’s what I hope you take away from this week’s epic Your News installment: Don’t abandon official data, digital technology or professional custody. Instead, understand the assumptions and intermediaries built into them.
Physical precious metals offer one form of savings with no layers between owner and asset. Yes, their prices can fluctuate, and they should not be treated as a guaranteed answer for inflation protection or economic instability.
But unlike an inflation statistic, physical gold is not an estimate.
Unlike a token, it does not require a blockchain (or a WiFi connection, or even electricity) to function.
And unlike Venezuela’s reserves in London, gold owned by you and professionally stored doesn’t require official permission to access.
Learn more about the benefits of physical gold and silver ownership. Request your free 2026 Precious Metals Information Kit right now.