Dear Reader,
The Fed raised interest rates for the first time in three years on September 16. Twelve to zero. First hike since 2023. Markets took it as a gold-bearish signal and moved accordingly. Gold pulled back from nearly $4,700 to around $4,353.
The institutions with the longest time horizons in the world saw the same price action and kept buying anyway.
- Warsh makes it official: Fed Chair Kevin Warsh led a unanimous 12-0 vote to hike 25bps to 3.75%-4.00%. The committee signaled another hike is coming before year end. First hiking cycle since 2023.
- Central banks bought the dip: 289 net tonnes purchased in Q2 2026 -- a 62% year-over-year increase and the strongest second-quarter total on record. This came after gold had already corrected 8% from its Q1 highs.
- The thesis isn't rate cuts: 12% of global crude supply is off the market. Rate hikes don't fix oil wars. What institutions are buying is a dollar-exit vehicle -- something that can't be frozen, defaulted, or printed away.
- James Altucher: Elon's next move will mint 1.8 million new millionaires. Here's what he found.
WHAT HAPPENED
On September 16, the FOMC voted 12-0 to raise the federal funds rate by 25 basis points to a target range of 3.75%-4.00%. Chair Kevin Warsh was unambiguous: "The plain fact is that inflation is too high." The committee left the door open for at least one more hike in 2026 -- the median dot plot projects the rate at 4.1% by year end. The Fed's own projections don't see inflation returning to 2% until 2029.
The market responded predictably. Gold, which had been trading near $4,700 as rate-hike probability rose into the meeting, sold off to around $4,353 -- roughly 22% below its January 2026 record of $5,589. The Conference Board called the hike "not a one and done," noting the Fed rarely stops after a single move once it's started. Core PCE sits at 3.4%.
Then came the Q2 World Gold Council data. Central banks purchased 289 net tonnes in the second quarter alone -- a 62% year-over-year surge and the strongest Q2 on record. Poland. China. Uzbekistan. Kazakhstan. The Czech Republic. They didn't wait for rates to fall. They bought through the correction. Combined with Q1's 244 tonnes, institutions accumulated over 530 tonnes in the first half of 2026.
The obvious read is that retail is right and the sovereign buyers are wrong -- that $4,353 is fair value in a hiking cycle. Hold that thought.
But first -- our friends at Brownstone Research flagged something you need to see:
SPONSORED: BROWNSTONE RESEARCH
The two investment legends who picked Nvidia 10 years ago predict Elon Musk's new AI breakthrough -- "M.A.G.I." -- will collide with a market pattern with a flawless 100% track record. The last time it triggered, everyday investors had the chance to turn $10,000 into $350,000 in just 12 months.
THE INVESTOR ANGLE
Central banks aren't buying gold as an inflation hedge. They're buying it as a dollar-exit vehicle.
The calculus changed in 2022 when G7 nations froze Russia's dollar reserves overnight. Every sovereign treasury in the world saw it happen and drew the same conclusion: assets held in foreign currencies can be seized. Gold cannot. It doesn't freeze. It doesn't default. It has no counterparty.
Rate hikes press on that thesis from one side. Energy inflation presses from the other. 12% of global crude supply is currently off the market -- nearly twice the scale of the 1970s shocks. The Fed can raise the cost of borrowing dollars. It cannot put that oil back on the market. When the source of inflation is a geopolitical supply shock, rate tools are the wrong instrument. Central banks appear to be pricing that mismatch in.
Goldman Sachs still targets $4,900 by year end. The World Gold Council's most recent survey found 89% of central banks expect to increase gold reserves in the coming year -- published after the correction, not before it. Goldman estimates purchases averaging 50 tonnes per month through year end.
The spread between what rate markets believe and what sovereign institutions with 50-year time horizons are actually doing is a signal. That spread doesn't stay open indefinitely. It closes. And it rarely closes toward the retail side.
Stay free.
Chris Carroll
Publisher, Freedom Financial News
QUICK HITS
Fed Raises Rates 25bps in 12-0 Vote, Signals More Hikes Coming The FOMC unanimously raised its target range to 3.75%-4.00% on September 16 -- the first hike since 2023. Chair Warsh signaled at least one more increase before year end. The Fed doesn't expect inflation to hit 2% until 2029.
Man Who Called SpaceX Rise Says Elon's NEW Project Is Even Bigger Renowned tech investor James Altucher -- the man who called Nvidia, Apple, and SpaceX years in advance -- just uncovered Elon Musk's latest breakthrough. He says it will create up to 1.8 million new millionaires. Watch his free video.
Gold Forecasts Cut, But Central Bank Buying Expected to Cushion Retreat Analysts cut their 2026 gold price median to $4,509/oz from $4,916 three months ago. Central bank demand, running well above pre-2022 levels, is expected to limit further downside even as rate expectations weigh.
Larry Benedict's Oil Skimming Strategy When the market crashed 37% in 2008, Larry Benedict made $95 million for his clients. Now he says the oil market is creating one of the biggest opportunities in 40 years -- and you don't need to own a single oil stock to profit.
Gold at $4,360, Down 4.95% From Last Month -- Fortune Markets Gold pulled back from last month's $4,587 following rising rate-hike probability. Silver holds near $67/oz. The gold-silver ratio compressed to 65.7 -- silver narrowing the gap as gold absorbs rate pressure.
P.S. Oxford Club analyst Marc Lichtenfeld called NVIDIA when it was trading at $1.10. Now he's making his next bold call -- See his next prediction here
|
|
.jpg)
