Gold & Silver Project October ’23 Surge as Inflation Signals Peak.

09-20-23 – Commodity ‘Inflation’ and the Fed: “One of the ways to measure commodity inflation is via the S+P Goldman Sachs Commodity Index (GSCI or GNX).  While far from a perfect gauge, it does provide internal comparisons for a basket of commodities.

In other words, you can assess where the current level of that index compares to past levels of that index.

Like some of the other commodity indexes, it is weighted more heavily in oil/energy… but so is our economy.  Everything we purchase, particularly in this age of ‘right to your front door’ delivery, has a portion of its cost determined – directly or indirectly – by the cost of fuel.  So, the heavy weighting is not that shocking.

The GSCI set an intra-week high in March ’22 and a weekly high close in early-June ’22, before declining steadily into early-June ’23 – a precise 360-degree cycle in time.  Since its early-June ’22 peak, the GSCI has set successive highs on a 22-week interval, creating a ~22-week high-high-high-(high; Sept 11 – 15) Cycle Progression that projected a peak at the same time unrelated cycles in Crude had been projecting a peak.

In doing so, it matched the duration of its previous Dec ’21 – Mar ’22 surge while rebounding 50% of its Nov ’22 – June ’23 decline.  Timing cycles and indicators converged in mid-Sept ’23, the same time a unique ~5-Year Cycle peaked in Crude (see INSIIDE Track).

It is not just the timing features of this recent peak, however, that make it noteworthy.  Price features are also revealing a lot…

For starters, the GSCI has rebounded less than a third of what it lost from its 2022 peak to its June 2023 low.  That is not a sign of runaway commodity inflation.

Second, it just peaked at the level of its Jan ’23 high – its year-opening range and the primary resistance for its intra-year trend (down turned neutral).  That intra-year action is also not overly inflationary.

Third, and this one is price AND time, it initially peaked in the second month after attacking and holding its monthly LHR.  A test of that indicator normally leads to a 3 – 6 month peak in the ensuing 2 – 3 months.

So, just as the Fed is announcing things look more inflationary on the horizon (or at least ‘less deflationary’ – leading to the consensus opinion of only two rate cuts in 2024 instead of four), the GSCI is saying this latest bout of ‘commodity inflation’ – for lack of a better term – could be peaking.

Perhaps, it is the Fed communique that will drive this top.  At the very least, it concurs with ongoing analysis in the energy markets – which have been projected to surge from their early-May & mid-June ’23 lows into the week of Sept 11 – 18, ’23.

While this does NOT signal an automatic shift from inflation to deflation, does NOT signal an imminent collapse in energy prices, and does NOT preclude other commodities – like metals and certain ags – from rallying in the coming months, it DOES show that a crucial level of upside pressure is expected to diminish.

And that could have a mixed impact on various markets after 1 – 2-day knee-jerk reactions to today’s Fed news is digested and forgotten…

Gold & Silver maintain the potential for a late-Sept/ early-Oct advance that should carry them higher into multi-month cycles converging between mid-Oct & early-Nov ’23.  As explained repeatedly the last few months, an accelerated advance is most likely at some time between mid-Sept & mid-Oct ’23.  The 90/10 Rule of Cycles has consistently projected the majority of the next advance to occur in October ‘23.”

Gold & Silver produced 1 – 2 month highs in early-Sept, corroborating future cycle highs projected for early-Jan ‘24.  They remain weak as they await bullish cycles that begin in early-Oct ‘23… and are expected to spur a sharp multi-week rally into mid-Oct (Silver) through early-Nov ’23 (Gold).

The action since late-2022 is powerfully validating the onset of a new 40-Year Cycle of Currency War in which Gold & Silver possess unique potential for late-2023 – late-2024!  The 90/10 Rule of Cycles in Gold continues to project a sharp advance in October ’23 – in the final weeks leading into a (potential) early-Nov ’23 peak.  Silver is expected to diverge with an initial high in mid-Oct ’23 and a more significant high in Jan ’24.  The weekly 21 MARCs concur.

Where are Metals Likely to Rally in 4Q ’23? Will Middle East War Cycles Have an Impact??

How Does 90/10 Rule of Cycles Project Sharp Rally in October ’23?

Why are mid-Oct & early-Nov ’23 Cycle Highs the Key to 2024 Outlook?

Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.