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CPI is out and oil is up a massive 9% overnight. I’m diving into the exact commodity setups this sudden spike creates, while Alex tracks today’s order flow [tap to join us for Profit Panel]
The Federal Reserve has a new face at the top, and he’s already in a bind.
Kevin Warsh is now Fed chairman, and everybody wants him to start cutting rates.
But here’s the thing: He probably can’t cut, at least not yet. The most likely path? He’ll leave rates where they are and wait for the pressure to build.
And build it will.
Why the Fed Is Practically Boxed In
Let’s look at the reasons not to cut rates first. We’re not in a recession.
In fact, recession fears have mostly gone away — most analysts aren’t calling for a downturn anymore. But here’s the catch: We’re still dealing with high inflation.
Until inflation comes down a little more, the Fed is stuck. It can’t justify aggressive easing when prices are still running hot.
But on the other side of the ledger, it certainly can’t raise rates either.
Jobs have softened a little, and the economy has slowed somewhat. That combination makes tighter policy a nonstarter.
So Warsh is in a corner. He’s backed in, practically forced to cut rates at some point. Maybe not today, but the clock is ticking.
What This Means for Real Assets
Here’s where it gets interesting for traders like us.
Rate cuts are like steroids for the economy — they feel great in the short term. But the end game is always the same: rampant inflation.
And when inflation is in the picture — or even just the threat of it — investors keep piling into metals and commodities.
You’re already seeing that play out. China is snapping up gold on every dip, central banks are accumulating aggressively and nearly one-third of World Bank reserves now sit in gold. That’s not noise. That’s a global move toward real value.
It also fits a familiar pattern. In past rate-cut cycles, gold hasn’t just edged higher — it has exploded.
One of the most dramatic runs saw gold surge 369%. When policy loosens and currencies weaken, hard assets tend to do exactly what they’re built to do: protect wealth by rising as paper assets erode.
I’m not saying we’re headed for runaway inflation tomorrow. But the setup is there. The Fed is caught between a slowing economy and sticky prices, and the pressure to ease is building.
That’s the kind of environment where gold, silver and copper start looking a whole lot more attractive than anything denominated in dollars.
This could be the biggest trading opportunity I’ve seen in years, and it’s being lit by a Fed chairman who doesn’t have many good options left.
Geof Smith
Geof Smith Trading
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P.S. Fed Chair Warsh Set to Testify Before Congress This Week – Here’s the Play!
With Warsh on the host seat this week, traders are looking for the best possible approach or ticker to spearhead this week’s income opportunity.
I’ve got both in black and white, and I’ll show you if you go right here.
Disclaimer: We develop tools and strategies to the best of our ability, but no one can guarantee the future. There is always a risk of loss when trading past performance is not indicative of future results. Since LIVE trading began on 9/18/25, there have been 20 winners, continuing the undefeated streak. In LIVE trading, the average return has been 32.05% and the average hold time has been 24 days.
