MARKET INSIGHTS  –    August 26, 2026

Gold slipped this morning from a 3 month high after reporting on the personal consumption expenditures price index increasing to 3.7% in the 12 months through July.  This was slightly over forecasts of 3.6%.

While this would normally be an indication of the Federal Reserve’s need to increase rates, we see other factors that will discourage or even prevent the Federal Reserve from being able to accomplish that.  The Federal Reserve has been backed into a corner by the U.S. Treasury from being able to raise interests in the short term.  Here are the reasons why that is unlikely, given the increased costs of a rate increase…..   

1.  The Treasury is in the process of buying back long term U.S. Government Bonds.  However, the government doesn’t have money to do that due to fourth trillion dollars of debt.  In order to accomplish this, the Fed has to issue short term bonds to pay for the program.  This means that if the Fed raised rates in September, it would cost the government more money in higher interest payments on the new bonds.

2.  Japan is the largest foreign holder of U.S. Treasuries.  Interest rates in Japan have been rising making their bonds more attractive than ours.  So, to stabilize the Japan bond market and prevent U.S. bonds from being sold, the U.S. Treasury began using U.S. taxpayer dollars to buy Japanese assets keeping their interest rates down. 

Here is the problem… The Federal Reserve meets September 16th to discuss raising rates.  The Japanese meet to discuss raising their rates on September 18th.  If we raise rates, that would force the Japanese to do the same, thereby rendering all of the Treasuries buying measures worthless.

So just a couple of reasons to not expect U.S. interest rates to increase.  Precious metals should continue on this uphill climb, not withstanding some minor bumps along the way.

Gold is currently up 11.4 percent month to date and silver is up over 16% just in August.

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