Title:       📈 The Fed Hiked Into an Oil Shock, Gold and Silver Steadied
Publication: Prinsights (Substack) — prinsights.substack.com
Author:      Nomi Prins (founder/CEO, Prinsights Global; ex-Goldman Sachs MD)
Date:        2026-SEP-16
URL:         https://prinsights.substack.com/p/the-fed-hiked-into-an-oil-shock-gold
Audience:    everyone (public — nothing gated)
Length:      written post (no timestamps)
Note:        Saved verbatim from the public post (Substack API body, 2026-09-16T19:48Z) for personal
             study. Subtitle and the two charts are carried below; the charts are transcribed as
             [Chart — ...] blocks (point values read off the plotted lines, approximate except where
             labelled). Subscription-promo lines ("Subscribe now", "Upgrade to Founders+", "Share",
             the "Stay Tuned" Premium plug) are kept in place but are promo, not substance. NO
             securities are named anywhere in the post — it is a pure macro note (the September FOMC
             hike, oil, debt service, central-bank gold, gold & silver as asset classes). The teased
             "undervalued major gold producer" is not named. Never invent tickers from it. The
             Fox Business / Charles Payne appearance is referenced only (video embed not captured).

Subtitle:    Here’s why the Fed can set the price of money but can't stop geopolitical oil shocks or
             manufacture metal – and what that means for one part of the markets.

================================================================

The Federal Reserve raised its benchmark rate by 25 basis points to 3.75 to 4.00% this afternoon, the first hike and at the third meeting since Kevin Warsh became chair.

After two inflation reports last week came in slightly above forecast, and with oil pushing around $100 per barrel of crude, the FOMC flexed its “we-can-control-inflation” muscle, siding with the inflation-fighting posture Warsh exhibited at Jackson Hole.

“We removed a dose of accommodation so that financial and credit conditions would be more consistent with our ultimate objectives,” said Warsh in an effort to offer mild-at-best commentary on the Fed’s motivating factors.

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Three of his FOMC colleagues had already dissented from staying neutral to a hike in July, and the latest inflation data handed them proof for their case, bringing the majority of the committee on board with that decision this month.

Oil was the main culprit, while the near $100 level is a psychological tipping point for a Fed and financial media that are filled to the brim with those who believe micro adjustments to short-term money rates can reduce prices at the pump.

The other part of the equation is what those higher recent oil prices did to the standing inflation gauges. Producer prices climbed 5.4% over the year in August, and consumer prices rose 3.4%, driven by gasoline up 27.4% and diesel up 24.1%.

Recently, Brent crude has pushed back above $100 a barrel, currently around $102 and up nearly 10% in September, amid ongoing barbs between the United States and Iran over the Strait of Hormuz.

Now, if we strip out energy, core PPI and CPI are still above the Fed’s self-imposed 2% inflation target, adopted in January 2012. Inflation has been above that target since it surged in early 2021, following the aftermath of Covid. So, as we zoom forward, despite 525 basis points of hikes from 2022 to 2023, the Fed has not brought it back to 2% in more than five years.

[Chart — "Inflation Has Stayed Above the Fed's 2 Percent Target Since 2021" (Prinsights Global). Annual
 CPI inflation, year over year, 2012–2026, with a dashed "Fed 2 percent target, set in 2012" line.
 Source line: "Prinsights, BLS annual CPI inflation, yearly average. 2026 is the latest 12-month reading."
   CPI y/y (approx. readings): 2.1 (2012), 1.5 (2013), 1.6 (2014), 0.1 (2015), 1.3 (2016), 2.1 (2017),
     2.4 (2018), 1.8 (2019), 1.2 (2020), 4.7 (2021), 8.0 (2022), 4.1 (2023), 2.9 (2024), 2.6 (2025),
     3.4 (2026, labelled "latest", dashed).]

But stripping out energy is a fiction. Food must be trucked to stores and most goods must be shipped, which means that the diesel getting them to their destination bleeds into the whole index. That is why, in total and in core, these inflation readings were impacted by those barrel-of-oil prices, one of the entire set of commodities the Fed can’t produce, and therefore can’t control on the supply or price side.

The question that the market is struggling today with is whether we are at the precipice of a hiking cycle. Gold and silver think not. Warsh has spent his short tenure rebuilding a Fed credibility problem, and acting on an inflation print is how he shows his resolve.

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But treating a war-driven oil spike as the opening of a tightening campaign, into a labor market that is softening and a national debt that cannot carry higher rates, would be a reactionary reach for optics rather than a fix for the economy. Either way, the physical shortage behind commodity prices is not something the Fed can do anything about. For as mighty as the Fed’s money cannon might be, it also has limits.

Debt Matters More than Rate Decisions

Higher rates can’t calm Strait of Hormuz chaos or resolve conflict in Ukraine. What rates in general can impact most is the cost of servicing the government’s debt. That outstanding debt above $40 trillion, incurs interest costs of more than $1 trillion a year, or over $3 billion a day, which is more than the entire defense budget.

Every dollar the Treasury pays because of higher rates increases the servicing cost on the trillions it keeps refinancing. Put simply, a hike aimed at oil makes the debt more expensive without cooling fuel prices.

Plus, the roughly $2 trillion annual deficit keeps the debt pile growing no matter what the Fed does with rates, and the interest servicing bill is on track to double to $2.1 trillion by 2036. That renders it the fastest-growing item in the entire federal budget, climbing faster than defense or Medicare. Every single dollar of that must be borrowed and refinanced through a bond market already absorbing a rising volume of Treasury issuance.

That massive debt limits just how far Warsh can go with rates, and it makes the case for the Fed ultimately adopting a version of QE 3.0 greater, as an additive salve to the recently implemented Treasury buyback strategy. No Fed chair controls the deficit or the pace of that borrowing, but monetary policy is one way for the Fed to contain the cost here.

Central Banks Still Shunning US Debt and Buying Gold

The institutions that used to fund U.S. borrowing are continuing to step back as the debt load increases. Foreign holders are down to about 32% of the Treasury market from more than 40% a decade ago, and over the same years central banks have bought gold over Treasuries at record levels. They took a record 289 tonnes of gold in the second quarter, up 74% over the year, while the gold price had its steepest quarterly drop in a decade, and China’s central bank added for a twenty-second straight month through August. The central banks stepping away from U.S. debt are the same ones buying the most gold.

[Chart — "Central Banks Keep Adding Gold, Year After Year" (Prinsights Global). Cumulative tonnes of gold
 added by central banks since 2020. Source line: "Prinsights, World Gold Council net central bank
 purchases, cumulative from 2020. 2026 is the WGC forecast."
   Cumulative tonnes (approx. readings): ~255 (2020), ~705 (2021), ~1,790 (2022), ~2,820 (2023),
     ~3,870 (2024), ~4,870 (2025), 5,719 (2026, labelled "with 2026 forecast", dashed).]

That dollar, U.S. policy, and debt diversification strategy is what keeps fueling the bid under gold and silver. Gold trades around $4,300 an ounce, and the $6,000 target we set in January remains intact. When the inflation reports hit last week, gold sold off to $4,333 intraday before closing back at $4,414, and silver dipped to $63 before steadying near $65.

Those inflation prints catalyzed the third rate scare in 3 weeks, in addition to the ones after the jobs report and Jackson Hole. Each time the selling failed to follow through, because the buyers underneath it keep catching the dip.

Silver carries an additional squeeze factor on top of its propensity to one day become a reserve asset. The metal has been in physical deficit for 5 years of more than 100 million ounces a year on average, while solar, electronics, and defense require more silver than current operating mines produce for delivery. Though silver’s price at $65 is roughly half its January record above $120, the physical premium over the paper price has stayed intact, signaling the potential for a strong rebound.

👉 Stay Tuned: Next week our Premium monthly issue recommends an undervalued major gold producer built for exactly this backdrop. If you have not joined yet, now is a great time to upgrade.

ICYMI: Yesterday, I joined Fox Business to discuss exactly what I saw unfolding with the FOMC. As I shared with Charles Payne 24-hours ago, the Fed changing rates helps nothing in reality. Check out our conversation below.

[Video embed — Fox Business segment with Charles Payne; not captured.]

Bottom line. The Fed can tinker with the price of money, but it cannot manufacture oil, gold, silver, or copper. Simply put, central banks can’t do anything about the cost of real things. Gold is anchored in value that record central-bank buying and a rising debt cannot touch – while silver adds a five-year physical deficit factor on top of that.

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