Craig Hemke – Could Things Be Turning More Bullish Post-FOMC Meeting With Higher Inflation Expectations?

Shad Marquitz
December 16, 2021

Craig Hemke, Founder and Editor of TF Metals Report, joins us to discuss the market reactions after the  recent FOMC meeting on Wednesday afternoon, where Jerome Powell outlined that the Fed will increase their tapering by decreasing the amount of bonds purchased by $30 Billion per month, instead of $15 Billion per month starting in January.   Craig also felt it was a noteworthy admission by Powell that they honestly have no idea of where things are headed in a year or two, where normally they act like their policies and tools have things more in their acceptable targets.


Next we recapped the higher inflation expectations, seen after another round of hot readings in the Consumer Price Index at 6.8%, the highest level since 1982, and  a Producers Price Index reading near 8.5%.  We discuss how the higher inflation reading was met with even more bond buying driving interest rates lower and creating even more negative real rates.


We wrap up by reviewing the precious metals sector bounced a little bit since the FOMC meeting, that Silver double-bottomed at $21.41 (the same exact level it tested as a recent low), and that the COT reports may indicate a turn in the tide.   Craig unpacks other periods of history with negative real rates, and contrasts how markets reacted in response to a similar macroeconomic backdrop. We set our sites on the eventual rate hikes in 2022. 

Click here to visit Craig’s site – TF Metals Report.

    Dec 16, 2021 16:26 PM

    The Fed’s change in statement from “not even thinking about thinking about rate increases” to 3 increases after completing the taper in March is still nothing but talk. They really prefer to have people act upon expectations. If the sheeple do what they are hoping they will do, maybe they’ll actually do nothing. Fact is, they’re behind the curve and the taper of bond purchases simply reduces their input of liquidity which may, repeat may cause the stock markets to slow down somewhat. Rate increases of .25% won’t do squat to the availability of credit for those looking to borrow cheap money.
    Their statement that they don’t know where we will be a year from now is the only honest thing he said.
    Craig’s thoughts on the tax loss selling of mining shares is spot on. Today’s action proved his point.
    Good interview. Thanks.

      Dec 16, 2021 16:51 PM

      Good thoughts all around Silverdollar. Agreed.

    Dec 16, 2021 16:51 PM

    A 0.25 rate hike per quarter, starting in June 2022? If that happens things will blow up by Q1 of 2023. I don’t think they can make it to 2.25%. We should have a pool!

      Dec 16, 2021 16:03 PM

      It will be fascinating to see how it all unfolds next year, and at what point they cry uncle or something breaks.

        Dec 16, 2021 16:30 PM

        Craig’s comment that the bond markets sees a rate cut coming is telling.

        What scares me is Doc’s conclusion that the blood letting is not over in the PM’s – the difference between gold, silver and the miners is worrying. Something has to give – either the miners move up or gold goes down. I fear the latter will occur. No doubt we will see very soon.

        Right now my second biggest looser is Novo, seeing that company down to $1.02 US is rather amazing.

        My guess is the next few weeks are gonna be real.

          Dec 16, 2021 16:27 PM

          Mike, I bought Novo Resources and Pure Gold yesterday, both near their 52 week lows. I am a happy camper! I am looking to pick up some more Superior Gold very soon. DT

            Dec 16, 2021 16:08 PM

            DT – My average cost for Novo is way less than 2 US so I’m not worried that I will stay underwater forever and I bought more down here around 1.02 but none of this makes any sense. When you watch Mr Market slap a good, well run company with real potential silly you have to wonder why anybody would be in the sector at all? How do you make investment decision when management, resource potential, execution don’t seem to matter? If I were looking at this market from the outside I’d have to ask – how do I get an edge? Are gold, silver and the miners all risk and no reward?

            Dec 17, 2021 17:56 AM

            DT – I’ve been growing my position in Superior Gold as well, and consider it one of the up and coming “growth-oriented producers” like Calibre, Karora, I-80, Minera Alamos, Steppe Gold, (and prior to this week Argonaut).

            Dec 18, 2021 18:15 AM

            Hi Ex, thanks for sharing, I always enjoy hearing about your picks. DT

    Dec 16, 2021 16:56 PM

    Great interview. You guys warm the blood in my heart that end of year could be great. I hope it isn’t Covid. Appreciate the additional info. Ever upward.

      Dec 16, 2021 16:05 PM

      Thanks Lakedweller2. It was nice to get Craig’s optimism, after so much pessimism and negative sentiment lately.

        Dec 16, 2021 16:26 PM

        Yeah, those that are negative and pessimistic ought to be banned from the site…but will you let me come back some time later?

          Dec 17, 2021 17:39 AM

          Haha! I wasn’t talking about you Lakedweller. You are usually quite constructive in discussing the bullish trades that are working, or why you are selling the stocks that are underwhelming, and your comments and reflections are greatly appreciated.
          My comment was more that it was nice to get the reasons why Craig was constructive the metals having a bounce (oversold readings on charts, COT data, the double-bottom in Silver at $21.41, inflation expectations staying elevated, etc…). It just seems like we’ve had a string of different technicians discussing why the metals will stay under pressure for the foreseeable future, paired with a number of comments from generalist guests or on the blog about gold being done and over or the negative sentiment towards the mining stocks. When I read the comments at, seeking alpha, youtube, twitter, there is a lot of doubt around the PMs, commodities, and relating mining stocks, and a lot of people officially throwing in the towel on the sector. It may be a great contrarian indicator.
          However, things don’t need to always be framed in a bullish light by any stretch, and we don’t just need sunshine and rainbows blown up everyone’s rear ends. When people lay out a sound thesis for their bearishness, it is fine and every bit as helpful as bullish commentary, and something I personally find great value in. When it is just whining about the markets or people that proclaiming things are over, without logically laying out why they feel that way and the data that supports their blanket statements, then it is less valuable. Markets move in both directions, and if there is a reason why this sector or any sector should continue correcting that investors should be aware of, then it should definitely be discussed.
          It is more fun when the mining stocks we hold are heading higher, like they have the last 2 days since the FOMC meeting and Q&A concluded, so that is at least an encouraging reflexive move. As to whether it is just a short-duration relief rally, or the beginning of a more intermediate turn remains to be seen.

    Dec 16, 2021 16:46 PM

    Metals futures all “positive” … we are on a roll.

    Dec 16, 2021 16:17 PM

    Wall Street’s take:
    10 year T-bill: 1.50% yield
    6.8% inflation / 10 years = .68% loss of purchasing-power, per year (compounding not considered)
    Net income: 1.50%-0.68% = .82% per year

    This also excludes ‘normal’ inflation of 2-3% per year, which if compounded, would wipe-out any gain on a T-bill at 1.50% per year. Return-free risk (thanks, Rick Rule).

    As inflation goes higher, lasts longer, and/or other external risk is factored, the T-bill option looks more dreadful all the time, but after all, gold “yields nothing”, and would perform even worse than T-bills. Right?

    Unless one is concerned about capital and wealth preservation. With a strong upside of capital appreciation. Half of all stocks pay little or no dividend, yet professional investors would buy them over gold, because…? They think they will go up. Kind of like why we buy gold.

    Dec 16, 2021 16:40 PM

    From what I understand, the bullion banks are still massively short PM’s. Thus they crush every rally

      Dec 17, 2021 17:59 AM

      The bullion banks play their part and throw their weight around in the markets, but there are a lot of market participants all intertwined in the daily price action. I wonder if the bullion banks are ever going to be net long?

        Dec 17, 2021 17:28 PM

        I have a feeling they are accumulating miners to offset their shorts

    Dec 17, 2021 17:57 AM

    John Kaiser talks about NVO, bringing DeGrey(DEG:AX) into the story.

    Dec 17, 2021 17:19 AM

    Looks like Europe general markets down and US general Futures Markets projecting down.
    Hope miners don’t have to go down with them to make them feel better. So far metals futures up but they still have 15 mins to fix that….

      Dec 17, 2021 17:43 AM

      One lie begets another lie until all they can do is lie….

        Dec 17, 2021 17:49 AM

        Dollar up ….interest rates further negative … inflation grows … debt increases…general markets down…
        Metals up…. Miners down. … negative comments are being thought by all

    Dec 17, 2021 17:18 AM

    Santacruz showing signs of life…I have a breakeven after averaging down. A glass of water all around …

    Dec 17, 2021 17:32 AM

    My account fell asleep in the middle of the day. I tapped on the screen…nothing, nada, no response…I am going to go watch reruns of Bonanza.

      Dec 17, 2021 17:20 AM

      America fell asleep watching that show, thinking hard work, decency and honesty was the way to success. While the whole place was being stolen by thieves.

    Dec 17, 2021 17:36 PM

    I cashed up today!;-) I am playing a santa claus rally for the USD that will die on a spike as soon as one of the fed bafflegaggers says that they have to hold back for some reason, haha. IMHO .97 is in the cards for a lower RSI top, I’m not sure if it will be the final cycle top because I’m not privy to the plan.

    Dec 17, 2021 17:04 PM

    What do you believe are some of the best royalty companies of PM companies to own?

      Dec 17, 2021 17:15 PM

      Royalty: Ex can tell you off the top of his head… but he also follows a report that comes out periodically that I can’t remember where he finds it. If he reads this, he will point you in the right direction.

      Dec 18, 2021 18:53 AM

      Hi Pardu. “Best” is always an impossible term to define, because it is subjective and to many investors the best may mean different things over different timeframes. Do you mean best in class for the major royalty companies like a Franco Nevada or Wheaton Precious Metals, or best upside for a potential rerating like Sandstorm, Nomad, and Vox, or best potential outperformance to the upside in a bullish market move like the beaten down smaller Jr Royalty companies like Star Royalties, Empress Royalties, Sailfish Royalties, or Orogen Royalties, or best operational partners like Maverix, Metalla, and Triple Flag, or or best exploration upside on properties (which would be highly debatable since there are over 2 dozen royalty companies with literally hundreds of royalties, so how could anyone parse out how much exploration upside there is, etc…. but companies like EMX or Osisko Gold Royalties come to mind. Then there are which companies were the best at acquisitions, but that is debatable as well depending on which assets you are talking about, but Gold Royalty Corp likely took the prize in 2021 for acquiring Ely Gold (which I used to own until the acquisition), Golden Valley (which I used to own until the acquisition), and Abitibi Royalties. Maybe someone means which solid royalty company can I hold with the best dividend and that would be Nomad. Best proprietary database to find new royalties would be Vox. Best promotion would be E.B. Tucker for Metalla. Best base metals royalty company would be Nova Royalty, followed by Altius, and then Anglo Pacific, and finally Trident. Best battery metals and specialty metals royalty company in Electric Royalties, followed by Altius Renewable Royalties. There are many areas to go, but I’d suggest that much it is subjective based on how an investor rates the projects, production growth timelines and projected revenues, jurisdiction risk, etc… etc…
      Personally in my portfolio I hold Sandstorm, Maverix, Metalla, Nomad, Vox, Elemental, Sailfish, Nova, and did have Ely and Golden Valley until they were acquired, and had Orogen for a trade that I plan on buying back.

    Dec 17, 2021 17:07 PM

    I counted 13 abnormal red candles throughout the day to get Gold and the other metals negative. For the two days following Powell’s speech, I was up $20 total. The attack continues as the The Fed continues to sink the dollar and economy. Perception is everything…free markets are nothing. Criminality is the word of the day…

    Dec 17, 2021 17:43 PM

    The following weekly chart represents my best effort to give natgas bulls something positive. Watch the 3.50 area next week. It’s going to take time to turn the weekly chart bullish again but that doesn’t mean there won’t be a worthwhile rally in the meantime.

    Dec 17, 2021 17:04 PM

    URA had its worst weekly close in three months and will soon be heading much lower if the bulls don’t hold it up next week (but I bet they won’t)…

    Dec 17, 2021 17:14 PM

    Two broken fork supports and a new weekly MACD sell this week for UUUU. It is already 37% off its high yet its downside potential remains massive.

    Dec 17, 2021 17:25 PM

    It might seem very unlikely now but I bet OIH vs HUI will fill its huge gaps of November 2020…

    Dec 17, 2021 17:34 PM

    All this, to the day, reminds me of 2015 when Doc was overly/overtly bearish….

      Dec 18, 2021 18:55 AM

      I remember Dec 2015 also. I was all in and it was a discouraging time. Most everyone was expecting more of the same. I was lucky and got about a 6 month run out of that one before nothing but misery returned. I learned that on the upside, start being cautious about after 2-3 months because a rally like 11-12 years like in the General Markets only comes from something/someone that has another agenda other than making Gold and miners look like a long term investment. Unbacked fiat currencies are protected until they burn them to the ground.