Craig Hemke – Constructive Outlook On The Precious Metals As Inflation Expectations Equilibrate

The KE Report Jul 7, 2026

Summary

Craig Hemke argues peak Fed hawkishness is priced in, and easing rate-hike expectations are letting gold and silver bottom and build a base.

Gold snapped back above $4,000 on every dip, signaling the lows are in; he expects a sideways base, not a V-shaped recovery.

A death cross (50-day moving average crossing below the 200-day) keeps rallies getting sold until sideways trade lets the averages converge.

The guest argues energy-cost fear oversold producers 40-60%; energy is only 10-15% of input costs and crude has round-tripped, restoring margins.

He bought GDX (the gold miners ETF) August calls, betting generalists rotate back ahead of Q2 earnings that beat depressed expectations.

Craig Hemke points to Franco-Nevada being sold down at the same percentage rate as producers as evidence the Q2 rout was indiscriminate herd selling rather than fundamentals-driven.
He cites that treatment of the royalty company as part of a market inefficiency that he thinks could reward investors on a second-half rebound.

Top takeaway Craig Hemke reads Kevin Warsh's first post-FOMC press conference as a deliberate assertion of hawkish credentials: after expectations he would be a Trump 'yes man' following the effort to force out Powell, Warsh instead emphasized price stability and the consumer.
That press conference drove markets to price two, possibly three, rate hikes in the weeks before the recording; Hemke argues expectations for Warsh-driven hikes were overcooked and are now being unwound.
Warsh spoke in Europe in the middle of the prior week, and Hemke expects Fed funds futures to rotate back toward no further hikes as inflation data moderates, a shift he sees as supportive for precious metals into the fall.

Top takeaway Argues gold's lows are in as of early July 2026 — each dip below $4,000 was quickly bought back above that level — and that peak hawkishness will soon be priced out, setting up a second-half rally, though he expects a basing process rather than a V-shaped recovery.
Expects a repeat of last summer's pattern, when four to five months of sideways consolidation let moving averages converge before short-duration averages crossed above longer-duration ones to launch the next bull-market leg.
Points to the PCE energy component rising 21% from March through May as crude went from $65 to $110 as the driver of the rate-hike narrative; with crude back near $68, he expects month-over-month inflation prints to undershoot and hike expectations to unwind, with June CPI and PPI due around mid-July 2026.
Calls the roughly 40% collapse in gold stocks a market inefficiency — even royalty companies fell as hard as energy-intensive producers — and expects Q2 producer earnings later in July and August 2026 to beat the expectations behind the May-June selling, with margins healthier than feared at $70 crude.
Discloses a directional trade: he bought 10 GDX $80 calls expiring the third Friday of August 2026 and is holding them, expecting generalists to rotate back into the sector ahead of earnings reports.

Top takeaway Argues the energy-cost rationale for producers falling 40-60% was overstated — energy is only 10-15% of input costs and varies widely by mining method, from underground to diesel-heavy open pits — and looks to Q2 reports and Q3 guidance to prove that out.
Expects the year-over-year Q2 2026 versus Q2 2025 earnings comparison to be a starker positive surprise than the market realizes, noting some companies are valued lower now despite recently posting better quarters.
Highlights summer seasonality, with gold often bottoming in late July or early August, and says even a roughly flat 2026 for gold would count as a win after the outsized gains of 2024 and 2025.