High Inflation: We are in Kondratieff's "Summer of Summer" | Ahmed Farghaly

Many people are wondering what has been happening to the prices of gold and silver recently. We were expecting developments similar to those that occurred after the 2020 bottom of the Kuznets wave [aka the 18-Year Cycle] in global markets. The first chart below presents our cyclical analysis of the Commodity Price Index.

 

 » We are in the “summer of summer.” «

 Commodity Price Index (quarterly bars, log scale) from 1750 to 2025: 162-Year, 54-Year, 18-Year, and 9-Year cycles. 

[Note, there is ongoing debate regarding the precise starting points of the 162-year and 54-year cycles.
It can be argued that both should be anchored to the Great Depression low of 1932, rather than to 1949-50.]

It is evident that the 54-Year Kondratieff wave, first identified by Nikolai Kondratieff, is clearly reflected in this historical chart. Even more intriguing is the apparent presence of a 162-Year larger-degree Kondratieff wave that maintains the same 3:1 harmonic relationship to the Kondratieff wave as the Kondratieff wave does to its smaller counterpart, the 18-Year Kuznets wave. In our cyclical model, the cycle spanning three Kondratieff Waves is called the Hegemony wave.
 

972-Year Methuselah Wave = three 324-Year Enoch Waves

Enoch Wave = two 162-Year Hegemony Waves 

Hegemony Wave (156.88 y) = three 54-Year Kondratieff Waves

Kondratieff Wave (52.72 y) = three 18-Year Kuznets Waves

Kuznets Wave 17.52 y) = two 9-Year Juglar Waves 

Juglar Wave (8.76 y) = two 54-Month Kitchin Cycles 

Kitchin Cycle = three 18-Month cycles = six 40-Week cycles

Many economists have described the “seasons” of the Kondratieff wave—spring (stable growth), summer (high inflation), autumn (low inflation and asset bubbles), and winter (deflationary recession). Typically, spring coincides with the first Kuznets cycle, summer with the second, and autumn and winter with the third. The highest inflation rates within a Kondratieff wave occur during the summer phase, corresponding to the second Kuznets cycle, which began in 2020.

 

» To every thing there is a season, and a time to every purpose under the heaven. «
Ecclesiastes 3:1.

We are currently in the second Kuznets cycle (2020 to late 2030ies) of the second Kondratieff cycle (2000 to 2050) within the ongoing Hegemony wave (1950 to 2100)—a phase that can be described as the “summer of summer.” This phase suggests that we are likely to experience the highest inflation levels since the American Civil War (1861–1865).

» We are likely to experience the highest inflation levels since the American Civil War. «

US Inflation: Annual Percentage Change from 1774 to 2007, with Outlook Extending to 2106.

  

Our next chart above illustrates annual inflation in the United States since 1777. A distinct 162-Year Hegemony wave pattern emerges, with an inflation peak in 1813 marking the summer of the first Kondratieff cycle, a higher peak in 1865 corresponding to the summer of the second Kondratieff cycle, and a lower peak during World War I representing the summer of the third Kondratieff cycle. A comparable peak reappeared in 1980. According to our cyclical outlook, inflation in the current Kondratieff cycle is expected to surpass the levels of the 1970s, as this phase represents the second Kondratieff cycle within the broader Hegemony wave—the “summer season.”

The most advantageous assets to hold at this stage of the cycle—both from the standpoint of the Hegemony wave and the Kondratieff summer—are precious metals, real estate, and equities that tend to benefit from periods of high inflation.

Quoted from:
Ahmed Farghaly (October 6, 2025) - High Inflation: We are in Kondratieff's "Summer of Summer". 

 

 The Ultimate Summer:

972-Year, 324-Year, and 162-Year cycles.

» We are in the Sixth Wave that peaks
on Sunday, December 12, 2032. «

 

» Yet, what experience and history teach us is this: that nations and governments have never
learned anything from history, nor acted in accordance with the lessons to be derived from it. «
Georg Wilhelm Friedrich Hegel, Introduction to Lectures on the Philosophy of History, Berlin, 1822.

 

See also:

Ahmed Farghaly (2016) - The 162-Year Cycle in Stocks and Commodities Since 1509.

Early Global Commodity Supercycle: Top Investment Picks | Andrew Hoese

Commodity Supercycles are long-term, decade-spanning periods of sustained above-average price surges, driven by major demand shocks—such as industrialization, energy transition, and urbanization—alongside supply constraints and geopolitical shifts. Notable past cycles include 1896–1920 (US industrialization), the 1970s (oil crises), and 2000–2014 (China’s rise). 

 

Gold-S&P 500 Ratio (monthly closes, 1925 to October 2025).

» There is an early breakout in Gold versus the S&P 500, a double bottom breaking higher. This signals a shift into a world unlike the past 40 years — a transition from an era of declining interest rates to one of rising rates. That creates different money flows. Money is no longer flowing mainly into bond and stock markets; instead, it is increasingly moving into precious metals, mining companies, and commodities. This marks the beginning of an outperformance of commodities and precious metals over traditional financial assets. «

Today, advancements in AI, digitization, electric vehicles, robotics, the emergence of thousands of new data centers, other technologies, and the relentless rise of BRICS+ are set to fuel an unprecedented surge in energy demand, including coal, oil, gas, hydrogen, nuclear, geothermal, solar, and more. Urgent grid overhauls and expansions will drive a massive increase in demand for key metals such as lithium, nickel, silver, and copper.
 

The current Commodity Supercycle (2022-2045) is driven by several financial key factors, with interest rates playing a central role. From 1980 to 2021, declining rates favored Bonds and Stocks, creating cup-and-handle patterns in Gold and Silver. Now, the shift to an increasing interest rate environment is disrupting this dynamic, as evidenced by a shoulder-head-shoulder topping pattern in bonds. 

 

When rates hit 4.5-5% on the 10-Year US Treasury Note Yield, stocks are likely to decouple, with rates rising while stocks stagnate or decline. The Dollar (DXY), currently in an uptrend channel, could accelerate commodity gains if it breaks downward. Inflation cycles further shape this landscape: disinflation boosts safe-haven assets like gold and silver, while accelerating inflation drives broader commodity markets. Money printing, such as the significant stimulus in April 2025 (Trump's One Big Beautiful Bill Act), fuels gold and silver in real-time, with other commodities responding as money flows through the system.

 

 

 Investment Potential Rankings: Commodities and Financial Instruments (October 2025):

Top: Lithium, Coal, Iron Ore. iShares MSCI Brazil ETF (EWZ: tracks large/mid-cap Brazilian equities for emerging market exposure), VanEck Steel ETF (SLX: tracks global steel sector companies (production, mining, fabrication). Highest potential due to recent bottoms, high historical leverage (50-150x for coal/iron ore, 20x for EWZ), strong breakout patterns, and inflation-sensitive demand (EV/BESS for Lithium, Steel +1.1%). Under-the-radar status maximizes asymmetry.

Mid: Copper, Nickel, Natural Gas, Silver, Platinum, Palladium: Strong performers with breakouts or bottoming patterns; Silver/Platinum have top performer potential but face consolidation or supply risks; Copper near highs but neutral Q4 2025; nickel oversupply concerns.

Low: Oil bearish short-term ($60/bbl YE2025); Gold strong but nearing consolidation, and less leverage than Silver.

Lowest: S&P 500, NASDAQ, Bonds. Financial assets face headwinds from rising rates (4.5-5% disconnect); bonds least attractive due to downtrend and rotation to commodities.

The ongoing and escalating worldwide commodity boom is unfolding in a clear sequence: It began in 2022 with a disinflation phase, where gold and silver led as safe-haven assets, potentially pushing silver prices toward $60-90. Over the next six to twelve months, a transition is expected where gold and silver may consolidate or experience choppy trading (point 7. in the historic long-term fractal).

 

 Platinum-Palladium Ratio (monthly bars, 1986 to October 2025).

 

 Platinum-Gold Ratio (monthly bars, 1986 to October 2025).

 

 Platinum-Silver Ratio (monthly bars, 1986 to October 2025).

 

 Copper-Gold Ratio (monthly bars, 1986 to October 2025).

 

  Oil-Gold Ratio (monthly bars, 1984 to October 2025). 

 

Uranium (monthly bars, 2011 to October 2025): Bullish.

 

During this period, other commodities like Crude Oil and Base Metals, which bottomed in April-May 2025, will begin to gain traction. As the cycle shifts to accelerating inflation, oil and base metals are poised to surge, driven by money rotating out of bonds and stocks into hard assets. 

This mirrors historical patterns, such as the 2018-2020 period when gold rose during a slowdown, followed by oil's sharp rally in August 2020 after gold consolidated. The current cycle aligns with the 2001-2008 commodity bull market, characterized by a declining dollar and strong commodity outperformance against financial assets, as signaled by gold's breakout against the S&P 500.

 

In 2025, Precious Metals are surging, with gold and silver both up over 60% year-to-date and mining stocks nearly doubling in value. Technical indicators suggest short-term overbought conditions, but the long-term outlook remains bullish. Notably, spot silver has climbed above $50, showing backwardation against futures prices around $48.70, indicating strong physical demand and potential discrepancies between paper and physical markets.

 

Certain commodities are poised to lead in performance. Gold is a key leader but not the top performer; Silver and Platinum are expected to outshine it, with silver potentially reaching $300 based on historical fractals from the 1940s to 1980s. 

 

Platinum, currently at a 0.4 ratio to gold, could revert to its historical mean of 1.2-2x gold’s price, with potential to hit 5.5-6x as seen in the early 1900s. Crude Oil, Natural Gas, Copper (nearing all-time highs), Steel (breaking out), Iron Ore, Nickel, and Lithium (up 100-300% from bottoms) are also strong contenders. 

 

Platinum-Gold Ratio currently 0.41 (gold/platinum 2.44) as of October 2025, with platinum at $975/oz, gold $3975/oz. Historical: Platinum premium (up to 6.63:1 in 1968) until late 1990s due to industrial demand (catalysts, auto); low 0.05 in 1885. Fluctuations from supply disruptions (South Africa/Russia mines), financial crises, geopolitical tensions, inflation fears; gold safe-haven spikes ratio in downturns (e.g., 2.3x in 2020, 3.1x Feb 2025).

Coal and Iron Ore offer high leverage, with potential for 50-150x gains as seen in the 2000s bull market, making them prime investment targets. Emerging markets like Brazil, through ETFs like EWZ, present 20x potential driven by currency exchange rate unwinds, particularly as the dollar weakens.

Historical parallels provide further context. In the 1930s, gold’s revaluation with flat input costs led to massive mining gains. The inflationary 1970s and 2000s resemble today’s environment, while the 1940s-80s increasing rate cycle mirrors current conditions, with silver moving from consolidation to a boom. 

 

This is not solely a precious metals bull market but part of a broader commodity and hard assets cycle. To maximize returns in the current commodity cycle, one should have invested in under-the-radar commodities like oil, natural gas, iron ore, nickel, and copper between April and May 2025, when they formed quiet bottoms—evident in patterns like inverted head-and-shoulders and double bottoms—before gaining mainstream attention. 

 

These assets, now moving higher, offered significant asymmetry as smart money positioned early, capitalizing on low public interest. For those yet to invest, opportunities remain in inflation-sensitive commodities like steel, coal, and lithium, which are breaking out or showing early uptrends, particularly as the dollar weakens and money flows from bonds and stocks. 

 

Reference:
Andrew Hoese (October 11, 2025) - Early Commodity Cycle: Top Investment Picks. (video) 

 

Commodity Supercycles from 1805 to 2045.

A rotation from Gold back to the Dow might be most prudent if/when inflation-adjusted DJI retreats

back to its 2000 level, which could take many years.  For now, we are right at the upper rail.

The Great Rotation out of Paper Assets into Hard Assets: 
The biggest Bull Market of our Lifetimes is underway.

Gold entering the parabolic phase of the Debt/Fiat collapse.
Moves that took years to unfold now happen in Months/Weeks.

 

Copper: The new oil for this century.

Palladium: Now joining the party. Target $3,430.

 

Platinum: Bullish. First target above $3k. 

 

Silver: A chart pattern that has taken five decades to form.

A generational set-up unfolding. Go long and stay long. 

 

An epic Silver fractal is playing out. 

  

162-Year, 54-Year, and 18-Year cycles in Silver from 1802 to 2025 (quarterly closes, log scale). 

 

The global financial shift isn’t coming—it’s already here. Gold. Silver. BRICS. De-dollarization. Geopolitics and geoeconomics now underpin the unfolding of the next great global commodity supercycle: escalating US–China rivalries, supply-chain fractures, and rising WW3 risks accelerate the decline of the United States’ 250-year empire-life cycle while cementing China’s ascent. 

 

Collapsing US stock indices–to–gold ratios reveal deep monetary stress, aligning with inflationary, interest-rate, and commodity-cycle dynamics that signal dollar devaluation and the breakdown of the post–World War II global financial system. The Great Rotation out of paper assets—equities and bonds—into hard, tangible assets is igniting what the charts suggest will become the greatest commodity bull market of our lifetimes.

 

Wealth preservation now hinges on tangible inflation hedges—metals such as lithium, copper, and nickel; precious metals including gold, silver, platinum, and palladium; and energy assets spanning coal, oil, gas, hydrogen, nuclear, geothermal, and solar. Avoid rate-sensitive exposure in US stock indices, and bonds; instead, accumulate undervalued, cash-flow-rich commodity producers and physical holdings to capture asymmetric, real-asset returns into around 2040.

 

See also:

TPR (October 9, 2025) - The Dow-to-Gold Ratio (DJI/XAU) Collapses: Get Ready for Tangible Assets.

Larry Williams (September 25, 2025) - US Stock Market Outlook for Q4 2025.

Hurst 40-Week Cycle High in US Stock Indices | High of 2025

The Dow Jones reached its peak in the Hurst 40-Week Cycle as expected on Friday, October 3, while the S&P 500 and NASDAQ hit their highs on Thursday, October 9. This marks the likely high for 2025.

 

Schematic Hurst 40-Week Cycle in the S&P 500 (daily bars; April 7, 2025 to January 1, 2026). Please note that, in any composite or summation of cycles with 2:1 ratios of length and amplitude, the crests of individual cycles become troughs in the resulting summation curve (thick black line).

In the S&P 500, the breakdown on Friday, October 10, expanded to four times the average true range of the past 20 trading days, erasing the lows of the previous three weeks in a sharp, 7-hour move down to August's high. The index closed down 3.36% on the highest volume since August 1, while the NASDAQ dropped 4.24% and the DJIA fell 2.44%.
 

The 20-Day Cycle Low is projected to occur between October 10-13 (Friday to Monday), followed by a brief 2-3 day bounce. Afterward, the market is expected to continue its downward trajectory into the next nominal 20-Day, 40-Day, and 80-Day Cycle Lows around October 24-27 (Friday to Monday).

A brief recovery is anticipated during the first week of November, before the market continues downward into the next 40-Day Low, which is forecasted for around November 28. Another short bounce is expected during the first week of December before the final decline into the 40-Week Cycle Low, which should occur between late December and early January 2026.

The principle of confirmation [20-week VTL] on display.

See also:

David Hickson (October 6, 2025) - Hurst Cycles: Bigger Picture for SPX, NDX, ASX, and BTC.

David Hickson (August 25, 2025) - 20-Week Cycle Troughs in S&P 500, NASDAQ, Gold & Bitcoin. 

Larry Williams (September 25, 2025) - US Stock Market Outlook for Q4 2025.

 TPR (August 5, 2025) - Insights into J.M. Hurst's 40-Week Cycle AKA the 9-Month Cycle. 

The West's Dystopia: War, Fragmentation, and Perversity | Emmanuel Todd

Trump’s perversity is unfolding in the Middle East, NATO’s warmongering in Europe. [...] Such is our world as we approach 2026. The dislocation of the West takes the form of a ‘hierarchical fracture’.

» One of the fundamental concepts of the West’s defeat is nihilism.  «

The United States is giving up control of Russia and, I increasingly believe, of China. Blockaded by China for its imports of samarium, a rare earth element essential to military aeronautics, the United States can no longer dream of confronting China militarily. The rest of the world – India, Brazil, the Arab world, Africa – is taking advantage of this and slipping away. But the United States is turning vigorously against its European and East Asian ‘allies’ in a final effort at overexploitation and, it must be admitted, out of sheer spite. To escape their humiliation, to hide their weakness from the world and from themselves, they are punishing Europe. The Empire is devouring itself. This is the meaning of the tariffs and forced investments imposed by Trump on Europeans, who have become colonial subjects in a shrinking empire rather than partners. The era of liberal democracies standing in solidarity is over.

 

[...] Cutting the European continent in half economically was an act of suicidal madness. [...] The rage resulting from defeat is leading each country to turn against those weaker than itself in order to vent its resentment. The United States is turning against Europe and Japan. France is reactivating its conflict with Algeria, its former colony. There is no doubt that Germany, which, from Scholz to Merz, has agreed to obey the United States, will turn its humiliation against its weaker European partners. My own country, France, seems to me to be the most threatened.
 

[...] One of the interesting features of America today is that its leaders are finding it increasingly difficult to distinguish between internal and external issues, despite MAGA’s attempt to stop immigration from the south with a wall. The army fires on boats leaving Venezuela, bombs Iran, enters the centres of Democratic cities in the United States, and sponsors the Israeli air force for an attack on Qatar, where there is a huge American base. Any science fiction reader will recognise in this disturbing list the beginnings of a descent into dystopia, that is, a negative world where power, fragmentation, hierarchy, violence, poverty and perversity intermingle.

 

So let us remain ourselves, outside America. Let us retain our perception of the inside and the outside, our sense of proportion, our contact with reality, our conception of what is right and beautiful. Let us not allow ourselves to be dragged into a headlong rush to war by our own European leaders, those privileged individuals lost in history, desperate at having been defeated, terrified at the idea of one day being judged by their peoples. And above all, above all, let us continue to reflect on the meaning of things.

Quoted from:
Emmanuel Todd (September 28, 2025)  - The dislocation of the West: what threatens us.

(from the preface to the 2025 Slovenian publication of La Défaite de l'Occident) 

Emmanuel Todd, one of the last phenotypical old-school French intellectuals, is a historian, sociologist, demographer, statistician, anthropologist and political scientist at the National Institute of Demographic Studies (INED) in Paris. A prominent critic of the US, globalization, and European integration, he is best known for predicting the collapse of the Soviet Union (La Chute Finale, 1976), After the Empire (2002) and his 2024 book The Defeat of the West. 

See also:

 Emmanuel Todd (January 11, 2024) - La Défaite de l'Occident (The Defeat of the West; Todd rejects an English edition).

The Dow-to-Gold Ratio (DJI/XAU) Collapses: Get Ready for Tangible Assets

The Dow-to-Gold ratio (DJI/XAU) measures how many ounces of gold are needed to buy the Dow Jones Industrial Average. It is used as a long-term indicator of monetary confidence, where a falling ratio shows a shift in real value away from paper assets (cash, bonds, stocks) towards tangible assets like gold, silver, platinum, palladium, rhodium, copper (metals), oil, lumber (energy), and real estate.

Dow-to-Gold Ratio (DJI/XAU) from 1897 to 2025 (quarterly bars, log scale; chart credit: Francis Hunt.)

 Although the Dow has gained roughly 250% in dollar terms since 2000, by Q4 2025, 

its real value has declined by about two-thirds when measured in gold.

 

Over the last century, the Dow-to-Gold ratio has oscillated between periods of equity confidence and monetary stress. In 1929, the ratio peaked at roughly 18.63 before collapsing below 2 during the Great Depression. It reached about 28 in 1966, then fell below 1 in 1980 amid high inflation and currency instability. 

 

Dow-to-Gold Ratio (DJI/XAU) from 1800 to 2020 (quarterly values, log scale).

 
At the 1999–2000 peak, the Dow equaled approximately 45 ounces of gold—its highest in over a century. As of October 2025, the ratio is near 12, a decline of about 73% from that peak. The drop was steep from 2000 to 2011 (reaching a ratio near 6), followed by a rebound to about 20 by 2018, and renewed erosion thereafter. Over that period, gold has outperformed equities in real terms.

 

Dominant 120-Trading Day Cycle (≈174 calendar days) in the daily Gold chart.

 

China is preparing for something.

Hurst Cycles: Bigger Picture for SPX, NDX, ASX, and BTC | David Hickson

S&P 500: In our previous update, we identified three possible 20-week cycle troughs, and after comparing with less bullish markets (Nifty, ASX), concluded that the most likely occurred in the first few days of September. Price behavior since then supports that view. The next 20-day cycle trough likely occurred around September 25, slightly longer than average at 23 days. 

 

Price is rising from the 20-week cycle trough on September 2. The market is still bullish, moving up from either a 20- or 40-day trough, with the next expected 40-day or 80-day cycle trough due within one weeks to ten days. The 40-week cycle trough is projected around January 2026.

This mild irregularity raises the question of whether that trough was in fact an early 40-day one, since we’re due for another in about a week to ten days. Regardless, price remains in an upswing, moving out of that trough, and we stay bullish until the market gives evidence of peaking.

 

The S&P 500 e-minis (ES) is still running up and the composite cycle points to 7,000.

 

Schematic composite cycle projection for the S&P 500 during the 
bullish 9-month cycle phase of the current 18-Month Cycle. 

 

Looking at the bigger picture, the S&P 500 has a 54-month (4½-year) cycle trough in October 2022, followed by 18-month troughs in October 2023 and April 2025. The strong rally since April suggests that the trough may be of greater magnitude. We expect a 40-week cycle trough in January 2026, and a major 18-month (or possibly 54-month) trough by September 2026. Until then, the market remains upward-biased with periodic corrections.

 

NASDAQ: The NASDAQ shows nearly identical structure: a 20-week trough on September 2, and a 20-day trough on September 25. A 40-day cycle trough is due around mid-October.

 

Also rising from the September 2 20-week trough. A 40-day cycle trough is expected between mid- and late October, followed by a move down into the January 2026 40-week trough. The market remains up until evidence of a peak forms.

On the larger scale, the NASDAQ shares the same October 2022 54-month base and subsequent 18-month troughs in October 2023 and April 2025, placing it in its third 18-month cycle—historically the least bullish. If this up-move fails to sustain, it could turn sharply bearish. A 40-week trough is expected in January 2026, followed by a deeper 18-month or 54-month trough toward late 2026.

 

Australian ASX: The ASX has been valuable for cross-checking the US indices because it hasn’t been as relentlessly bullish. Its 20-week trough also appeared around early September, confirming cycle alignment. After a hesitant bounce, the ASX regained strength last week. Shorter cycles (20-day and 40-day) are slightly stretched, and a 40-day trough is due soon, followed by an 80-day in November and a 40-week trough in January 2026. 

 

The 20-week trough occurred on September 2–3; price struggled initially but recovered strongly from the 20-day trough. A 40-day trough is due within a week, an 80-day trough in November, and the 40-week trough in January 2026.

Its longer-term 40-month cycle (analogous to a 54-month in US markets) bottomed in April 2025, explaining the strong upward pressure. The ASX is expected to peak later this year, then weaken into January 2026 before another rally.

 

Bitcoin: Bitcoin’s 20-week trough formed in early September, consistent with equities. The 20-day/40-day identification remains uncertain, but price is currently advancing from that base.

 

The 20-week trough appeared in the first days of September. Price is currently rising, but it will later move down under the influence of the 40-week and 18-month cycles into a trough expected January 2026.

On the broader scale, Bitcoin’s 54-month trough came in December 2022, with an 18-month trough in August 2024 and a 40-week trough in April 2025. Its next key trough, of 18-month magnitude, is due in January 2026. Although the coming decline should be mild due to limited amplitude, Bitcoin’s bullish momentum may fade into early 2026 before the next major upswing.

 

Reference:
David Hickson (October 6, 2025) - The Bigger Picture - Hurst Cycles Market Update - 6 October 2025. (video) 

 

See also:

David Hickson (September 22, 2025) - Hurst Cycles Notes on the S&P 500: 20-Day Trough, Now Up.

 David Hickson (August 25, 2025) - 20-Week Cycle Troughs in S&P 500, NASDAQ, Gold & Bitcoin.

 Christopher Grafton (2022)  - Using FLDs to Forecast Market Turning Points and Trends. 

Jeffrey A. Hirsch (October 2, 2025) - S&P 500 Year-End Outlook: Strong Seasonal Setup Targets 7100.

Wayne Whaley (September 27, 2025) - S&P After 10%+ First Three Quarters and Positive September.  

 Larry Williams (September 25, 2025) - US Stock Market Outlook for Q4 2025.