The system is shifting from “Good” inflation to “Bad” inflation

The financial system is shifting from “good” inflation to “bad” inflation.

As I explained last week, stocks typically LOVE inflation at first, since it lets companies raise prices and report higher nominal sales. On paper, it looks like growth—even though the gains come from price hikes, not more goods or services sold.

But this only lasts so long. Once inflation crosses a critical point, costs climb faster than revenues, margins shrink, and profits fall. That’s when things turn ugly.

Throughout most of 2025, inflation has actually boosted stocks. It’s a big reason the S&P 500 surged from its April lows, aided by a weakening U.S. dollar. The chart below shows this clearly: stocks ripping higher as the $USD slid to fresh lows.

Now, that dynamic is changing.

One of the best ways to track inflation’s impact is by comparing gold to stocks. When inflation is mild, the S&P 500 outpaces gold. But once inflation gets out of hand, the relationship flips—gold begins to outperform stocks.

That reversal is happening right now.

The chart below shows gold’s performance relative to the S&P 500. When the line rises, gold leads. When it falls, stocks lead. During the trade war meltdown, gold spiked relative to stocks, but that was mostly because equities collapsed. That wasn’t inflation—it was fear.

Since then, stocks have generally beaten gold, signaling “good” inflation. But that trend has ended. Gold just staged a major breakout versus stocks, a clear warning that inflation is crossing into dangerous territory.

Remember, stocks have rallied almost non-stop for six weeks. The S&P 500 sits right near all-time highs. For gold to outperform stocks in this kind of environment is a massive signal that the financial system is shifting.

In short, we’ve moved from “good” inflation to “bad” inflation. That means it’s time to get aggressive with real inflation hedges if you want to protect and grow your wealth.

This is not a small shift. It’s a global sign the next inflation wave is about to strike.

The time to prepare is NOW—before it hits.