Talk of “peak inflation” is helping to drive investor inflows back into stock and bond markets. As the narrative goes, inflation readings have hit their highs for the year. The Federal Reserve will hike rates until monetary policy “normalizes,” then declare victory over the very problem its policies unleashed.

This rosy scenario gained some traction on Friday after the government reported Personal Consumption Expenditures data. The Fed's preferred core PCE measure came in at 4.9% annually in April, down from 5.2% in the previous month.

Conveniently for central bankers and Wall Street cheerleaders, the “core” rate excludes volatile food and energy prices. Unfortunately for those who live in the real world, there are no signs that food and energy prices are done rising. Per gallon gasoline costs made new records across the country over Memorial Day weekend.

Officials in Europe are warning of energy shortages and power blackouts extending into the winter. Meanwhile, Africa faces a looming famine after critical grain supplies from Russia and Ukraine have been cut off. Other parts of the world face poor harvests due to drought.

United Nations Secretary-General Antonio Guterres said on May 18 that “the specter of a global food shortage” haunts the global economy.

Perhaps some Americans will take heart in the fact that any price spikes in foodstuffs and fuel will be excluded from “core” inflation. But nobody who feels the impact of these rising costs on their household budget should be convinced that inflation has peaked.

Even if cost pressures do peak this year, inflation, as measured officially or unofficially, will almost certainly remain elevated above the Fed’s 2% target. Federal Reserve notes will continue depreciating. And they may even begin to depreciate more rapidly against foreign currencies.

The U.S. Dollar Index hit a multi-year peak of 104.9 on May 11. The buck had been rallying, strangely, at the same time as it was losing purchasing power at the fastest rate in decades.

Over the past couple of weeks, though, the Federal Reserve note has slid against the euro and other major fiat currencies. If phony dollar strength has peaked, that may help send the message more broadly to investors that cash is no safe haven.

The safest currency in an environment where fiat currencies are depreciating in real terms is hard currency. That means gold and silver, the ultimate alternative to all paper and digital assets.

We are likely far from a secular peak in gold and silver prices in terms of U.S. dollars. Silver would need to more than double from here to match its previous high. And gold has yet to experience the parabolic move seen in other commodities this year.

But regardless of where nominal prices head next, owners of physical bullion can rest comfortably knowing that their form of money will retain real value over time.