After a week of nonsense and frivolous headlines about the supposedly-hawkish incoming Fed chairman, it’s nice to see some logic and common sense return to precious metal trading. While it may take time for prices to fully recover, the rationale for expecting continued gains in 2026 remains in place.
At the peak of theselling pressure last week, we wrote this update on the folly of assuming that somehow Kevin Warsh will be a more “hawkish” Fed chair than Jerry Powell. If you missed it, you should read our article onprecious metals prices.
The notion that somehow Trump and Bessent had been duped into promoting someone even more hawkish than Powell is patently ridiculous, and over the past few days, we’ve gotten some clarity. First this from Trump:
As such, anyone expecting rate hikes and balance sheet reduction from a Warsh-led Fed will be profoundly disappointed. Instead, expect rate cuts and, if short end cuts lead to higher rates on the long end, Yield Curve Control—just as we predicted in this year’smacrocast:
On multiple occasions in 2025, I used these weekly columns to explain how Yield Curve Control was a possibility/likelihood as soon as 2026 as Bessent worked to “meld together the operations of Fed and Treasury”. Here’s just oneexample.
But don’t just take my word for it. You may find it interesting that other, more “mainstream” analysts are beginning to figure this out too. See this reporting from Bloomberg. A “Fed-Treasury Accord” is precisely what Bessent was suggesting with his “meld together” schtick:
And if you’re looking for real world reaction and implications of all this, you can see it as I type on Monday, February 9. Just ten days ago, Warsh was announced as Trump’s pick to succeed Powell and, almost immediately, the false narrative spread that Warsh would be an inflation and interest rate “hawk”. The U.S. dollar index spiked on the assumption, but look at it now:
Source: SGT Report
