Gold and silver spike to record highs after Powell says DOJ subpoenas are latest Trump attempt to influence monetary policy
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,” Powell said.
Precious metals are proving their mettle as a store of value, up big in early trading on Monday after the head of the Federal Reserve explicitly said that the executive branch is attempting to use judicial tools to interfere with the conduct of monetary policy.
Gold reached $4,599 while silver traded as high as $84.60, both records for the shiny stuff, as they continue their sensational runs.
Federal Reserve Chair Jerome Powell said that the US central bank had been served with grand jury subpoenas by the US Department of Justice, “threatening a criminal indictment” pertaining to Powell’s testimony before the Senate Banking Committee in June, which touched on the contentious renovation plans of the Fed’s facilities. President Trump and critics of the chair have mused about firing Powell for cause over alleged cost overruns related to the project.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,” Powell said in a video message. “This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions — or whether instead monetary policy will be directed by political pressure or intimidation.”
Typically, countries in which central bank policy is judged to be subordinated to political whims face weakness in their domestic currencies and higher borrowing costs. This can increase the appeal of safe haven assets such as precious metals. Since 7 p.m. E.T yesterday evening, the US Dollar Index has shed about ~0.4%, weakening against a basket of major currencies including the euro, yen, and pound sterling.
The iShares Silver Trust and SPDR Gold Shares ETF are the top two trending tickers on the r/WallStreetBets subreddit over the past 12 hours, per SwaggyStocks.
Trump has suggested that the Federal Reserve’s policy rate (currently in a range of 3.5% to 3.75%) should be “1% and maybe lower than that” this year, in part to help reduce the cost of financing government debt. The president is expected to announce his pick to succeed Powell as the top US monetary policymaker imminently.
Interestingly, news of these subpoenas did not see prediction markets meaningfully curb the odds of the “insider” candidate to assume this position, current Fed Governor Christopher Waller. He remains at roughly 10%. Kevin Hassett, director of the National Economic Council, retook a narrow lead over former Fed Governor Kevin Walsh as the most likely pick for chair, per prediction markets, with both at around 40% or higher as of 4 a.m. ET on Monday.
(Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.)
