Pulling the rug out from under the “debasement trade.”
By Wolf Richter for WOLF STREET.
Different markets reacted differently to President Trump’s nomination of Kevin Warsh for Fed Chair. And most of them were well-behaved, as you’d expect from a Fed-chair nomination that has been discussed for months.
But what stood out was the immense mania in gold and silver that had produced massive gains in the prior months and years; it was super-ripe; traders were sitting on massive profits; prices had already been extremely volatile in recent days, indicating that they’d become stretched beyond belief, and that any little thing could be that straw that would break the camel’s back.
QE seems to be history. Warsh has long hammered on the Fed and on Powell for QE and for the massive size of the Fed’s balance sheet that he says should be much smaller. That has been a consistent theme, and he has not deviated from it.
He and Treasury Secretary Bessent – long-time friends – are singing from the same hymn sheet. Bessent published an essay in which he blasted the Fed for its QE, for its enormous balance sheet, for the “perverse incentives for irresponsibility” that it has created, for its “Wealth Effect” policies, for failure to knock down inflation when it began to surge, for the “class and generational disparities” that its monetary policies, such as QE, have created [I discussed Bessent’s essay here].
When Warsh was a governor on the Federal Reserve Board under Bernanke, he supported QE-1 in order the get the Financial Crisis under control.
But when that was done, and the dust had settled and the economy had begun to recover, and markets were roaring higher in 2010, Bernanke nevertheless was pushing for QE-2, amid substantial opposition from some members on the FOMC, including Warsh and Thomas Hoenig. Bernanke announced QE-2 in November 2010, and Warsh quit in March 2011 (and Hoenig retired later in 2011). Warsh detailed his views and why he quit in a speech in 2018 at the Hoover Institution.
Warsh has long hammered on the Fed for its still huge balance sheet even after $2.4 trillion in QT. He wants to reduce the Fed’s balance sheet, but in cooperation with the Treasury to avoid disrupting markets. He says the large balance sheet got the Fed involved in fiscal matters, in funding the deficits, and that the Fed should not be involved in that. But this being a fiscal issue, the Treasury should have some say in the reduction of the balance sheet.
The media criticized Warsh back in the day for being an inflation hawk, even when inflation was relatively low. But he says inflation isn’t caused by rising wages and a rapidly growing economy, but by government spending and “money printing” – QE and the balance sheet. “Inflation is caused when the government spends too much and prints too much,” he said.
How much of an inflation hawk he will be if he is confirmed by the Senate remains to be seen. He said that inflationary pressures will decline because AI and other technologies would lead to productivity gains. But that might not work out that way. They might just lead to higher profit margins, especially in the services sector where companies have substantial pricing power, and where inflation is already high. They may not want to pass on those profits, if they materialize, to consumers.
But his hostility to “money printing” appears to be etched in stone, and he and Bessent agree on it. So this pulled the rug out from under the “debasement trade.”
The price of silver collapsed by 39% from the all-time high yesterday morning of $121.78 per ounce to about $75 at the low this afternoon. It then bounced off a little and currently trades at $85 an ounce, down by 30% from the all-time high yesterday. That is a huge historic move, even for silver.
Silver had a phenomenal run over the past 9 months, exploding by 317% from early April 2025 to the all-time high yesterday. Since early 2023, when it was trading at around $20, it exploded by 500%. Everyone and their dog were promoting silver. A classic mania. People make lots of money in manias.
And suddenly it popped. Yesterday evening already, as news appeared that Warsh and Trump had met, and that Trump would announce the Fed chair nomination Friday morning, people began to run for the exits to take profits, and the price dropped overnight, and forced selling set in on leveraged positions, just when buyers evaporated, and the bottom fell out.
Silver was already teetering after the breath-taking spike amid huge volatility when the Warsh nomination hit it and tripped it up.
The price of gold plunged by 14% from $5,575 yesterday morning to the intraday low today of $4,700. It has since then bounced some and is down 10% from yesterday morning, at $4,909 per ounce.
For long-term investors in precious metals – those that intend to let their heirs worry about what to do with their stack – none of this should be concerning. Manias and plunges occur periodically and are part of the long-term deal.
The dollar bounced a little. The DXY, which tracks the dollar against a basket of six currencies dominated by the euro and yen, rose by 1.7% from the low on Tuesday (95.55) to 97.15 currently, including a 0.9% rise today.
The dollar has spent much of the past 5 decades below that level. But the crisis media latched on to early January 2025, when the DXY had spiked to 110, and breathlessly hyped the drop since then. All of it was used by folks to hype the “debasement trade” and the collapse of the dollar, which helped drive gold and silver higher, when in fact the dollar is just kind of in the middle of its 50-year range:
Stocks dropped but not by much. It’s like nothing special happened. The S&P 500 fell by 0.4% for the day to 6,939, and is down less than 1% from its all-time high (7,002).
The Nasdaq Composite fell by 0.9% today to 23,461 and is down by 2.3% from its all-time high (24,020).
PPI came in hot this morning. Maybe that did it. Stock investors essentially blew off the Warsh nomination. But they didn’t blow off Microsoft AI spend, and MSFT plunged by over 10% since its earnings call yesterday evening.
The Treasury market yawned upon the nomination of Warsh. The 10-year Treasury yield had ticked up 4 basis points last night, and then gave those up during the day, and ended the day essentially unchanged.
The price of oil has been zigzagging higher since January 7 on geopolitical issues. Today, WTI futures edged up 0.5% to $65.74 a barrel, up by about $10 from January 7. The Fed chair is irrelevant to the oil market.
Cryptos have been battered since early October, and the Warsh nomination added a little to it.
Bitcoin fell last night on the news of the Warsh meeting, but then recovered today. It’s now at about $84,000, but down from $90,000 on Wednesday, with much of the drop occurring Thursday morning, and down by 31% from the all-time high in October.
Ethereum USD declined about 4% since the news of the Warsh meeting last night, but that’s not a big move for a crypto. It’s down by 45% from its all-time high.
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Why is spun electrons $84k? It’s storage of nothing. Digital tulips and Trump grift.
Because we live in insano version of the mult-verse. Tulips mania is the new norm…FOMO is the trade currency
The video just above the comments is a feature I started a few months ago. Almost every business day, I post a new video by The Technical Traders, discussing the daily technical aspects of stocks and precious metals. Chris, who is a gold bug, has been talking about taking profits on gold and silver since earlier this week, and the technical reasons behind it. Right now, his Friday morning video is showing, where he discusses the technical aspects of the markets as they were moving today, stocks, gold, and silver.
“ How much of an inflation hawk he will be if he is confirmed by the Senate remains to be seen. He said that inflationary pressures will decline because AI and other technologies would lead to productivity gains. But that might not work out that way. They might just lead to higher profit margins, especially in the services sector where companies have substantial pricing power, and where inflation is already high. They may not want to pass on those profits, if they materialize, to consumers.”
This paragraph nails it.
I am not a true gold bug. I cannot professionally plan for the zombie apocalypse. But I will always maintain a position in metals to hedge the frailties of central banks and Congress. They’ve been money for 5,000 yrs. Continuing to (at a measured pace, if they can help themselves) devalue the USD is clearly the politically preferred methodology of containing (ha!) the debt. It’s not rocket science. There are three levers. Cut spending, increase tax revenues, or devalue the currency. We know they hate the first two, and IMO, all three will eventually become a necessity considering the current state of affairs. The nod to Warsh was just an excuse for this particular plunge and there will be more, as always. As the paragraph above says, we’ll see exactly what he actually does once he’s in the seat. But while one person can clearly have some irrationally exuberant or depressive influence, that one person does not control any market, and we will always maintain a position in the things the banks cannot print more of. Dirt. Metals. Water. Trust, is a commodity too. And once it’s violated, no matter how good the dance, it ain’t ever coming back the way it was before honey.
Hi Wolf, 90% of traders like Chris end up buying back in at a higher price. I have known so many traders taking huge losses. Pride comes before the fall.
The losses can get to be pretty extreme. I know one guy who thought he was a good trader, and who really does know a lot about charting, who was given $1 mil for a trading account, and traded it down to zero.
Chartists almost always end up taking big net losses.
Look at NURP and the accounts they wiped out in 2025 because of their “double-down” technique.
Holding based on long term fundamentals is the only way to make big profits legally from the markets.
Example: My AGQ that I brought in 2024 when silver was at 35 is still looking very good. It’s a long-term “debasement trade”. I am not trading it. I didn’t sell in October when gold and silver dived. I won’t sell until the U.S. solves the problem with huge interest payments on the debt.
Took a shot w their service mostly on your implied referral here Wolf. I’m liking their mix of technical analysis and macro awareness.
The main guy there sold 40% of his gold n silver when gold was over $5k but missed the spec top, which in this kind of spike is pretty much impossible to guess anyway. I did ok on it too but thats just because I’ve seen it before and was appropriately skeptical of all the “to the moon, Alice!” commentary.
Fun stuff short term, good insurance long term.
I feel I must reply to Brendan’s reply below.
I am sort of a silver bug too, but I sold half of my silver hoard in January slowly dollar averaging out. I subscribe to the principle that gains don’t count until they are realized.
My quibble with Brendan is his comment about buying and holding a leverage bullish ETF like AGQ. That is just dumb. They are meant to be held for a day or less. AGQ lost 59.91% on Friday. Two more days like that and there won’t be any long term investment for Brendan to hold. These leveraged ETFs are widow makers. If you are going to hold precious metals long-term, don’t hold them in a leverage ETF at the top of a market frenzy like we saw in January.
Dan,
“My quibble with Brendan is his comment about buying and holding a leverage bullish ETF like AGQ.”
That was “MS” who said that, not Brendan.
I know Brendan personally, he is a pro, and I didn’t think he’d hold AGQ for long-term or at all. So when I read your comment in my commenting software, I did a double take, and then I went back to look for Brendan’s comment, but he said nothing about AGQ. So I had to use the browser’s search function to find the refences.
Since margins on silver and gold futures contracts have gone up again, it is likely that this pause in gold and silvers rather spectacular appreciation is being extended.
Parabolic charts almost always come straight back down. As MS says below. It is best to recognize a trend then buy early and ride the wave to long term profits.
That said, since our debt is going parabolic, the gold and silver parabola is unlikely to fall 40% from its high before resuming its path upward. Albeit at a slower pace…
The thing is, any technical reason to get out of gold/silver before 1/29 should also apply to stocks!
Parabolic charts always end a certain way.
Makes me wonder if the nomination of Warsh was the administration taking a shot at the overheated markets people are moving money into as part of the sell America trade. Suddenly those formerly sure things look risky (though in reality gold/silver only lost about 2 weeks of gains).
The question of “what else are you going to get into that hasn’t gone parabolic?” is the relevant question for now. Not stocks. Not real estate. Guess a lot of people selling gold are buying treasuries, keeping those yields from rising, just as they’re supposed to.
Gold and silver had nothing to do with technical reasons or any type of MaCD, moving average, candlestick mombo jumbo. I’ll tell you EXACTLY why silver went down and it’s extremely simple.
Nobody was going to pay anyone $120 $140 or whatever an ounce silver was “at” IN PERSON
That’s when you know it’s a real “Top”, not because the technical color in the shapes thing, but because of the, you can’t sell it in the real world since no refinery or pawn shop would pay that much for it
Tulips. With limited supply.
Seeing lots of commentary that the downturn of precious metals last week was because of the CME boosting margin requirements 3 times in January. Once a downdraft starts, the long margin traders get knocked out one after another like bowling pins.
Turns out people LOVE prime numbers. They’re willing to spend big $$$ on fancy prime numbers, and very afraid of missing out on them!
Business plan: Start naming newly discovered prime numbers after rich people for a fee. Cool prime numbers go for a premium (e.g., “1 followed by 13 zeros, then 666, then 13 more zeros, and ending with 1” could probably be sold to Bill Gates for a billion dollars). The only even prime, 2, is of course priceless.
Cuz boomers sit and watch tv or their computer and donate money to politicians, celebrities and podcast hosts.
“Why is spun electrons $84k?”
For basically the same reasons that some arrangements of pigments on canvas sell for millions: Somebody wants that specific arrangement and is willing to pay that much to get it.
Under $78K now. Almost touched $75K. Still in thousands.
It will take another 10 years for crypto currency fans to accept reality. It will be painful to acknowledge the biggest ponzi scheme of all time.
True.
Spun electrons dipped into the $74’s overnight, That is the waterline for major support and it bounced like a ping pong ball off of it.
I prefer the mining stocks. The best of them have seen spectacular increases in profit margins and are likely to resume their appreciation based on tangible product and profits.
Spinning digital assets is not as economical as it once was. As Bitcoin mining cost goes up, and yield falls, it becomes a tenuous hold…
All of these posts are nonsense because the US headed toward collapse
Please bet everything you have on that collapse, and let us know how that goes.
Buy some SPY LEAPS in the down direction and let us know in two years how that goes
I’m not a socalbeachdude but even I know not to bet against the stock market long term.
45% of Microsoft’s RPO’s are from OpenAI. $281 billion…..OpenAI revenue for 2025: $20 billion.
The new Windows is taking/saving screenshots of what you are doing. I thought this was conspiracy theory, then I googled it. Google is working on similar feature for Chrome OS.
You would think Linux would start to catch on – it’s much simpler to use than it used to be. No spyware, no advertising.
The problem with Linux is the lack of device drivers that screws up inter-machine operability. Every time you try to use a new printer or projection device it’s an all new science project. In short, none of these Unix-based systems are plug-and-play. Just my personal opinion from my personal experience. Corrections are welcomed.
I replaced Windows with Linux Mint, works great, zero bloat!
I bailed on Windows 11 and went to Ubuntu. It has been fun so far and feels way less bloaty and corporate.
Didn’t IBM buy Red Hat?
You can uninstall the Recall feature. Also only Windows computers with Copilot and certain hardware even receive that feature. Supposedly it is also stored locally and encrypted, not in the cloud.
Too late. I don’t trust them. They will always prioritize your privacy last. If it’s not Recall it will be something else. Linux is my next project.
The $100 billion deal between NVIDIA and OpenAI was never binding and is now off, according to a WSJ article.
With that $100 billion not happening, I wonder how that will mess up all the other interconnected nonbinding deals that have been announced.
This circular financing thing will probably unravel real quick without this deal…looks like Ed Zitron’s prediction and criticism is coming home to roost quicker than anticipated.
Altman is going to have to hustle harder than ever now, cramping ads into chatgpt is not going to save them, think his next play will probably be swindling the gov for a bailout if the wheel does indeed start to come off fast…
I’d think with all the billions swirling about that Altman could easily slip into the night with 5 or 10 billion of them and maybe that doesn’t make him the richest man in the history of the planet but it’s not a bad haul for a con man.
Global New Network: The Federal Reserve chair recently told the press that this AI frenzy is not like the dot-com bubble for one simple reason: These companies actually have earnings.
However, former hedge fund manager Larry Benedict pushed back on this argument in a recent interview. He said that there’s always a reason to justify absurd valuations:
Positive earnings
A breakthrough technology like the internet or AI
Customer or revenue growth
Larry pointed out that Lehman Brothers posted record profits in the years leading up to its collapse. He also pointed out here that the companies leading the AI revolution have a major financial flaw that could soon lead to their “Lehman Brothers” moment.
When this flaw is exposed, it could trigger up to a 80-90% crash in any of the Mag Seven stocks. And it would be wise to not dismiss this warning as hyperbole.
The Lehman profits were pretty dubious, as very shaky assets were not being marked to market.
Companies like Google, Amazon, and Microsoft, on the other hand, have real money coming in every day from retail customers, advertisers, and corporate customers.
Was there any mention of why it was off?
Also what’s the point of a non binding deal?
It’s a long article in the WSJ based on sources. So I cannot describe it all here. Short version is that Nvidia had lots of misgivings about the deal and about OpenAI.
@ MM1, the purpose of a non-binding deal is hype.
Nice for them to drop that on a Friday night.
Consequential day, unlike most inconsequential.
With Multiple banks issuing recent position papers calling for 6k gold and 125+ silver, with CME circuit breakers not working, with it being a Friday at the end of the month, this had zero to do with a new FED chair. This was 100% big institutional players, banks, bullion banks, either covering their own massive shorts, or allowing someone else to do so.
Anyone who believes this was about a FED chair has cognitive dissonance.
🤣
It’s always THE BANKS when silver tanks. But never the banks when silver spikes. I’ve been listening to the same THE BANKS nonsense for 15 years every single time when silver plunges.
Why would they have to “cover their own massive shorts” if silver hadn’t already dropped a lot? I pointed that out; it’s called forced selling. It sets in after the price has already dropped a bunch. Then there are suddenly no buyers, and the price collapses under forced selling. I explained that in the article. All you have to do is read it.
But what triggered that big plunge that started Thursday evening? The Warsh nomination. We discussed that here in the comments on Thursday evening as it was happening.
price goes up “im a genius!”
price goes down “market manipulation!!!”
It is THE BANKS in PM’s. There is very little retail or WallStreet interest in gold. Thursday and Friday are settlement days in the Futures markets and Chinese markets are closed for the weekend removing a good deal of liquidity. The magnitude of the drop does suggest that in general the PM markets are not very deep, with limited liquidity and that liquidity is easily withdrawn.
The whole Gold/Silver dynamic is also caught up in Geopolitical struggles with an increasing share of the world not necessarily wanting to replace USD, but wanting to find an alternative and USD assets don’t really seem entirely “safe” as they used to be.
I see BTC is down around 80k this morning. Some say that BTC is a good metic of global liquidity so perhaps all of this is hinting at some sort of Liquidity issues in the monetary plumbing – although that seems more normally to be a reaction to dollar strength rather than dollar weakness.
We will just have to see what shakes out next week. Maybe Trump launches an attack on Iran Sunday – now that would be some actual news. If the Warsh announcement really is the reason, it just suggests how unserious the whole market playground is.
“He said that inflationary pressures will decline because AI”
This may be true either through improved productivity or because of massive capital destruction if it turns out the 500 billion or Trillion in projected Capx spending fails to produce revenues.
Don’t overthink this. The East is now setting the price of gold and silver, not New York and London. The east wants the metal for various reasons. New York and London have a lot of paper derivatives…
my read is the banks are obligated to take the short side at comex, with the Fed ready to make them whole. if this was a psyops, a message to the market (listen to Hendry today paraphrasing Trumps offer to pull JPMs license if they don’t make more loans) timed to coincide with the nomination announcement. we wont know until 9pm sunday when shanghai opens just how much of this was the plan. Or how much China wants lower silver prices (if this is an industrial squeeze) it may be that spread will blow out, and the dollar debasement trade is on like donkey kong. it takes 500 oz Ag to make a tomahawk missile and right now they are ready to vaporize a few of those in the ME. In lala land Comex is going to be the exclusive supplier of the DOD, and perhaps JPM will only take the other side on THAT trade and speculators can only watch. This is the most corrupt WH in the history of the nation.
Silver ends January 2026 up 18%. This will be interesting.
This!
Poor Waller…..all that pucking and showing daddy he wants lower interest rates too just to get pass over like left over dinner…..
Now he can become a hawk again 🤣
I had dragged out my grandmother’s silver service, all my silver coins and stuff and was on my way to the coin shop to sell at spot. Oh darn, gonna have to put it all back for the next time. But hey, spot price $79.57, just call it $80. Up 7% in 1 day. Owners of Comex futures contracts will want delivery of physical Silver. Shorts are trapped. The spot price is higher then the futures price. Dead cat bounce or opportunity we shall have to just wait abit.
I’ve got a prepaid Gold Exchange package with prepaid return postage in the way in the mail from JTV and am hoping and praying gold doesn’t collapse to $20 per pound by the time I can stuff a pile of gold in it and get it back to them in exchange for real US Dollars which are now soaring!
People mail gold?
That’s so dumb.
Wow
Why wouldn’t you mail that stuff including fine jewelry?
Haha
I own a pawn shop. Do what you want but know that you’ll get the lowest price if you mail off your jewelry to one these tv ads. You really don’t even need to worry if the price of spot changes since they don’t anything close to it
Spot price for the precious metals is a fraud , a ghost price . If you want to buy silver you will pay ~ 10$ over spot .
If you want to sell silver few dealers will even provide a bid over the last few days because they do not know what price that can sell silver to refiners
I have been lectured that the real price is determined by the Shanghai exchange . That sounds easy . All I have to do is to arrange shipping and insurance to Shanghai and pay any tariffs and duties . Even though seemed like a very “ SIMPLE “ process 😄. i decided to sell my silver 2 days ago via selling the Mar futures . The price was considerably below the “ so called spot” and created a need to
Transfer my futures position to a future month later
I call the spot price of silver the roach commodity .
They let you buy in , but you can not get out .
Good to know thanks. Hey I’ll take whatever I can for grannies silver service. She would have wanted it that way. Anyway, who uses silver forks,spoons etc these days?
I have bought from folks privately for a touch above spot,feel you could also sell this way.I will only do cash deals/in a bank either ones choice(seller or buyer)or a police station parking lot during the day.
As a buyer or seller never use your home to do transactions,for added security look at my handle.
I use sterling silver in my dining room every day and have a huge amount of beautiful silver pieces acquired the family over the past 100 years. It is lovely but takes work to keep polished.
I sold 20 silver coins I bought in 2007 for $20ish 10 days ago for $72.50 at a local pawn shop when spot was $92ish. Took a lot of haggling. I’ve been trying to find a way to sell them for a decade at a reasonable profit. The price jump finally made it possible. PMs are not for me.
Kent,wish you were a neighbor,would have bought at spot/cash.
If you absolutely ‘must’ speculate in metals such as silver, gold, or the platinum family (ruthenium, rhodium, palladium, osmium, iridium, and platinum) simply use APMEX which is an honest dealer/broker in precious metals and offers reasonable prices whether you’re coming or going.
Kent,
Good timing. But what kind of “silver coins?” How much silver content? 80% like the pre-1967 Canadian half dollars? For American Silver Eagles (99.9% pure silver, guaranteed by the U.S. government for weight and purity), a reputable gold and silver dealer (NOT a pawn shop, please!) will pay about spot less $2; and sell them at spot plus $4, if you go there in person and don’t have to deal with shipping costs. A good dealer will tell you over the phone how they price ASEs (such as “we pay spot less 2” or “we pay spot less 4”). So you can shop around.
$72/$92 is highway robbery. I sold for $78 when spot was $81, no haggling. Just looked up gold dealer near me on google maps and picked one with high ratings.
On Wednesday, I made a plan to sell my CEF… come Friday morning when I would do my end-of-month banking.
FSCK!
Is that true? Owners of Comex futures contracts want physical delivery? I was under the impression that taking physical delivery through the exchange was very difficult.
Not difficult, just have the money in your account and inform the broker before the first notice that you are keeping the contract and standing for delivery. Within the delivery month someone will transfer a certificate to your account, your broker will help you track down which depository the bars are at and you hire brinks to ship it.
I wouldn’t be surprised to see more decrease in the price of gold or silver in the short term. I have a friend who knows alot about precious metals markets, and he says the big movers of the precious metals markets are “criminals”, so this latest psy-op to get people to sell their precious metals so that the “criminals” can buy in atcheaper prices, could be successful for more than 1-2 days.
Hi Mish,
I clicked on the link to read your discussion of Bessent’s essay, and got a 404 error. Is your essay still up?
Thanks
Thanks! It’s fixed now.
BTW, I’m Wolf, not Mish.
I read Mish for years and that comment made me do a double take.
Hey, **** is a four letter word! Be careful the way you sling those around.
My personal theory is the Wolfman was heavily short, made a few calls to some buddies and they pulled the plug.
Mish banned me from his site a couple of months ago.
He couldn’t handle my opinions that would support Trump one minute then find blame with Trump the next. I guess he really wanted me to go all in on his serious TDS issue. That guy hates Trump, and his comment thread has to be filled with people from Minneapolis.
At least over here, you just don’t talk about the politics all that much which is fine.
After following him since 2007 and meeting him at conferences in Chicago area twice around that time, the recent years have to be about the eyeballs and clicks. Any of his posts without “T” in the title doesn’t draw flies. He moved from Chicago area to the friendly confines of a St George, Utah subdivision about 6 years ago.
I stopped reading Mish some time ago. His TDS got to be too much and I’m not even a big Trump fan (but unless you hate him 100% you are pure evil to the TDS people). Even worse though, his analysis was just not any good. He turned perma-doomer and there is already ZH for that, and they are better at it.
Apologies, Wolf. I was reading Mish on X a little while ago.
You write much better pieces than he does :-)
Thanks
Adding to my comment above, Mish *used* to be good. Around the GFC he was spot on. His site just declined in quality. Sadly though, most of the business and finance press did not fare any better. Wolf’s site is a rare island of sanity (although there is still wild stuff in the comments at times).
Agreed, CSH. I followed Mish 15 – 10 years ago too. Ironically, once he and his wife fled the insanity of ill-inois for UT, he seemed to lose his mind.
–Geezer
Just looked him up, not having been able to stomach his site for years. He is in the booming antivaxxer, conspiratorial MAGA heart of southwest Utah, enjoying nature photography of the area. Funnily, I don’t remember him as a proponent of big government protecting the vast amounts of federal land he is currently enjoying. Utah sure isn’t going to protect it once they steal control.
Who’s Mish?
Mike Shedlock
I looked at his site, holy snikees I thought I was in Area 51
1:04 PM 1/30/2026
Dow 48,892.47 -179.09 -0.36%
S&P 500 6,939.03 -29.98 -0.43%
Nasdaq 23,461.82 -223.30 -0.94%
VIX 17.44 +0.56 3.32%
Gold 4,909.00 -445.80 -8.33%
Oil 65.74 +0.32 0.49%
Gold is a worthless commodity, other than the most conductive metal. without the historical basis as a storage of value.
The long term is not the same as the short term ever
I couldn’t disagree more.
1. Gold will never be worthless and go to zero.
2. Gold is not the most conductive metal. Silver is.
3. Long term vs short term? Name anything that is???
Graphene is the new ultra conducive material. Only discovered in 2004, it is absolutely taking aim at replacing silver in many applications.
Gold is a valuable and broadly enjoyed commodity used for jewelry.
It has some very unique anti corrosion/ oxidation properties that make it irreplaceable for electrical contacts, in addition to many other industrial applications.
And the color looks good in the white house.
MW: Trump picking Kevin Warsh as Fed chair wasn’t enough to soothe shaky markets
I can hear his knee bending from here.
MW: Silver suffers biggest drop in 46 years, with ‘every man and his dog rushing for the exit’
Opinion: Gold and silver’s $7 trillion wipeout delivers a painful lesson about risk
Having successfully traded since 1970 , I have been amazed how many think that trading is such an easy way to make money . There are times in which there are advantages in a specific trade . These times do not present themselves every day , every week or even every month . Now is the time in silver because
Volatility has exploded in put options , even greater than movements in silver today
MY RECOMMENDATION IS A SMALLER BALANCE SHEET. TAKES THE FED BACK TO A MORE MANAGEABLE SIZE, A MORE SERIOUS JOB, AND INTERESTINGLY, IF YOU CAN HAVE A SMALLER BALANCE SHEET, YOU CAN HAVE LOWER INTEREST RATES. – Kevin Warsh
https://www.c-span.org/program/public-affairs-event/reagan-economic-forum-discussion-on-trade-and-technology/660649
Wolf, do you agree with Warsh? Can we control inflation only through the balance sheet? Or are interest rates at a certain level a necessity to control inflation.
He actually has two factors to bring down inflation, but the Fed can only do one: Reduce spending (Congress) and reduce the balance sheet. I’m pretty sure both together would work like a charm. But reducing the balance sheet further might also work eventually. It’s worth a try.
He has also advocated for higher “real” interest rates, so lower inflation but with policy rates above inflation at a wider spread. So I don’t know how that fits in now, but that’s something that would occur when inflation has come down to target.
In the interim the Treasury needs to finance around 11 trillion in 2026 , most of which is refinancing prior debt . I have talked to no one and have read no comments ( except by Bessent) who think that the Federal deficit will be reduced by any significant amount in 2026.
Without crashing markets, the Fed really needs to find ways to keep lowing its balance sheet. They need to be destroying more money, even if it’s at a very slow rate. I know that’s easier said than done, but I also hope he’ll start telling Congress every chance he gets to start getting its fiscal house in order. If he could find some success in that, then I’d sing his praises.
How could the Federal Reserve even possibly considering doing that when the US Treasury debt denominated in US Dollars is now approaching $40 trillion and total assets in the US are now well over $100 trillion? The big question really is how can the Federal Reserve balance sheet be so tiny now as compared to the value of other assets in the US alone denominated in US Dollars.
Bank of Zimbabwe: This Federal Reserve nomination on tight monetary policy is a day late and a dollar short. To give proper credit: While Powell hasn’t been able to figure out where inflation comes from, the Africans in Zimbabwe have. Zimbabwe got inflation down to 4.1%; there is a Jan 26, 2026 Bloomberg article on it (behind a paywall). AI says tight monetary policy, government spending etc., with the IMF praising them. The folks in Zimbabwe made their own money, a ZiG that is 40% Gold and a basket of currencies. ironically nearly identical to the original Federal Reserve dollar of 1913.
So while the Federal Reserve and Whitehouse are crowing about a sound monetary policy, the African men in Zimbabwe have already figured it out. Give credit where credit is due.
The 3 great hyperinflations of the 20th century were
WEIMAR post wW1
Hungary Post WW2
Zimbabwe
All three of these hyperinflations were directly related to wars immediately proceeding these hyperinflations
It is highly indicative of the basic ignorance of those who state that the US is on the same course toward hyperinflation
What about Turkey, Argentina, Bolivia, Peru, Brazil?
I see too many zeros on Japanese and Korean paper bills. Does that count?
Venezuela has entered the chat.
Argentina has suffered from sustained high inflation for decades.
Not quite hyper, but debilitating none-the-less.
“….40% Gold and a basket of currencies. ironically nearly identical to the original Federal Reserve dollar of 1913.”
Gary. I think you just described the BRIC’s Unit for cross border exchanges.
MW: As bitcoin falls toward $80K, here’s why Fed Chair Warsh may not be enough to revive the crypto
The morons deserve their crypto losses
The people who buy into crypto now are the morons.
Wow. It’s almost as if this is a…gasp…”decent” pick?
It’s as if Warsh’s ideas seem…I dunno…sensible? And the pick itself is…counterintuitive, to put it mildly, to what the Wizards of Oz…sorry, our “Media”, concluded Trump must look for in a new Fed Chairman?
Ignorant on finance though I truly am, I value WOLFSTREET for being FAIR and IMPARTIAL through all our trials and tribulations, and for cutting through the media/FinTwit clickbait BS. You deserve millions more readers than you have even now. Thanks from afar.
Yeah at first glance he looks reasonable…but I’m still skeptical as to why he was then chosen
Because I believe Trump is for the American Dream of home ownership and a middle class with great employment opportunities mobility reasonable home prices and a thriving global economy.
QE was responsible for much of the problems post GFC and especially Covid giveaways. So maybe one can give Trump some credit for trying . By the way very hard to move a corrupt system. As far as Trump personally benefiting from the system look at the rest of Congress? If one wants to buy or not buy crypto Trump says up to them . Just like gold silver art etc. i personally am opposed to crypto due to the potential for money laundering
I totally understand and respect differences in political affiliations, but my question is in the last year had your life gotten any better? Have you gotten a big raise? Have there suddenly been ample job opportunities? Are goods cheaper? Are you less worried about big expenses like medical bills or education? Are states rights being respected? Would you feel safe carrying a gun in a conceal and carry state? Do you believe other countries cower at a bully, or do you think they appease while coming up with a long term strategy to deal with him less? Do you know middle class people who have been helped and had their lives dramatically changed by current policies?
I was talking to a friend last night, a legal US citizen from Nicaragua, and she was like this is how it happens (referencing Nicaraguas past) – it’s slow baby steps. It’s blind allegiance instead of critical thinking. It’s thinking a political figure is going to be the savior of your situation. It’s hate and division so you will stay loyal no matter what your party does. It’s constantly blaming the other guy, instead of noticing that both parties keep increasing the weather divide and only making the rich richer. It’s all smoke and mirrors.
MM1,
could you add several letters to the front of your email address. Your comments keep getting hung up in my system.
Thanks
Except Trump loved QE during his first term (in fact pushed for a negative interest rate) and didn’t mind when mortgage rates were 2-3% during COVID in 2020. The 2020-2021 COVID cycle of excessive MBS purchases by The Fed is largely why we have affordability issues in housing.
Maybe, just maybe, it’s because there’s an entire media apparatus that has on a daily basis nudged you in the direction of questioning every move even when your gut tells you this one was a sensible move – a Hawk among Doves?
Surely, there must be a dark, secret motive, right?
There must be! Midterms remember?
Fear is the link seller …
My gut tells me that when things don’t add up, to be very cautious and look for additional factors. A president who wants lower rates doesn’t nominate a federal reserve chair who believes in higher rates and who wants to run off the fed’s balance sheet also raising rates unless there’s something else that isn’t obvious. Before deciding what to expect from this pick, I’d want to figure out what the hidden piece is.
Ed Tice
“who believes in higher rates”
RTGDFA before you post stupid conspiracy theories. Warsh does not believe in higher rates. He believes in a smaller balance sheet and in less inflation, obtained via a smaller balance sheet.
The choice was vetted very carefully. With specific comments let out to the media at specific times…he passed the litmus test. When we push this button; How much “money” moves from where to where? Fear gauge was pretty steady, PMs even though double digit swings – didn’t make much of a mess. Bitcoin prices don’t matter until the perfect ledger is created and adopted by the IMF – which IMO, will never exist – it would be like solving chaos theory, string theory, and TDS all at the same time.
This Warsh seems like real dissent…from Trump. He is a complete divergence from the Trump doctrine of ever lower interest rates. It looks like someone had a serious talk with Trump.
So monetary policy is, if not fixed, at least under control.
The problem is that ultra- loose monetary policy was required to provide ultra- loose fiscal policy with ever increasing liquidity. If the Fed is returning to orthodoxy, so must fiscal policy. The government must either cut spending, raise taxes or both. Given the reaction to the cuts to health care,
maybe higher taxes.
Or is he a dissent from what you’re being told Trump is, which is different.
I’m losing patience with the media rapidly. Best to stick to the data, see through the madness and speculation, and judge on actions.
I’ve been told a lot of garbage over the past two years and it’s all coming to light and I now seriously question what world some of these big wig media outlets are living in because their narratives seem to be so far straying out of sane, rational, data-driven analysis.
What ARE you talking about? Are you saying the networks have been using AI to create false videos of Trump publicly denouncing the Fed Chair over and over for months?
The language was always beyond disrespectful but recently turned threatening. Since you feel the whole thing is made up by MSNBC or something here is a BBC news item:
‘Federal prosecutors have opened a criminal investigation into Federal Reserve chair Jerome Powell, he said on Sunday.
In a highly unusual move, Powell disclosed that the US Department of Justice (DoJ) served the agency with subpoenas and threatened a criminal indictment over testimony he gave to a Senate committee about renovations to Federal Reserve buildings.
Calling the probe “unprecedented”, Powell said he believed it was opened due to Donald Trump’s anger over the Fed’s refusal to cut interest rates despite repeated public pressure from the president.’
And you believe Powell why? Because he is such a truth-teller? Because his wisdom over the last 10 years has been proven accurate? Because you can prove he didn’t ignore the DOJ asking the Fed to give information before issuing subpoenas?
By the way, the BBC is hard-left. Citing to them simpy shows you do not realize which media lean which way.
Legal Economist,
By any objective definition the BBC is not hard left, but generally considered center They might go a little left on social issues but are also center right on economy and politics giving significantly more weight to government voices than opposition.
In other words, just a mostly useless and controlled media company like all the rest.
Looks like as of now the Chairman confirmation will be stalled in the Senate Banking Committee as Tillis said he will be a “no” vote until the DOJ case against Powell is resolved.
Well the BBC is certainly to the Left of some people.
Reminds me of a line from a Brit comedy group from decades ago
(Beyond the Fringe?) They are talking about America:
‘Well they have a two party system. They have the Republican Party, which is the equivalent of our Conservative Party, and they have the Democratic Party, which is the equivalent of our Conservative Party.’
Need to see Warsh in action vs just talking. He says a lot of conflicting things that sound good independently but don’t make sense under current market conditions if actioned on quickly.
He said he wants a much smaller balance sheet at the Fed, but he also wants long term rates down, and he also wants to bring short term rates down, all while keeping inflation on target.
That makes little sense in the current reality. Sizing down the balance sheet will take years, if done orderly and can push rates higher depending on the private market’s capacity to absorb all that old and new debt. Inflation isn’t going to get reduced through deflationary aspects of AI in any short term window, that’s nonsense. If anything AI is net adding to inflationary load with spending / waste pressuring capacity until the bubble bursts.
Just don’t see how his ideas actually get the results he’s proposed in anything but a long horizon. Almost expect him to push for lower rates while ignoring inflation in the short term hoping inflation drifts lower on its own, and reverse course later after it again proves sticky.
For what it’s worth, Paul Krugman was saying something similar today as well. He says Warsh is a political guy and was only a hawk during the 2010’s because Obama was in office, so the people calling him one now are making a mistake. According to him, many economists also consider Warsh’s rhetoric as basically gibberish – big words and unconnected ideas. He thinks that Warsh’s presence on the board won’t be an immediate problem since he’s just one vote, but he could be a major liability in a crisis.
(As an aside, Krugman isn’t as much of a free-trade guy now, although more for practical reasons than theoretical: globalization is unpopular with the public because of the disproportionate local effects, and because of the national security issues with outsourcing to China.)
…By the way, I just read the speech that Wolf linked. I’ve never seen someone use that kind of verbiage who’s actually being honest. If I didn’t know any better I’d think I was reading Jordan Peterson.
That’s the silliest statement I’ve read all day. Think about it! It’s not even silly. It’s just bullshit.
If you had to fix the economy during a crisis by using QE, say you save 5 trillion $ from losses, medicine as it were.
If you do nothing you lose the 5 trillion.
Either way you get blamed by an opportunistic upstart.
This is Boris Johnson’s playbook all over again. Can we have a Liz truss to take the heat too for our country? lol
He could be being honest for all I know, but generally what I see is that the people who know what they’re talking about are able to make their point in plain English. Given that the country is awash in charlatans right now, talking like that isn’t going to help his case.
What’s wrong with Jordan Peterson?
“According to him, many economists also consider Warsh’s rhetoric as basically gibberish – big words and unconnected ideas.”
So what does the great Paul Krugman have to say about the 150 economists that told the Biden administration that large deficit spending would not cause inflation. Or how about the economists who said sending all the manufacturing jobs to China would be okay. Search the web for “What Economists (Including Me) Got Wrong About Globalization” by Mr. Krugman.
I consider most economists to be idiots, who have cushy jobs in government, private think tanks, and large investment firms and no common sense.
If you pull most blue collar or middle class person off the street and ask them if deficit spending or off-shoring manufacturing is a good idea, they would answer with a loud NO. Why? Because they live in the real world and have common sense.
What is his opinion worth? About as much as used toilet paper.
Yeah I read his “got wrong” piece when he wrote it, that’s why I follow him now. Generally, I think the people you can learn the most from are those who can admit their mistakes.
He’s written a lot about the covid inflation. Basically, he admits that 1.9T was too much, but that wasn’t the only factor, because there was also the supply-chain-driven inflation from shortages and such. Look at the fact that inflation was a global phenomenon even in countries that didn’t do stimulus. He says that Summers et al. were wrong in predicting 1970s-style entrenched inflation, and that it instead came back down on the trajectory he and others predicted in 2021. Now the current admin is pushing it back up.
I sure wish people would answer with a loud no at the ballot box. They have been answering with a loud yes in the elections for many years, though they probably don’t realize what they’re doing. They said yes last November. They have another chance this year in the midterms to say NO and vote for Libertarian, the only party on the ballot for a balanced budget, but a whole lot of people can’t conceive of voting third party.
If Krugman said it, believe the exact opposite. Do a search on Krugman’s worst predictions (and there have been a lot of major doozies).
While he was once a good economist, it just shows how a Nobel Prize and working at the NYT can corrupt a person.
Krugman’s area of study was microeconomics. Relying on him for macroeconomic insights is similar to getting a prostate exam from a lesbian gynecologist: Some knowledge but certainly no hands-on experience or expertise.
Dr feel good quit touching your prostate. That’s nasty
His rate comments make sense if he gets inflation down; and he wants to get inflation down by reducing money supply = reducing the balance sheet. His logic is that he can reduce the balance sheet, bring down inflation, while cutting short-term rates a little, and long-term rates will follow inflation down. This the monetarist theory. I don’t know if it will work or not. But I like the idea of reducing the balance sheet. He might also reinstitute reserve requirements and make other changes that might allow him to get a better handle on inflation from different directions.
“According to Warsh, models used by the Fed to interpret economic data are wrong: ‘They believe that inflation is driven by consumers, by wages that are rising too much, and consumers that are spending too much,’ he said. ‘I fundamentally disagree. At the core, I think inflation comes about when the government spends too much and prints too much’.”~ the responsibility for inflation goes to congress and the POTUS. Maybe he is right, but wages and employment etc play a role or I am in denial or just wrong
Increasing wages do not necessarily cause inflation. In general, it depends on whether production increases more or less than wages. I find Warsh to be correct on government spending and dollar printing.
I wonder what kind of conversations Trump had with Warsh? I know Trump expects loyalty, but he has to understand that the Fed has to be reasonably independent. Warsh has to have explained his plan to Trump, so that there’s not a gotcha’s coming that will put Warsh under fire. I’d also like to see Warsh update the Fed’s PCE target to something closer to 2.5%, which seems to be a more reasonable goal.
Sounds like Warsh and Miran are going to get along splendidly.
Warsh and Miran are unlikely to be on the Board of Governors together. If Powell doesn’t resign from the Board of Governors (that term expires in jan 2028) when his term as chairman ends on May 15, 2026, there is no room for Wash to join the Board of Governors, and he cannot become Chair. There are only 7 slots on the Board of Governors; and they’re all occupied. That’s why Miran has to go to make room for Warsh. That has been part of the deal with Miran from get-go. Miran is just temporary, a placeholder for the new chairman.
Warsh is probably the best choice rhat could have been hoped for
QE which Trump seems to want is not in Warch’s playbook which seems to be Trump’s calling card
Like Powell instituting QEat the behest of DJT replacing Yellen
Now Warsh will become a dove again. Trump has constantly said he wants stonks, crypto, housing and all other bubbles to continue going up with even bigger government spending then current levels. Further for Trump stock market seems to the barometer of whole economny. A 180 by Warsh seems given. Will be extremely surprised If he doesnt.
Well put. Overall he seems like JPow 2.0, who also seemed like a good pick at the time: sounded reasonable, against excessive money printing, but then went on to print the most money ever and had 9% inflation and a systemic risk exemption during his term. The fact is that ANYONE who came out the other side of this process is going to be a raging dove by definition, or they wouldn’t have been picked.
Meanwhile in the real world physical silver and gold over in the East it is trading much higher. The actual asset itself.
This new FED chair. Hates QE and Treasury financing. Thinks AI will help cut waste. Good for him.
But Trump loves debt. And the overall national debt is astronomical.
Which political party is going to cut entitlements as you call it in the US? No one.
Who’s going finance the debt now?
One man with optimism doesn’t solve the demographic problem in the West and the level of debt already accumulated.
if it says “Great Value”. Run away
I lost a lot of fiat value in gold and silver last couple of days,but,still over a couple of years way ahead of the game in fiat bucks.
Price goes down will buy more/price goes up will have a beer,I win either way with my in hand stacks.
I sold some physical and bought some miners…
But yes, the MATH of the budget is what it is, and the debasement trade is assured. This time on a global scale.
Interesting times.
Agree. Anyone who has a one year run- up of 90% in anything and then is dismayed when it has a pullback of 8% should not be investing in anything but GIC s.
The run up in silver was so much faster and more violent that its pull back was predictable even by a silver bull.
RE: silver. I just did a check and was surprised to see it’s rarer than I thought. The gold / silver ratio in the earth’s crust is somewhere between 17 and 19 to one. And it has many more industrial uses than gold, uses which are growing in volume, like solar panels. Worth a look at the right entry point and IMO preferable to Bitcoin.
Yesterday shakeout plucked gold and silver traders stop losses. Silver and and gold [1M] and [1W] trends are still up. In gold terms healthcare and oil are cheap. A CPI between 10% and 18% can deflate the US $40T gov debt, Japan, the EU and Chinese gov debt. It will massacre bonds, cash and transfer money.
Any oil-related tips to offer, Michael?
Agreed. A short-term fall in the price of precious metals hardly means the end of debasement. Debasement is the biggest trade of the decade (other than maybe NDVA has been )
Kevin, what are u going to do ?
If Warsh is seen as a bubble busters, let me be the first to say, because let’s face it, it’s anybody’s guess or conspiracy theory why the metals tanked, it was the most leveraged players, the Japanese.
The leveraged can’t withstand a rout and it spills over to everything.
Gold wasn’t routed. It pulled back 5 % after a 1 yr run up of 90 %.
Now then ya got yr Bitcoin.
BTW: I feel a bit ripped off. I got into DOGE coin thinking it was issued or related to the Dept of Government Efficiency.
There is a 1 missing before your your 5. The pullback from the high is 15% as of now.
True
I welcome the pullback, but Walsh is no “hawk”.
“But his hostility to “money printing” appears to be etched in stone, and he and Bessent agree on it. So this pulled the rug out from under the “debasement trade.”
Tell me, has CONgress increased revenues to meet the new expenses? If so, then the statement above is correct.
What century do you live in? Can I join you? In this century that I live in now, Congress discovered that it does not have to collect in taxes what it spends. It can just borrow what it spends endlessly and let the future take care of the debt. That’s been the big issue here. Warsh addressed it too. He said inflation is caused by excessive government spending and by “money printing,” not by a strong economy or rising wages. And he said that the Fed has moved into fiscal matters by enabling Congress to borrow and spend like that.
What could the fed do to stop being an enabler?
smaller balance sheet would be a big step in that direction.
How about not buying Trillions in Treasury bonds, for starters.
I think we are talking past each other, the MATH is what it is. Walsh will do nothing to change that. He will be yet another enabler.
Economic is a dismal science. It is even BS. You can use some statistics to explain human behavior in economic activities. Other than that, it is just a bunch of BS.
Presidents come and go. Fed chair come and go. Now, explain to me how big the US deficit will be in 5 years? Do we get to keep playing the game until the deficit is 500 trillion?
I wouldn’t get that worked up about the U.S. debt. It’s mostly bovine … it’s chewing cud. It’s one pocket of my jeans owes the other.
We will never pay it off and go to net zero (that’s not even a realistic goal), and you’ll never get a good read on our debt to equity as a nation because we straight lie about our asset side (to the downside to an almost absurd degree).
There’s still no safer haven than US Treasuries – see: objective evidence. It won’t always be like that, but it’s not the end of times you’re being sold on a daily basis.
Like and subscribe for more BS
Hoang,
“Now, explain to me how big the US deficit will be in 5 years? Do we get to keep playing the game until the deficit is 500 trillion?”
You look at “debt” in a vacuum. What matters about the debt is its relationship to the economy. If the economy grows faster than the debt, the burden of the debt declines until it’s no longer a problem. So strong economic growth and slightly higher inflation will over time reduce the burden of the debt.
Kirk,
“you’ll never get a good read on our debt to equity as a nation”
For a sovereign nation, debt to equity is nonsense. What you need to look at is debt in relationship to the size of the economy and to tax receipts.
“because we straight lie about our asset side (to the downside to an almost absurd degree”
I’d like to feel better – provide specific details on the statement above. I’d really like to feel more confident about the future.
Hopefully you mean something more than the vague, general handwaving about “untapped natural resources” or deeply cynical/ultimately self-destructive attitudes about unchallengeable US “military might” (whose ability to “regenerate” large scale military weapons is a rotted shadow of what was accomplished in WW 2).
The interest on the debt is now a major budget item, having overtaken military spending. A version of the self- sustaining reaction, that feeds on itself. It’s hard to model the mind set that sees this going on forever. Resembles a religious belief, in not requiring any mathematical or logical foundation.
The metric that matters for interest expense is interest expense as a percent of tax receipts:
https://wolfstreet.com/2025/12/24/us-government-interest-payments-to-tax-receipts-average-interest-rate-on-the-debt-and-debt-to-gdp-ratio-in-q3-2025/
I agree. I know a guy who has a degree in econ from Wharton, and was a V.P. at Goldman Sachs, and he thinks the increasingly high interest payments that the gov’t makes on our debt is irrelevant. Oh Jeez.
Yes, at some point the debt will be overwhelming, the biggest item in the budget.
How can anyone not see that ?
Silver will be at new highs within 2 months!
Yep…
Just like when it reached $50 per ounce in 1980 and then struggled for many decades to just maintain $4 to $8 per ounce?
I will remind you of this comment in a few months.
I think SoCal is likely to be correct.
Happened to be in London when the Texbros tried to corner the silver market that year SCBD, and called the better half to buy, which was done at approx 13, then sold a day later for some serious gain..
Traded solid 100oz bars for a couple years thereafter at a great coin shop in east bay that sold at spot plus 3%, bought at minus the same… made a lot of coins,LOL…
“Trading” on the various venues for ”futures” not so good..
Lots and Lots of challenges, including very bad actions and worse advise from so called brokers…
To each their own, eh?
That was before many of its industrial uses were in mass volume. or even invented. Eg. It’s required in solar panels. However the last run up was the spec demand competing with the industrial demand and the pull back was completely predictable.
As I’ve lamented I sold my 50 oz bar about 5 months? ago for 57 US, at that time a record. I would gladly buy it back for 60, even if I had to hold it a year. I don’t think it will go much lower for long.
CNBC Feb 2
‘Gold and silver rebound after historic wipeout as analysts say thematic drivers stay intact’
Gold up about 5% silver up 8%
Silver is now at $83, a couple of bucks shy of the price Friday evening that I cited in this article ($85).
Gold is now at $4,834, about $75 bucks shy of the price I cited Friday evening in this article ($4,909).
Your name checks out:-)
How can the Fed ignore the Treasury’s need to fund huge fiscal deficits? These deficits will continue indefinitely because it is politically impossible to reduce spending or to raises taxes. Of course, we could grow our way out this hole, with AI as the magical agent of growth (though I doubt it). Perhaps Bessent and Warsh will succeed in changing the Fed. But if a crisis occurs, I think they will behave much as their predecessors did. It will cost them nothing to turn on the electronic printing presses and they will be applauded for doing so.
Higher nominal economic growth and slightly higher inflation will whittle down the burden of the debt on the economy. That’s what they’re shooting for.
For example, nominal GDP in Q3 grew by 8.3% annual rate; inflation as measured by the GDP deflator was 3.7% annual rate in Q3. The nominal Treasury debt grew by 6.1% year-over-year, so more slowly than the economy, and if this keeps going year after year, over time, it reduces the burden of the debt on the economy and resolves that issue. That’s the plan from this Administration.
Just another small step Wolf, when what is SO clearly needed is to rein in spending of all and every kind that is not already paid for.
Not very likely when the system rewards those politicians who are somewhat or entirely obligated to those folx who have supplied them with ”campaign funds” that somehow or other seem to seep into the pockets of the paid political puppets over and over and over…
WE, in this case the working and retired WE, are not going to get any relief from this until WE see serious legislation to stop the revolving door and the clearly paid politicians of all stripes, though some of the younger US Representatives seem to be stepping up, and KUDOS to them, far shore!
It’s just exaggerated seasonality.
🤣
Was QE priced in to gold and silver or risk before warsh? That’s the question people are asking. If Kevin takes away the QE PUT, what happens next?
Volatility, tons of Volatility. No matter what
MSTR average Bitcoin price is now $76,037 per coin. Price now is $78,677 as I type. When bitcoin gets down below MSTR buy in price. NASA we got a problem.
Bessent was worried about the stop losses being triggered from the decline in the dollar; European family wealth funds want to protect their bosses wealth in spy priced in euro with stop losses. That explains the timing of the inevitable Warsh. But as wolf said debasement expectations just changed, zig zag another reason to sell risk. I thought we would have limit down future day last week, crazy right, but maybe soon. The yen is set up for a big rise in my opinion
I have absolutely no idea about how much of a monetary dove or hawk that Warsh may ultimately become.
But I think it is *really* important to recognize just how deeply/profoundly “financialization” has (so far) prevailed over real asset economics.
Look at the multitude of pretty big financial market gyrations that result from the *simple selection of Warsh* (whose *actual* power/tendencies lie months/years in future…and are therefore honestly unknowable at this moment).
Yet…the vast gyrations – involving tens of billions of value.
Based upon the “chicken entrail” prediction (Warsh selection) of *future* “chicken entrail” predictions (actual future Fed money supply/interest rate f*ckery-pokery).
Not actual, existing production/efficiency/tech capabilities of companies or nations…but today’s financial guesses of future financial guesses.
Once things have proceeded to this point, they have become profoundly stupid and profoundly dangerous.
I didn’t know much about Warsh, thanks for framing his positions, not sure he will get away with the inflation hawk thing with Trump but the anti QE is a welcome sign.
Not much Trump can do once he’s confirmed. Remodeling card has already been played.
Kevin, high WTI and high CPI takes down AI.
It was (-) 10F, or (-) 23C, in PGH this morning. Natural Gas plunged from 7.44 to 3.0, before closing at 4.34. The [1M] and the [1W] trends are up.
Kevin Warsh will be Volcker 2.0. Look for interest rates to stay where they are or go even higher. Gold $ Silver will plunge. The Fed balance sheet will be drawn down. Crypto will plunge and head to zero or below zero.
The 1st thing he needs to do is fire the 300 PHd Keynsian economists on the Fed Staff. Until he does that, nothing will change.
Possible in law connection with Mr warsh with his father in law Mr Lauder (yes of estee Lauder fame) being crony buddy of the commander in chief and able to draw in some favors to get sonny boy the job and make the daughter happy. Who knows.
I am sick of Trump always appointing incompetent people because he thinks they are good with the press “he’s central casting”.
Thanks for letting us roll Wolf, we are all getting excited with our Saturday Evening Quarterback” BTC bounced at $76029 below MSTR BTC buy in price. You hit a ballon with a needle it eventually pops. The question is how big the derivative market in crypto is? Who sold the PUTS in BTC and what do they have to liquidate to honor the PUT contract? If they can’t honor the contract is the clearinghouse insurance policy big enough that they don’t go down if ADL auto de leveraging fails to cancel the trade. I love the GOLD bug participate here on your site explanation for buying GOLD “its free from counterparty risk”. F yeah love it!!!. I am buyer of gold at $2650! or maybe 2700! robin “hood” and “coin” should get smoked in the weeks ahead!
I didn’t read every comment, so it may have already been stated.
Warsh can oppose the Fed expanding the balance sheet. Fine. We can all see wisdom in that.
But there still must be a marginal buyer for US debt. Foreign governments are stepping away. Now the Fed will (I guess) be stepping away.
There is NO WAY US government spending will be reigned it. Zero chance. The debt will keep piling up. Only so much room on the short end.
So , they will deregulate the banks to let them buy it. They’ve already talked about it. Plausible deniability for debasing the currency, just a different path. .
“Only so much room on the short end”~ you just got to go back in history. Is this happening now with massive t bill issuance? I am not smart enough to know that answer. But I see similarities between now and than. ~ “In 1934, the German government issued MEFO Bills as notes of payment that could be exchanged with the government. Even though MEFO Bills were issued to mature in six months, the maturation period was continually extended using 90-day extension provisions, essentially serving as bonds with a very long maturity period for the German government. Through the MEFO Bills, the German Reich was able to fund rearmament without being noticed. By 1938, there were 12 B Reichmarks of MEFO Bills, compared to 19 B Reichmarks of standard government bonds.”~ seeking alpha article
True but this was internal engineering. By 1938 Germany was broke to the point that the head of the Reichs Bank was wondering how it could pay for food and oil.
The conquests of the next few years solved that problem with captured gold, beginning with that of the Czechs.
Gold sceptics should check the role of gold in WWII. For example Germany had to buy iron ore from Sweden but the seller had zero interest in Reichsmarks. Gold? No problem. Same as now btw. Gold is rated a Tier One Asset by the BIS. It is always acceptable to settle international debt unlike most fiats.
New guy wants to “…reduce the Fed’s balance sheet, but in cooperation with the Treasury to avoid disrupting markets”
What does “in cooperation with Treasury” mean?
How does this goal align with the understanding that (pre-QE) “balance sheet always grew with banking system/economy” and the hypothesis that we are at/near minimum total balance sheet to avoid said market disruptions (paraphrasing), making current balance sheet growth akin to pre-2009 management practices.
Last chart I saw had balance sheet at ~21% of GDP but showed 6% pre QE. Lot of space between those numbers. Anybody wanna speculate on a meaningful target? Is that target and the process of getting there what “cooperation with Treasury” means?
IMVHO belly, the best possible outcome will be for Treasury and FRB to coordinate to reduce both Fed holdings and debt.
WILL that happen,,, probably not due to paid puppet politicians obeying their masters/owners…
But, WE can continue to hope, eh?
What does “in cooperation with Treasury” mean?
1. Bessent, the boss at the Treasury Dept., also lambasted the Fed for QE and its huge balance sheet and also wants a smaller balance sheet. A large balance sheet is inflationary, as is QE (money supply), in their theory, and bringing down the balance sheet would reduce money supply and reduce fuel for inflation, and if inflation remains moderate, long-term interest rates are going to remain moderate, rather than blowing out.
2. Powell’s “ample reserves regime” that he is so proud of and refuses to deviate from, and that he etched into the Fed’s “Framework,” is likely out the window. Warsh has already said that Powell’s Framework needs to be tossed and that he would be “breaking some heads” among the staff that concocted this and other stuff.
3. Cooperation with the Treasury is also required as the Fed shifts its assets to T-bills, including $2 trillion in MBS. There are currently not enough T-bills outstanding to do that, and the Treasury will have to increase T-bill issuance just to allow the Fed to rotate out of MBS and longer-term notes and bonds.
The Fed and the Treasury have been cooperating on the T-bill topic for months. And they worked and in glove during the mega-QE of March-May 2020, when the government issued $3 trillion in new securities and the Fed bought $3 trillion in securities.
4. The New York Fed is the fiscal agent of the Treasury Department, and the Treasury Department’s checking account is at the NY Fed, and they have to cooperate constantly.
5. Now they have to cooperate to unwind this QE mess.
6. The government’s checking account was moved from commercial banks to the NY Fed during the Financial Crisis (the TGA). So that increases liabilities and assets by the amount in the TGA. The “desired balance” in the TGA currently is $900 billion, and it grows as the money that flows through that checking account grows. So you need to add that to the minimum base, plus 17 years of inflation, plus the growth of currency in circulation of $1.5 trillion to the pre-QE base.
The balance sheet has always grown before QE roughly in line with nominal economic growth.
Historically, I liked Bessent but after last Sunday when he was on the Sunday morning news show, when the world saw him the #1 salesperson for UST debt spin what happened the day before in Minneapolis. I moved money out the USA on Monday and out of US currency. I don’t think i am the only American who is moving capital, honestly, i am worried about the upcoming midterms election results that it’s going to be called a fraud, rigged election. If that happens i assume capital controls would be put into place quickly. i am getting prepared to have an exit plan, its in my collective consciousness, my DNA to keep my family safe! Its really the only thing that matters. This is what i mean by our country has lost; its Truth capital. I am not alone with this paradigm shift,
Thanks Wolf/Vintage – I have follow up questions but I’m sure they’ll be covered in an upcoming report.
Delusional – Uruguay – Uruguay – Uruguay – Carnival kicked off 10 days ago and los llamadas start this Friday. Hope you like drums and red wine with Coca Cola
I am not seeing ANY comments saying that the CME raised margin requirements on silver futures contracts by 25% and on gold futures contracts by 10%. This killed the silver rally, not a Fed appointment. The silver bubble of 1979-80 was ended the same way- by changing the rules on futures.
🤣❤️ CME increased margin requirements AFTER the crash.
https://www.mining.com/web/cme-raises-gold-silver-margins-after-historic-price-plunge/
And it’s obviously not the first time it raised margin requirements; the most recent one was Jan 13, 2026, 😍
Eh,a lot at play in the metals market,I will just hold me stacks and priced right for me buy more,in this long haul and still way ahead of the game(fiat wise) even with recent price drops.
So we are subjected to years of Fed and JPow bashing from Trump, only to have him nominate someone who is semi-respectable among economists? Even the PM of Canada made the unusual move of endorsing the nomination!
Theories on the Warsh nomination:
1) It’s a signal to JPow to either retire and accept Warsh as his replacement, or stay on and maybe it’ll be Miran! Note that there are currently no vacancies amongst the governors for Warsh to fill so that he can even be chair.
2) It’s another TACO insider trade. This time administration insiders shorted precious metals, after years of promising to cut rates to zero once they had control. An extreme pump and dump!
3) Warsh will contradict the president’s stated policy goals by holding rates higher, and then the president has someone to scapegoat when the next recession or inflation comes along. Seen in this light, JPow (another Trump nominee) played his role perfectly, and Warsh will make a good scapegoat too.
Nomination != Confirmation
Also, a Trump nomnination may or may not be serious. He often uses people and events as tools to get what he wants. It wouldn’t shock me if he pulled a switcherooo at the last moment.
“But he (Warsh) says inflation isn’t caused by rising wages and a rapidly growing economy, but by government spending and “money printing” – QE and the balance sheet. “Inflation is caused when the government spends too much and prints too much,” he said.