Gold goes cold as Fed takes a Warsh
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Why did Kevin Warsh’s Fed nomination cause gold and silver to plunge?
Kevin Walsh is President Trump's nomination for the Fed. It seems to have taken some of the risk off the table, with gold and silver falling a lot. But no response on equities, which are also down. China's PMIs come in weaker, actually contracting, and it's a big week for central banks, the RBA, the ECB, and the Bank of England amongst them. It's Monday, it's the second of February 2026. It's the morning call from NAB. Good morning. Well, the US dollar has risen a bit on the news of President Trump's nomination for the Fed presidents, up three quarters of one percent, but still down below ninety-seven on the DXY. Uh the Aussie lost one point two percent. The real move was in precious metals, though. So Comex silver down thirty-one percent, gold down over eleven percent, but this didn't translate to strength in US equities.
We saw the Nasdaq down 0.9% on Friday, 0.4%. For the SP, even as European equities rose, the DAX climbed 0.9%, for example. There was some movement in bonds, not massive, interestingly. Well, not at the short end of the curve anyway, but more at the long end. So let's start there with Nab's Ray actual. I mean, we've been watching gold and silver hitting new highs. All it takes is the news that President Trump has chosen perhaps a relatively moderate Kevin Water. as the uh the nomination for Fed chair, and we see it headling down. So does that mean that all this rise that we've been seeing in precious metals has really been about the independence of the Fed?
How did the nomination affect the US dollar, the Aussie and equity markets?
Oh good morning, Paul. Well, lots to talk about obviously from Friday. But I think the short answer to the question is no. I mean obviously the you know, the run up that we've seen in precious metals has sort of reflected a sort of broad based um aversion to to fiat currencies in general, not just the US dollar. Um, you know, because I think concerns globally about um you know fears about not debt monetization or just fiscal profligacy. effectively and you know leading to sort of debasement if you like. You know, in that sense I think you know the gold rally you know dates back you know for well over a year. Um but obviously the the nomination of Kevin Walsh who I think you know most people instinctively regard as a highly credible candidate who's not going to willingly sign up to the idea that we should be slashing rates or you know doing more QE to support the bond market.
market, you know, has certainly been the catalyst, I think, for a rush for the exit, particularly in terms of sort of speculative or or ETF um buyers of gold that have really propelled the um you know seen that the the price run up go parabolic in the last few months or so. So you know I don't think this is necessarily the end of you know the the rally in precious metals or gold in particular, but um I think we just needed a c a catalyst for a shakeout. And I think I think the uh the news that that Walsh is Trump's pick um has has been more than enough excuse, I think, for a a rush for the exit.
Yeah, and if it is a question about uh you know, just how much currency uh there isn't being created, uh fiat currency is being created, I guess uh you know, Walsh might be the man 'cause he really doesn't believe in uh The Fed doing anything beyond interest rates by and large. He doesn't believe that they should be uh ramping up their um their balance sheet uh because he says it challenges the independence of the Fed. I mean it's it's more of a a fiscal operation rather than a monetary one.
Well that's it. This sort of you know idea of sort of fiscal dominance has has been a theme obviously, you know, almost dating back to the to the GFC really and when the you know the Fed led that uh massive expansion of uh central bank balance sheets with the accusation that it was backdoor debt monetization. And, you know, we don't know uh exactly how uh Kevin Walsh is gonna behave at the Fed. You have to believe that um, you know, he wouldn't have got the job and
Is the recent rally in precious metals driven by Fed independence or broader fiat‑currency concerns?
Unless he did believe that the US economy could could grow faster without accelerating inflation, um, with lower interest rates.
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Chapters
8 chapters
1
Why did Kevin Warsh’s Fed nomination cause gold and silver to plunge?
0:01–1:29
2
How did the nomination affect the US dollar, the Aussie and equity markets?
1:29–3:41
3
Is the recent rally in precious metals driven by Fed independence or broader fiat‑currency concerns?
3:41–6:18
4
What are Kevin Warsh’s views on QE, balance‑sheet policy and fiscal dominance?
6:18–8:19
5
Will Warsh’s stance on shrinking the Fed’s balance sheet reshape interest‑rate expectations?
8:19–9:52
6
How are US manufacturing PMI, producer‑price data and labor‑market trends influencing Fed policy outlook?
9:52–12:25
7
What do China’s sub‑50 PMI readings and Europe’s strong Q4 GDP mean for global growth?
12:25–15:08
8
Which central‑bank meetings this week (RBA, BoE, ECB) could move rates and why should listeners watch?
15:08–15:25