Back To Reality: Gold Prices Rebound as Fed Hawk Narrative Fades

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 the selling 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 on precious metals prices. 

Trump, Bessent, and the Future of Fed Policy

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:

And then this from Bessent:

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's macrocast:

Yield Curve Control and the Melt-Up Scenario

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 one example. 

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:

U.S. Dollar Weakness Creates Buying Opportunity

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:

U.S. Dollar Chart

Accordingly, the rally in the dollar index and Warsh's supposed hawkishness was used as rationale for trashing the gold price. However, as reality sets back in, here we are ten days later. Not all the way back, but certainly trending that way...

Price of Gold - 30 Minute Candlestick Chart

Protect Yourself with Physical Gold and Silver

All of this presents you with an opportunity. You can believe in fairy dust, unicorns, the Easter Bunny, and rate hikes OR you can be a realist who understands what Trump, Bessent, and Warsh are attempting to accomplish. They will act together to "run it hot" and hope to grow the U.S. economy faster than the overall debt and debt service costs. Will it work? Maybe...at least for a while.

But in the end, the collective weight of the accumulated debt will lead to a collapse. The purchasing power of the dollar will collapse, too, and this will take the gold price in dollars to levels that are currently unimaginable—just how $5000 gold seemed unimaginable as recently as two years ago.

So buy the dip and keep stacking physical gold and silver. For millennia, gold and silver have been your only protection against the monetary madness of politicians and bankers. Nothing has changed since January 30, and nothing will change going forward either.