This week, the debate over the future of the Federal Reserve has escalated. Treasury Secretary Scott Bessent has gone beyond urging rate cuts. He has publicly criticised the Fed’s use of quantitative easing, its expanding involvement in regulation, and what he sees as broad mission creep. He and several Trump advisers, including Kevin Warsh and Stephen Miran, are advocating for a leaner Fed mandate.
That debate is now colliding with an unprecedented legal fight. The Trump administration has appealed to a federal court for permission to remove Fed Governor Lisa Cook before next week’s pivotal policy meeting. A lower court had blocked the attempt, ruling that Cook could not be dismissed without due process and that the Federal Reserve Act only permits removal “for cause.” The Justice Department is now pressing to overturn that ruling, arguing that the president’s constitutional powers should prevail.
It is one thing to criticise the Fed’s policy mix. It is quite another to attempt to remove sitting governors days before a key meeting. This is the kind of intrusion that alarms markets. Independence is supposed to shield monetary policy from partisan cycles. If that shield weakens, the credibility of the Fed as steward of the dollar comes into question.
Markets are already adjusting. Goldman Sachs warned that if Fed independence is compromised, gold could surge to nearly $5,000 per ounce. Their analysis is simple: even a modest rotation of capital out of Treasuries and into gold could ignite a dramatic move. JPMorgan has also noted that concern about Fed independence is shaping investor behaviour, with positioning in gold, Treasuries, and equities reflecting a cautious shift.
The BRICS Gold Currency Shift We Can’t Ignore
This helps explain why gold has been making new highs. At (the time of writing) $3,650, it is up nearly 40% since January. Silver has done even better, climbing past $42, almost 50% higher this year. And this is not just a dollar story. Gold has delivered double-digit returns in nearly every currency, even the Swiss franc. Step back further and the trend is even more striking: over the course of this century, gold has compounded at roughly 10% annually. That kind of performance speaks volumes about the state of the global economy.
Institutional money is reinforcing the signal. Central banks now hold more gold in their reserves than they do U.S. Treasuries. That reversal would have been unthinkable a generation ago. For decades, American debt was the world’s reserve bedrock. Today, the very institutions tasked with protecting national wealth are tilting their reserves toward gold instead.
Silver’s strength deserves special mention. While it benefits from the same macro tailwinds as gold, namely rate cut expectations and inflation fears, it also has unique drivers. Supply deficits are deepening, exchange inventories are thin, and industrial demand is proving more resilient than expected. Solar and battery storage continue to absorb large volumes, and the growth of AI data centres is adding a new layer of demand for fast, scalable energy solutions. Silver is a small market, and when pressure builds from both investors and industry, prices move quickly.
It is worth noting that silver has a history of outperforming in the second half of Fed easing cycles. In past decades, once the Fed paused and then resumed cuts, silver delivered some of its biggest gains. The pattern does not have to repeat exactly, but the setup is familiar.
That does not mean the ride will be smooth. A hawkish surprise could knock both metals lower in the short term. Silver could also wobble more than gold if the economy stumbles, given its industrial use. And with momentum building, it would be no surprise to see silver overshoot $43 or $45 before pulling back on a “sell the news” reaction when the Fed finally cuts. But these would be setbacks in timing, not in the underlying case.
For those holding gold and silver, the lesson is clear. You were right to doubt that unlimited debt, political pressure, and money printing could continue without consequence. Institutional money has reached the same conclusion. Central banks are net buyers, major investors are repositioning, and the metals are telling the story in real time.
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