- The Fed raised rates last week for the first time since 2023, a hike that comes at the start of a tightening path rather than the end of one, with further increases dependent on inflation.
- Fed Chair Kevin Warsh has stated the goal remains 2% inflation and has not cut rates as the U.S. president wanted, setting up a potential conflict if the Fed hikes again.
- Silver has traded around $60 for the past couple of months after hitting all-time highs in January and falling sharply when Warsh was named Fed Chair pick; the iShares Silver Trust is up more than 50% over 12 months.
- Higher rates alone make silver less attractive versus risk-free returns, but the article's thesis is that Fed-independence friction, not the rate level, is the catalyst for a silver move higher before year-end.
Quotes
“Fed Chair Kevin Warsh has been clear: the goal remains to get to 2%.”
“An increase in interest rates alone doesn't make silver a more compelling asset.”
“I believe that may be inevitable, which is why I think silver may end up rising before the year is over.”