Powell Resignation Rumours, Silver Explodes

Rumours that Federal Reserve Chair Jerome Powell might not last the weekend began swirling late last week after William Pulte, the head of the Federal Housing Finance Agency, released an open letter praising “reports” that Powell was considering resignation. We covered Pulte last week for referring to the Fed renovation as the Palace of Versailles. The note landed at a politically sensitive moment, resurfacing long-running Republican complaints that the Fed moved too slowly on both recognising inflation and now, on trimming rates. Even some MSM outlets have been covering the US$2.5 billion renovation of the Fed’s Washington complex (already US$700 million over budget) and arguing that the overruns could supply the cause legally needed to push Powell out.

Markets showed little sign of buying the story for now. On Kalshi’s prediction market, the odds of Powell resigning crept from 14 per cent to roughly 19 per cent. Those levels still imply investors see the news as noise and gossip rather than a signal.

Powell’s critics argue the Fed’s balance-sheet losses prove mismanagement. Supporters counter that unrealised losses matter less than the credibility gained by keeping rates higher for longer to contain inflation.

If Powell did resign, the immediate problem would likely be short-term risk appetite getting damaged. A vacancy at the Fed’s top job during a late-cycle slowdown would cause uncertainty in the Treasury market, complicate the path to the widely expected first rate cut in September, and almost certainly light a fire under safe-haven trades.

Gold Strong, Silver Explodes

Gold, already hovering near record nominal highs after a string of central-bank purchases, would benefit from both a weaker dollar and a rush for hedges. Silver, on its last trading day, has surged over 4%. This puts silver at a 13-year high. Compared to its highest point in 2011, it would still have about 30% to rise to match it. This recent pump is potentially more about silver playing catch-up, rather than speculation about Powell.

For now, though, traders appear content to treat the saga as high-level gossip rather than an actionable macro risk. Unless credible evidence of a leadership change surfaces, Monday’s session is more likely to focus on June CPI data than “palace” intrigue.