The Market Updates

This is a history book moment because the Federal Reserve is supposed to work independently.

So what is actually happening?

Federal prosecutors sent subpoenas linked to the Fed’s headquarters renovation project.

Officially, it is about construction costs and approvals.

But Powell went public and said, "This is not really about a building. This is about forcing rate cuts.”

That is why markets reacted immediately. The US dollar weakened, Gold pumped.

WHY THIS IS SUCH A BIG DEAL ?

The strength of the US dollar does not only come from the economy. It comes from trust that the system is rule based and stable.

People buy US Treasuries and hold dollars because they believe the Fed is independent, policy decisions are made on data, not orders and inflation will be controlled when needed.

If that belief weakens, everything changes:

- Currency confidence drops
- Inflation expectations rise
- Trust in US dollar erodes slowly but deeply

Now there are two very different paths forward.

1. THE LIQUIDITY BOOM PATH (short-term bullish)

If political pressure wins, the Fed could cut rates faster and more than the economy normally allows.

That usually means:

- A weaker dollar
- Easier money
- More liquidity

Higher asset prices and higher risk appetite.

This is why people say politics is becoming a form of QE. Not because money is printed instantly, but because policy is forced toward easier conditions.

And timing is strange. Powell’s term ends soon. If the next Fed Chair is seen as politically aligned, markets will start pricing easier money in advance.

Short term: Stocks will rise, crypto will benefit, liquidity will expand.

2. THE CREDIBILITY BREAK PATH (long-term dangerous)

This is the risk most people are ignoring. If Fed independence looks broken:

- The dollar weakens for more than just one trading day
- Foreign buyers trust US debt less
- Long term bond yields rise even if short term rates fall
- Inflation expectations slowly move higher

Because investors do not only care about returns. They care about stability and rules.

If the system looks political the Treasury demand will weaken, Borrowing costs will rise, the US will pay a credibility premium.

And most importantly inflation becomes harder to control.

This is not just a theory. It already happened before.

In the early 1970s:

President Nixon pressured the Fed Chair Arthur Burns to keep rates low

Short term: markets rallied and unemployment fell but then inflation hit over 12% by 1974 and stocks crashed.

The fix later required interest rates near 20% under Volcker. That caused a deep recession and unemployment near 10%

So the pattern is clear: Political pressure → short term growth → long term damage.

Silver just broke $85/oz for the first time ever, up 19% in twelve days. It was $29 in January 2025. Now it's $85. That's a 180% gain in one year while the S&P barely moved.

This is panic buying disguised as diversification. When silver moves this fast, institutions are hedging against currency collapse, not chasing returns.

Here's what's driving it: Fed cutting rates with inflation still hot, Iran potentially closing the Strait of Hormuz, $700M smuggled out of Minneapolis, Trump threatening strikes everywhere, and gold at $4,500 pricing out regular investors.

Silver's the poor man's apocalypse hedge.

Industrial demand's real too - solar panels, electronics, medical devices all need silver. But that explains maybe 20% of this move.

The other 80% is "what if the dollar breaks?"

Compare this to 2008-2011: silver went from $10 to $50 when trust in the financial system collapsed.

We're seeing the same pattern, just faster. Markets are pricing in systemic risk that stock indexes are ignoring.

Gold-to-silver ratio sitting at 56:1. Historical average is 65:1.

That means silver's outperforming gold, which only happens when people think industry's about to boom or everything's about to burn.

Source: Trading Economics, JM Bullion