Title: A Rate Hike Doesn't Change the Case for Gold and Silver Show: Prinsights Pulse Premium (Substack) Guest: Nomi Prins (author) Date: 2026-08-30 URL: https://prinsights.substack.com/p/a-rate-hike-doesnt-change-the-case Length: written post — no timestamps Note: Paid (Pulse Premium) written post; text captured verbatim via Stephen's logged-in session. Subtitle: "Warsh's latest speech warned inflation is still too high. The price of gold and silver rests on record debt, central-bank buying, and structural deficits – which don't care about small rate moves."
Every August, the world's central bankers decamp to a mid-century lodge in the Grand Tetons for the Federal Reserve' Jackson Hole symposium, where a single speech in Wyoming can swing markets around the globe.
On Friday, Kevin Warsh took center stage. In his first appearance there as Fed chair, he warned that inflation is still too high and made clear he stands ready to raise rates to bring it down if necessary. Warsh said the summer's softer readings had not convinced him the underlying trend was improving, and the Fed has "work to do" unless inflation moves toward 2% "clearly and at sufficient speed."
True to his approach that has rattled markets since he assumed the Fed Chair post, Warsh provided no specific forward guidance on rates either way. In July, his Fed held rates at 3.50 to 3.75%, and three of the Fed's regional presidents pushed for a hike. In Jackson Hole, he appeared to side more with them.
The markets, especially precious metals, reacted to the takeaway that the next move in rates, if there is one, is up. This stance has been in play since crude oil prices first spiked during the onset of the Iran War, taking inflation figures up along with them.
Both oil prices and inflation measures have since tempered.
Gold and silver prices fell after Warsh spoke, with gold slipping toward $4,500 an ounce and silver to $67, giving back some of the past week's gains. The fact that it was a dull, late-August Friday afternoon, with little trading volume, didn't help. In Fed Fund futures, bets on a December hike climbed above 70% after the speech. That is all that happened, not any actual movement. Traders sold paper gold and silver in anticipation of a rate hike the Fed has not even made.
Why a Quarter-Point Hike Wouldn't Matter Anyway
The last time the Fed actually raised rates, it went on to raise them eleven times. Between March 2022 and July 2023, the Fed took the Fed Funds Rate from near zero to 5.25 to 5.50%, in the fastest spate of tightening since the early 1980s.
So, by the logic of mainstream and AI-synced headlines, if higher rates sank gold, those sixteen months would have done it. However, that's not what happened. Gold prices barely budged, trading between about $1,650 and $2,050 the whole time. Then, with rates still near the peak of that band, they more than doubled to an average near $4,360 this year and a record high of $5,595 in January. If 525 basis points of hikes could not push gold down, a single quarter point, less than a tenth of what gold already absorbed, won't either.
Here's the thing. The real forces that contribute to the price of gold and silver never come up at an FOMC meeting. Federal debt has surpassed $40 trillion, the deficit is near $2 trillion annually, and interest on that debt now costs about $1 trillion annually. That's more than the entire defense budget and the fastest-growing line in the federal budget. Higher rates only make that debt service cost worse, because every extra point the Treasury pays lands on the trillions of debt it has to keep refinancing.
Meanwhile, central banks have bought around 1,000 tonnes of gold a year for four straight years, moving reserves away from the dollar and paper they no longer fully trust, in an effort to de-dollarize and, more broadly, "de-fiatize" their own payment systems and trade agreements. The People's Bank of China added to its gold reserves for a twenty-first straight month in July, with its biggest purchase since 2023.
Then there's silver, which has been in a supply deficit for five years, of more than 100 million ounces a year, as solar, electronics, and defense consume more than existing mines can produce.
A quarter-point move in rates changes none of this.
Why This Selloff Will Fade Quickly
So a hike, if it comes, could catalyze a down day or week, but not much more. A central bank buying gold does not care whether the Fed Funds rate is 3.75 or 4%, and neither does a household in Shanghai or Mumbai buying physical silver.
Warsh inherited a Fed credibility problem, and fighting inflation with rate hikes or simply alluding to them is how he thinks he can rebuild it. But the inflation he is fighting is also fed as much by Washington's spending as by anything the Fed can do through monetary policy.
One quarter point does nothing about a $2 trillion deficit. The Fed is posturing that it can flex a muscle it simply doesn't have. That's because it cannot fix a fiscal or supply-chain-based problem with a monetary lever it does not control, and the market is trading on that posturing as if it could. Raising rates into a deficit that size would only treat the symptom while the cause keeps growing and provides precious metals one more reason to rise.
Bottom Line. Our outlook remains positive on metals no matter what the Fed signals from Jackson Hole. And our conviction is not based around what the Fed does (or does not do) in September. The case for gold and silver rests on debt, deficits, supply and demand, not a quarter point move. We routinely position our model portfolio for both Founders+ and Pulse Premium for the volatility that comes with headlines for the long term.