Metals Sink After Trump Taps Kevin Warsh for Fed
Lisa Kailai Han, Alex Harring and Pia Singh of CNBC also report S&P 500 falls for third straight day as speculative silver trade unwinds, but ends month positive:
Stocks retreated on Friday as technology shares remained in a funk, even as investors largely approved of President Donald Trump’s pick of Kevin Warsh to lead the Federal Reserve. Still, the S&P 500 squeaked out a January gain, despite Friday’s losses and volatile trading this month.
The broad index fell 0.43% to finish at 6,939.03, its third straight down day. The Dow Jones Industrial Average pulled back 179 points, or 0.36%, to settle at 48,892.47. The tech-heavy Nasdaq Composite underperformed, dropping 0.94%, to end the day at 23,461.82. All three indexes fell more than 1% at session lows.
“I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best,” said Trump in a Truth Social post.
Warsh’s selection was likely to ease concern about Fed independence because of his experience as a Fed governor and strong stance at times against inflation. While he is likely to push for lower rates in short term as Trump wants, the financial markets view him as someone who wouldn’t always follow the president’s direction and maintain credibility for monetary policy.
The U.S. dollar rallied and U.S. Treasury yields held steady, signaling that investors appeared satisfied with Trump’s pick.
“Kevin Warsh’s nomination for Fed Chair is exactly what markets were hoping for, as he’s a steady hand, well known in market circles and is expected to maintain the independence of the central bank, which is critical for markets,” said Richard Saperstein, chief investment officer of Treasury Partners. “Most importantly, Warsh faces few hurdles when it comes to being confirmed by the Senate.”
But other variables threw cold water on stocks in the session.
Spot gold and silver dropped around around 9% and 28%, respectively. Over the past year, gold and silver futures have soared about 67% and 142%, respectively.
Retail investors have piled into trades tied to the precious metals, especially in recent weeks as a speculative bubble formed. The iShares Silver Trust (SLV), a popular choice among individual traders, plunged more than 28% in Friday’s session, its worst day on record. Such a move can be indicative of forced selling, given that fundamentals rarely change on a trade so quickly, according to Matt Maley, chief market strategist at Miller Tabak.
“This has been the hottest asset for day traders and other short-term traders recently,” Maley said. “There has been some leverage built up in silver. With the huge decline today, the margin calls went out.”
Still, investors continued to parse through earnings reports.
Apple swung between gains and losses despite beating fiscal first-quarter expectations and reporting a significant surge in iPhone sales. That follows Microsoft’s 10% post-earnings drop on Thursday, marking its worst day since 2020 and wiping out more than $350 billion in market cap. KLA Corp lost more than 15% on Friday after its forecast suggested a deceleration in growth.
But outside of tech, Verizon shares surged nearly 12%, marking their best day since 2008. The telecommunications giant beat analyst expectations and provided a strong full-year outlook for earnings.
Despite Friday’s weakness, the major averages recorded a positive month. The S&P 500 and Dow logged gains of 1.4% and 1.7%, respectively, for January, while the Nasdaq notched a 1% gain. The small cap-focused Russell 20009 jumped more than 5% in the month.
Chloe Taylor of CNBC also reports silver plunges 30% in worst day since 1980, gold tumbles as Warsh pick eases Fed independence fear:
Gold and silver prices plunged Friday, as President Donald Trump’s nomination for the next chair of the Federal Reserve, Kevin Warsh, appeared to relieve concerns about the central bank’s independence and sent the dollar soaring.
Spot silver was down 28% at $83.45 an ounce, trading near its lows of the day. Silver futures plummeted 31.4% to settle at $78.53, marking its worst day since March 1980.
Meanwhile, spot gold shed around 9% to trade at $4,895.22 an ounce. Gold futures dropped 11.4% to settle at $4,745.10.
The sharp moves down were initially triggered by reports of Warsh’s nomination. However, they gained steam in afternoon U.S. trading as investors who piled into the metals raced to book profits. Metals were also under pressure as the dollar spiked higher, making it more expensive for foreign investors to buy gold and silver and spoiling the theory that metals would replace the greenback as the globe’s reserve currency.
The dollar index last traded around 0.8% higher.
“This is getting crazy,” said Matt Maley, equity strategist at Miller Tabak. “Most of this is probably ‘forced selling.’ This has been the hottest asset for day traders and other short-term traders recently. So, there has been some leverage built up in silver. With the huge decline today, the margin calls went out.”
Trump picks Warsh
National Economic Council Director Kevin Hassett had been the favorite to replace Powell for some time, but Warsh became the front-runner in prediction markets in recent days.
In a note on Friday morning, Evercore ISI’s Krishna Guha said the market was “trading Warsh hawkish.”
“The Warsh pick should help stabilize the dollar some and reduce (though not eliminate) the asymmetric risk of deep extended dollar weakness by challenging debasement trades – which is also why gold and silver are sharply lower,” the firm’s vice chairman said.
“But, we advise against overdoing the Warsh hawkish trade across asset markets – and even see some risk of a whipsaw. We see Warsh as a pragmatist not an ideological hawk in the tradition of the independent conservative central banker.”
Claudio Wewel, FX strategist at J. Safra Sarasin Sustainable Asset Management, told CNBC’s “Squawk Box Europe” on Friday that a “perfect storm” of geopolitical tensions had helped precious metals move higher this year, pointing to the U.S. capture of Venezuelan President Nicolás Maduro and Washington’s threats to use military force in Greenland and Iran.
More recently, he said, speculation over who would be nominated as the next Fed chair had been influencing metals markets.
“The market has clearly been pricing the risk of a much more dovish contender, that’s been largely helping the gold price along with other precious metal prices. Over the last 24 hours, the news flow has changed a little bit,” Wewel said, prior to Trump’s announcement.
‘Even good assets can sell-off’
Gold and silver both enjoyed record-smashing rallies in 2025, surging 66% and 135%, respectively, over the course of the year.
Coeur Mining lost 17%. Silver ETFs were dragged into the action, with the ProShares Ultra Silver fund last seen more than 62% lower. The iShares Silver Trust ETF lost 31%. Both funds were headed for their worst days on record.
Precious metals have been on a stellar rally over the past 12 months, amid broader market volatility, the decline of the U.S. dollar, bubbling geopolitical tensions and concerns about the independence of the Federal Reserve.
Katy Stoves, investment manager at British wealth management firm Mattioli Woods, told CNBC on Friday morning that the moves were likely “a market-wide reassessment of concentration risk.”
“Just as tech stocks — particularly AI-related names — have dominated market attention and capital flows, gold has similarly seen intense positioning and crowding,” she said. “When everyone is leaning the same way, even good assets can sell off as positions get unwound. The parallel isn’t accidental: both represent areas where capital has flooded in based on powerful narratives, and concentrated positions eventually face their day of reckoning.”
Meanwhile, Toni Meadows, head of investment at BRI Wealth Management, contended that gold’s run to the $5,000 mark had happened “too easily.” He noted that the unwinding of the greenback had supported gold prices, but that the dollar had appeared to stabilize.
“Central bank buying has driven the longer-term rally but this has tailed off in recent months,” he said. “The case for further reserve diversification is still there though as Trump’s trade policies and intervention in foreign affairs will make a lot of countries nervous about holding U.S. assets, especially those countries in the emerging markets or aligned to China or Russia. Silver will mirror the direction of gold, so it is not surprising to see falls there.”
Alright, another wild week on Wall Street which ended with a good old fashion selloff in precious metals.
Last week I discussed how silver and gold took off after Davos highlighted geopolitical tensions and and warned to be wary of parabolic moves (ie. never chase them higher, especially when they go full vertical).
Yesterday I went over IMCO's World View 2026 and stated the slide in the US dollar was overdone and I was expecting a snapback.
I know the dollar slid earlier this week after Trump's comments but even that signalled to me that something was afoot.
Call it the "Warsh effect", call it what you want but the Trump administration manipulates markets and you have to almost read right through their statements if you plan on making money.
Of course he picked Kevin Warsh, the best choice by far, Scott Bessent made sure of that and I'm sure top hedge funds were advised ahead of time (that's why they charge the big fees!).
So the dollar rallied and metals sold off but they were due for a major reckoning, including copper:
Now, to be clear, these weekly charts remain bullish as long as price remains above 10-week exponential moving average and weekly MACD is positive and trending up but when you have such a steep red candle like today, it typically means something has fundamentally changed.
We shall see, I expect more volatility next week and it's not all about Kevin Warsh and geopolitical tensions, there's strong demand for metals, especially copper where billionaire investor Robert Friedland warns the world has an insatiable thirst for metals, from surging military budgets to AI data centers and the greening of the global economy, but it does not have a credible way to supply the metals it intends to consume over the next few decades.
On the daunting scale of copper the world needs to produce over the next two decades, he states:
“You can’t build electric cars and windmills and solar and have a modern military without these metals. So, there’s a reason why underwater power cables are so expensive. That’s what it looks like when you put up a windmill offshore Nantucket Island and you want to bring that electricity and be green. It’s all copper, copper, copper, copper, copper. Copper right now, we’re expecting that to be a $270 billion a year market by tomorrow morning. And where’s this metal going to come from? There’s no copper inventory at all.”
“How much copper are we using? We’re consuming 30 million tonnes of copper a year, only 4 million tonnes of which is recycled. That means to maintain 3% GDP growth…..now listen carefully, with no electrification…this is with burning oil and gas. To maintain global 3% GDP growth, we have to mine the same amount of copper in the next 18 years as we mined in the last 10,000 years (combined). In the next 18 years, I’ve got to mine the same amount of copper as we mined the last 10,000 years…without electrification, without data centers, without solar and wind and the greening of the world economy. You people have no idea whatsoever what we’re facing. You’re dreaming.”
He might be right but price action of copper and other metal shares can experience violent volatility as this all plays out.
Alright, let me wrap it up with some stock market action.
Here are this week's top-performing US large cap stocks (full list here):
When you see Verizon (VZ) and AT&T (T) among the top performers, you know it's not a great week (I can kick myself for selling Deckers Outdoor too soon!).
Below, George Heppel, BMO, joins 'Closing Bell Overtime' to talk the steep drop in metal commodity prices.
Next, Jeremy Siegel and Tom Lee join Closing Bell to discuss Kevin Warsh's nomination as Fed Chair and the move in gold and silver today.
Third, the Investment Committee debate what the Warsh pick means for the market and your money.
Fourth, Jay Hatfield, founder, CEO, and portfolio manager at Infrastructure Capital Advisors, joins BNN Bloomberg to discuss gold and silver prices moving amid trade tensions.
Lastly, Kevin Warsh, President Trump's choice for the next Fed Chair, was in conversation on federal monetary policy and the role of the Federal Reserve during the 2025 Reagan National Economic Forum in Simi Valley, California.
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