Fed Chair Jerome Powell surprised some investors Wednesday afternoon with his comments about the gold and silver rally. The two precious metals, the most classic of the “safe-haven” assets, have the tangibility and inherent scarcity to act as a hedge in moments of turmoil, particularly when investors worry that politics or policy could undermine the value of the dollar or U.S. government bonds.
That is why the metals’ relentless rally to record highs since late last year—gold is up 84% year over year and silver up a whopping 245%—has drawn attention from analysts. In recent months, market commentary has split the move into two distinct narratives. “The argument can be made that we’re losing credibility or something,” Powell acknowledged before insisting that’s “simply not the case.” Just look at where inflation expectations are, he pointed out: “Our credibility is right where it needs to be.”
