Warsh Nomination Sends Silver into Historic Tailspin, Calms Inflation Fears
Markets Recalibrate as Trump Opts for Experienced Hand at Fed Helm
Financial markets convulsed on Friday, with silver suffering its largest one-day drop in history, after President Donald Trump nominated Kevin Warsh, a former Federal Reserve governor, to be the next chair of the US central bank. The dramatic reversal in precious metals and a strengthening dollar signaled investor relief that the President had chosen a candidate perceived as credible and independent over more politically pliant alternatives.
The spot price of silver cratered by as much as 30%, settling around $83.81 per troy ounce in London trade. This staggering decline wiped out the metal's record-breaking rally earlier in the week, which had seen it surge past $121 amid fears Trump would install a chair amenable to slashing interest rates irrespective of inflation data.
"The nomination acted like a bucket of cold water on the speculative fever that had gripped the metals market," said Eleanor Vance, a veteran commodities strategist at Meridian Capital. "Warsh's reputation as a serious, if sometimes hawkish, policy thinker reassures markets that Fed independence isn't for sale. The sell-off, while violent, is a recalibration, not a collapse."
Gold also tumbled nearly 10% in its worst intraday fall since the 2008 crisis, while the US Dollar Index rallied. Equity markets dipped as traders pared back bets on imminent, deep rate cuts. The nomination follows weeks of volatility driven by uncertainty over Trump's Fed pick and his public pressure for lower borrowing costs.
Warsh, 55, served as a Fed governor from 2006 to 2011 and was the youngest person ever appointed to the role. While seen as a "Trump loyalist" by some, his past writings and speeches have advocated for higher rates and a robust defense of the central bank's autonomy. Analysts suggest his challenge, if confirmed by the Senate, will be to reconcile the White House's desires with persistent inflationary pressures.
"This is a disaster wrapped in a relief rally," argued Marcus Thorne, an outspoken portfolio manager at Apex Fund, his commentary growing increasingly sharp. "The market is celebrating because Trump didn't appoint his dog. Warsh has a history, but he's entering a politicized cesspool. One speech about 'data dependence' and the MAGA crowd will turn on him. This stability is a mirage. The real story is that a 30% crash in a major asset is now just a 'recalibration.' The system is broken."
The reaction was more measured elsewhere. Dr. Anya Sharma, an economics professor at Carlton University, noted: "The immediate market response validates the anxiety that had built up. Warsh is a known quantity—a mainstream, market-friendly conservative. His appointment reduces tail risks and suggests a preference for stability, at least initially, within the administration. However, the path to confirmation through a divided Senate remains a hurdle."
Meanwhile, Ben Carter, a retail investor from Ohio, reflected a common sentiment: "I watched my silver ETF get cut in half today. It's brutal. Yesterday everyone was talking about inflation doom and $150 silver. Today it's all about the 'safe choice.' Makes you wonder who's really driving the bus."
The seismic shift underscores how deeply markets had priced in the risk of a highly accommodative, politically directed Fed. The Warsh nomination, for now, has provided a circuit breaker, but the long-term trajectory of monetary policy under a new chair remains a pivotal question for global investors.