If Jay Powell had his head up his bottom any farther, he’d puncture his pancreas.

Usually, I wake up, take a shower, head downstairs, make a cup of coffee, and read the news. Just like any other day, really. Except on days like today, I follow those actions by smacking my head and saying something like, “He said what?!?!”

My friend and colleague Jim Rickards is fond of saying the Fed doesn’t matter anymore. And up to a point, he’s correct. But when Jay Powell announces to the world he’s going to stop shrinking the Fed’s balance sheet, and gold hits new highs, the Fed looks a bit more vital than usual.

So what did Jay say?

The Fed may end balance-sheet runoff in the coming months, acknowledging there have been ‘some signs’ of tightening in money markets.

This, along with his dovishness on interest rates and the current state of the China trade, made gold and silver pop overnight.

Spot gold is just passed $4,200 as I write, and spot silver is back at $52.67 after Mr. Slammy shellacked it yesterday from $53.58.

You don’t need to add to any gold, silver, or miners’ positions at these levels. Paradigm’s own Maverick, Enrique Abeyta, pointed out yesterday in the Paradigm app’s Daily Feed that both gold and silver are overbought. Just ride the wave with what you’ve already bought, as this may signal a new wave up. 

The Fed’s New Slogan: “We Tightened… Kinda.”

Powell admitted the Fed is “approaching a juncture” where it’ll stop shrinking its balance sheet — which is Fed-speak for “the market’s crying uncle.” The so-called “ample reserves” threshold apparently means there’s just enough liquidity to keep Wall Street’s yachts floating but not enough to stop Main Street from pawning grandma’s jewelry.

And the best part? He said the labor market is “softening.” Translation: We broke it.

The Gold and Silver Fireworks Show

The second Powell’s lips formed the word “juncture,” gold exploded past $4,150/oz like SpaceX powered it. Silver didn’t want to be left out, rocketing to $53.52/oz, which matches the blood pressure increase of every short seller on the COMEX.

Silver bugs are currently doing what can only be described as interpretive dance in their basements, chanting “WE TOLD YOU SO!” while pouring Vodka Red Bulls down their gobs.

Physical premiums on coins and bars are now so high that even pawnshops are asking for KYC forms. Correction: In Hong Kong and Melbourne, they’re fresh out of any physical silver, according to locals on X.

Powell’s Problem: Hawk on Paper, Dove in Practice

To be fair, Powell didn’t say “I’m cutting rates next month.” But markets heard it loud and clear — mostly because his tone had all the conviction of a man who just realized he left the stove on.

He talked about “downside risks to employment,” “balanced risks,” and “ample reserves.” That’s central banker code for “We’re about to print again, folks.”

The Fed’s in a classic bind:

• Keep tightening, and unemployment spikes.
  
  
• Ease too soon, and inflation roars back like Godzilla.
  
  
• But do nothing? The market eats him alive.

So Powell chose the only politically viable option: pretend he’s still tightening while secretly undoing it.

History Repeats, First as Tragedy, Then as Stimulus

Every time the Fed “pauses,” markets throw a champagne party. Then inflation sneaks in the back door, eats all the hors d’oeuvres, and stays for dessert.

It’s a bit like Powell saying, “I’ve learned from 1970s history,” and then immediately buying bell-bottoms and a lava lamp.

The man wants to be Tall Paul Volcker, but deep down, he’s Arthur Burns with better suits.

And Niall Ferguson’s voice echoes in the background: “This is how empires default — slowly, then all at once.”

Gold and Silver: The “We Don’t Trust You” Trade

Investors aren’t buying gold because they think Powell’s doing a great job. They’re buying it because they don’t.

Every ounce of gold above $4,200 is a tiny vote of no confidence in the Fed’s ability to keep the currency stable. Silver, meanwhile, is the loud drunk friend shouting, “AND ANOTHER THING!” as it rips higher on industrial shortages, speculative mania, and good old-fashioned greed.

We’re witnessing the same flight from fiat we’ve seen in every late-stage monetary cycle: the Fed signals weakness, traders front-run the liquidity flood, and metals go vertical.

My Take: Jerome Powell Just Made Every Gold Bug a Genius

Gold at $4,200 isn’t a bubble. It’s a revaluation.

Silver at $53 isn’t an anomaly. It’s a symptom.

We’re watching the market price at the end of “tightening theater” — that long-running Fed production where Powell plays the stern dad cutting up the credit card, only to hand his son a new one five minutes later.

The audience (a.k.a. investors) is no longer fooled. They know Act III ends with QE4: The Reckoning.

Wrap Up

So here we are: Powell’s pivot is official, inflation’s still lurking, and the metals are partying like it’s 1979.

Gold’s the asset you own when you’ve stopped believing the referees are honest. Silver’s the one you buy when you think the whole game’s rigged.

And after yesterday’s speech, the market just shouted in unison: “We’re betting on both.”