Gold & Silver Blast Higher as Fed Gets Trapped

Silver is shooting higher again today – adding another dollar to its impressive gains over the past week. The white metal is now within short-range shooting distance of its all-time nominal high, as if there’s some kind of a magnet force drawing it towards that $50 mark.

For the week silver is up a robust 7.3% now to come in at $46.46 an ounce as of this Friday morning recording. This will be the 6th straight week of gains for the white metal, with silver adding a little more than $8 during that stretch since mid to late August. For the year now silver is up right at about 60%.

Momentum remains strong across the entire precious metals complex.

Like silver, gold is also advancing for the 6th consecutive week, although its gains are more muted. The yellow metal is up about $90 or 2.4% on the week, to check in at $3,789 an ounce. Gold’s dollar gain over these past 6 weeks now sits at a cool $440. And for the year gold is up 44%.

As for the gold:silver ratio, it has come down from 87.7 in mid-August to 81.5 as of today, indicating silver’s outperformance during the impressive rise we’ve seen over the last month and a half in the precious metals.

Earlier this week, platinum broke above the key $1,480 level and remains 2025's best performer among the precious metals. Which is saying something. With a few hours left in the trading week platinum now checks in at $1,580, good for an impressive 11.5% gain – more than $160 an ounce – since last Friday’s close. For the year platinum is now up 70, that’s right, 70%.

And finally, after slumping and failing to keep up with its cousins last week, palladium has joined the party. The industrial metal is up more than $120 this week and checks in at $1,293, good for a 10.3% advance. On the year palladium has gained 37%.

Getting back to this year’s top metals performer, that being platinum, the best way to diversify your overall holdings with physical platinum is by purchasing coins or bars. Check out MoneyMetals.com/platinum for more information and for up-to-date pricing information to buy, or sell, platinum products.

Overall, we've seen less selling of physical metal than we expected... and a bit more buying. It seems more Americans may be catching on to what's happening.

Dealers are still fairly flush with inventory, but premiums remain at multi-year lows, especially given that premium prices are falling in terms of the percentage of melt value as metals prices have soared.

In related news – and a key reason the precious metals are on fire – is the reality that Federal Reserve Chairman Jerome Powell and his fellow central bankers are stuck between a rock and a hard place. And they know it.

Powell admitted as much during a speech earlier this week when he confessed he sees “no risk-free path” ahead.

At MoneyMetals.com, we've been talking about the Fed’s Catch-22 for months, but it is unusual for a central banker to acknowledge risk. They want to maintain the illusion that they have everything under control – even though they don't.

Although Powell didn’t use the word, he described a stagflationary setup, with deteriorating economic conditions reflected in the labor market, coupled with elevated inflation.

Powell & Company is walking a tightrope, and it would only take a little nudge for them to fall to one side or another.

The problem is that the current scenario requires the Fed to pursue two opposite paths. It needs to hold rates higher for longer to keep inflation under control. (And by “under control,” we mean not so high that you notice it.)

The Fed feels it must cut rates to keep the air in our debt-riddled bubble economy.

It can’t do both.

So, Powell & Company are walking the tightrope with their fingers crossed, hoping they don’t go splat.

It’s worth noting that Powell continues to insist that monetary policy is “modestly restrictive.”

It’s not. At least not from a historical perspective.

The money supply only contracted modestly at the height of the hiking cycle, and it has been increasing for well over a year. That is, by definition, inflation.

The bottom line is that Powell and his minions had to make a choice.

They chose inflation. And the entire precious metals complex is loving it.

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