By Myra P. Saefong
MarketWatch, New York
Tuesday, August 26, 2025
President Donald Trump made a move to fire a member of the Federal Reserve's Board of Governors, potentially undermining confidence in the U.S. dollar and Treasury bonds -- and boosting the appeal of gold and other assets perceived as safe havens.
"The Fed's independence is its calling card, and the move to fire a governor is a direct assault on the Fed's ability to manage monetary policy free of political motives," said James St. Aubin, chief investment officer of Ocean Park Asset Management.
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"When you start to erode faith in monetary policy for the world's reserve currency, you are playing with fire," he told MarketWatch. "If the market believes the Fed is making policy in reaction to direct political influence, U.S. assets will become less attractive." ...
Stefan Gleason, president and chief executive at Money Metals, told MarketWatch that the notion of Fed independence is a "myth."
The Fed is "an inherently political institution, not only because the Board of Governors is appointed by the president with Senate confirmation, but our entire monetary system is now political in nature," he said. "We no longer have sound money backed by gold, but political money, where policymakers centrally plan the economy via changes to monetary policy."
That won’t stop some investors, however, from clamoring for alternatives if trust in the Fed is broken, risks to the U.S. dollar and bonds rise, and inflation climbs.
Traditionally, higher inflation has been hedged by real assets -- commodities, including gold, oil, and industrial metals, said BNY's Robert Savage.
Gold just might top that list. "Gold would be the safe haven of choice" for investors if the Fed were ever to lose its independence, said Chris Gannatti, global head of research at WisdomTree, which sees any threat to Fed independence as a "powerful catalyst for gold demand." ...
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