The iShares Silver Trust (NYSE: SLV) confronted notable losses on Friday as equity markets responded to a pivotal announcement in U.S. monetary policy leadership. President Donald Trump has nominated Kevin Warsh to become the forthcoming chair of the Federal Reserve, a decision that shifted the trajectory of market expectations and precipitated a reassessment in commodities, particularly silver.
Kevin Warsh is slated to take the helm as Federal Reserve chair following the completion of Jerome Powell's term in May 2026. His appointment has been met with a subdued reaction compared to prior concerns about the Fed's independence under a Trump administration appointee. Warsh's credentials include an extensive background in monetary policy and deep experience within financial markets, positioning him as a figure advocating for more measured monetary strategies.
According to financial analysts, Warsh's reputation for cautiousness regarding prolonged periods of highly accommodative policy has tempered investor anticipation around swift rate cuts that some feared might materialize. This weighed heavily on markets and contributed to a calming of earlier anxieties that a Trump-appointed Fed chair would rapidly lower interest rates in a bid to accelerate economic growth.
Krishna Guha, vice chairman at Evercore ISI, was quoted explaining that Warsh's selection should underpin dollar stability and diminish, albeit not eradicate, the risk associated with extended currency depreciation trades. This shift directly impacted precious metals markets, as both gold and silver experienced pronounced declines owing to the dollar's strengthening.
Indeed, the U.S. dollar appreciated by around 0.4% post-announcement, reflecting traders’ adjustments to the potential for a Federal Reserve under Warsh that would likely adopt less accommodative policies than previously anticipated. This currency movement typically exerts downward pressure on commodities denominated in dollars, including silver.
Silver itself entered Friday's trading on the back of a remarkable rally over recent years. The metal’s value soared approximately 150% throughout 2025, followed by an additional 45% increase in 2026, fueled by elevated geopolitical tensions, a weakening dollar, and uncertainties surrounding the Federal Reserve’s political independence.
Following Warsh’s nomination, the iShares Silver Trust (SLV) shares declined sharply, falling 19.39% to $85.26 at the time of publication, according to market data from Benzinga Pro. This pullback reflects the market’s swift reassessment of silver’s valuation in light of evolving monetary policy expectations and currency fluctuations.
Market indices and trader sentiment thus underscore how critical Federal Reserve leadership and policy outlook remain for commodities markets. The significant downturn in silver prices highlights the metal’s sensitivity to interest rate expectations and currency strength, particularly given its recent robust advance amid external geopolitical and economic forces.
Key Points:
- President Donald Trump's nomination of Kevin Warsh as Federal Reserve chair has shifted market expectations towards a more cautious monetary policy stance.
- Kevin Warsh's background suggests he will be skeptical of prolonged ultra-easy policies, which has reduced fears of rapid interest rate cuts.
- The U.S. dollar strengthened approximately 0.4% following the nomination, exerting downward pressure on dollar-priced commodities such as silver.
- Silver experienced a dramatic decline Friday, falling nearly 20% after achieving a 150% surge in 2025 and an additional 45% increase in 2026.
Risks and Uncertainties:
- Market sensitivity to Federal Reserve leadership changes may result in heightened volatility for commodities prices, including silver.
- Dollar appreciation, stemming from anticipated tighter monetary policy under Warsh, could continue to pressure commodity prices negatively.
- Geopolitical tensions and political influences on the Federal Reserve may continue to affect investor confidence and market dynamics unpredictably.
- Silver's valuation might remain unstable due to the combination of recent rapid price increases and shifting macroeconomic policy expectations.