Gold ‘Runs Up’ When Fed Credibility Erodes – Former Fed President Jim Bullard

Bullard heard a committee that is finally saying the quiet part out loud, and a gold market that has already voted.

James Bullard ran the St. Louis Fed from 2008 to 2023. He dissented in March 2022 because he wanted a half point and a plan to shrink the balance sheet while the rest of the room moved a quarter.

He now runs Purdue’s Daniels School of Business.
He still talks like a man who sat in the room.

Warsh’s line was the one stackers have been waiting to hear from an official: responsibility for 65 months of elevated inflation “sits squarely with the central bank.”

Bullard’s read was that the chair had moved toward the center of a split committee and opened the door to a hike if inflation does not come down faster than expected.

“Market probability certainly shot up after the speech,” Bullard said. “He seemed to indicate that he is more open to a rate hike than was previously thought.”

The case for holding, in his view, is getting thinner. Hawks such as Beth Hammack argue the data is already there. Core PCE near 3 percent at year end would look like 2023, 2024, and 2025 all over again. “So really made no progress across those years and you have to get more restrictive if you’re going to do that.”

He liked that Warsh described the real economy as relatively strong: growth, the AI boom, unemployment still low by U.S. history.

Then inflation. “Clearly that’s not going so well. So I think the case for getting more restrictive is there.” One quarter point may not be the whole story.

“If you start going in one direction, usually that means you go more in that direction.”
That is the policy tape.

The metals tape is why this interview belongs on SilverTrade.

Bullard put the fiscal problem in one sentence that does not need a model. “You’ve got 6% deficits as far as I can see.” Debt heading toward 120 percent or 150 percent of GDP. “There seems to be no concern at all in the political system to curb those deficits.”

Global markets, he said, are scratching their heads about U.S. policy. Treasury is just arranging the borrowing Congress and the White House already chose.
That is the backdrop for official gold buying.

Bullard told Szafron that foreign central banks have been diversifying away from Treasuries. Over the past year, physical gold proved more desirable than Bitcoin.

Gold running up, he said, is a signal of eroding faith in the Fed, and that signal is on the central bank’s radar.

Asked about the statutory $42.22 book value on America’s 261 million ounces, he did not reach for a 400-page white paper. His answer was simple: why not mark to market?

That is a former regional Fed president saying the official U.S. gold account is a museum piece while the rest of the world is buying the metal that does not need a counterparties’ permission. Bitcoin had a year. Central banks still chose bars.

He also broke with Treasury Secretary Scott Bessent on long-end buybacks, lining up closer to Stan Druckenmiller: the intervention does not change the long-run trend. Warsh wants unfiltered Treasury market signals. Bessent keeps reaching for levers that filter the long end.

Bullard’s warning was institutional, not theatrical. If Treasury policy turns inflationary, the Fed has to push back. “Hopefully it doesn’t have to be some big battle between the Treasury and the Fed.”

For readers who own metal, the interview is not a trading call. It is a former insider describing the same three facts stackers already live with. Inflation is the Fed’s job and it has not finished the job. Deficits look structural. Official buyers chose physical gold over the digital alternative when they had to pick a reserve that survives politics.

Warsh told Jackson Hole the Fed should be quieter. Bullard told Szafron the gold price is already talking. Foreign central banks heard it first.

Watch the full interview with Jim Bullard below: