Gold and silver prices tumbled as Kevin Warsh was named to succeed Jerome Powell

US President Donald Trump has tapped former Federal Reserve governor Kevin Warsh to replace Jerome Powell as the institution's chair. Warsh has signaled that he is willing to slash interest rates, a move long advocated for by Trump.

Trump revealed his choice in a Truth Social post on Friday morning, ending a months-long search for a successor to Powell. Warsh, an academic, Wall Street veteran, and former member of the Fed's governing board, will take over from Powell in May, if confirmed by the US Senate.

"I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best," Trump wrote.

While searching for a replacement, Trump repeatedly attacked Powell for his refusal to cut interest rates, a move that would - in theory - stimulate the economy and reduce the cost of servicing more than $30 trillion in national debt. Trump has referred to Powell as a "moron," and a "numbskull" for his refusal to implement the steep rate cuts he demanded.

Warsh previously favored high interest rates, believing that lowering rates too sharply would lead to runaway inflation. However, he has recently advocated for rate cuts and called for "regime change at the Fed." 

"He thinks you have to lower interest rates," Trump told the Wall Street Journal in December. "And so does everybody else that I've talked to." 

Warsh has close family ties to Trump. His father-in-law, Ronald Lauder, has been a major donor to Trump since 2016. In a 2018 meeting, Lauder urged Trump to buy Greenland from Denmark, according to former National Security Adviser John Bolton. Lauder, heir to the Estee Lauder cosmetics empire, owns commercial holdings in Greenland, and has been granted lithium mining rights in Ukraine under Trump's minerals deal with Kiev.

Financial markets reacted calmly to Warsh's nomination. After the announcement, Dow futures fell 0.3%, S&P 500 futures dropped 0.4%, and Nasdaq Composite futures were down 0.5%. Gold and silver fell, however, with spot prices for the precious metals dropping 6.4% and 15.7%, respectively, following a recent sharp rally. The selloff is seen as signaling market confidence in the nomination despite Warsh's pledge to lower rates, which ordinarily would be bullish for precious metals.