The global financial landscape was rocked today, January 12, 2026, as gold and silver surged to unprecedented all-time highs following news of a criminal investigation into Federal Reserve Chairman Jerome Powell. The Department of Justice (DOJ) probe, which became public over the weekend, has sent shockwaves through Wall Street, triggering a massive "flight to safety" as investors scramble to hedge against what many are calling a brewing constitutional and financial crisis.

Gold (Spot) shattered the $4,600 barrier to reach a staggering $4,630.80 per ounce, while silver (Spot) leaped roughly 8% to hit a record $85.75 per ounce. The sudden escalation of tensions between the executive branch and the nation’s central bank has raised dire questions about the future of Federal Reserve independence, leaving market participants to seek refuge in hard assets as the U.S. dollar and equity futures face significant downward pressure.

The Powell Probe: A Timeline of Escalation

The current market turmoil traces back to a series of events that culminated on Friday, January 9, 2026, when the Federal Reserve was served with grand jury subpoenas. The investigation, led by U.S. Attorney Jeanine Pirro of the District of Columbia, centers on allegations that Chairman Powell misled Congress during his June 2025 testimony regarding the $2.5 billion renovation of the Federal Reserve’s headquarters in Washington, D.C. Prosecutors are specifically examining whether Powell knowingly provided false information about a $700 million budget overrun that took the project’s cost far beyond its original scope.

The friction between the Fed and the administration intensified throughout late 2025, as President Trump publicly criticized the renovation as "ostentatious" and accused the central bank of fiscal irresponsibility. In a defiant video statement released on Sunday, January 11, Powell characterized the DOJ probe as "pretextual" and "unprecedented," suggesting it was a retaliatory strike for the Fed’s refusal to implement the aggressive interest rate cuts demanded by the White House. This open warfare between the President and the Fed Chair has created a vacuum of certainty, leading to a frantic sell-off in risk assets and a historic rally in precious metals.

Market Winners and Losers in the Wake of the Crisis

The primary beneficiaries of this geopolitical earthquake have been the major players in the precious metals sector. Shares of Newmont Corporation (NYSE: NEM) and Barrick Gold Corporation (NYSE: GOLD) saw double-digit gains in pre-market trading as investors piled into the world’s largest miners to capture the upside of the gold rally. Similarly, silver-focused entities like Pan American Silver Corp. (NASDAQ: PAAS) and royalty companies such as Wheaton Precious Metals Corp. (NYSE: WPM) have seen their valuations soar, as the $85 silver price significantly expands their projected profit margins. Physical metal ETFs, including the SPDR Gold Shares (NYSE: GLD) and iShares Silver Trust (NYSE: SLV), recorded record-breaking inflows within the first hour of the trading session.

Conversely, the banking sector is reeling under the weight of the uncertainty. Shares of JPMorgan Chase & Co. (NYSE: JPM) and The Goldman Sachs Group, Inc. (NYSE: GS) fell sharply as investors worried about the implications of a leaderless or compromised Federal Reserve. The banking industry is also facing a secondary threat from the administration's concurrent proposal to cap credit card interest rates at 10%, a move that, combined with the instability at the Fed, has led to a broad retreat from financial stocks. The U.S. Dollar Index (DXY) fell to 98.83, reflecting a cooling of global confidence in the greenback as the world’s primary reserve currency.

A Crisis of Independence and Historical Precedents

The DOJ’s move against a sitting Fed Chair is a departure from decades of established norms regarding the separation of monetary policy and partisan politics. Historically, the Federal Reserve has operated with a degree of autonomy designed to insulate the economy from short-term political cycles. Analysts are now comparing this moment to the 1951 Treasury-Federal Reserve Accord, which originally established the Fed's independence. However, the current situation is far more volatile, as it involves criminal allegations rather than mere policy disagreements.

The wider significance of this event lies in the potential "institutional risk premium" now being baked into U.S. assets. If the Fed's independence is seen as permanently compromised, the "Fed Put"—the long-standing belief that the central bank will intervene to stabilize markets—may be called into question. This has triggered a ripple effect across global markets, with central banks in Europe and Asia reportedly monitoring the situation closely, fearing that a weakened U.S. dollar could force them into unwanted currency interventions.

The Road Ahead: Potential Scenarios and Market Pivots

In the short term, all eyes are on the Supreme Court, which is currently weighing a case regarding the President's authority to fire senior central bank officials. A ruling in favor of the administration could lead to the immediate removal of Powell, potentially replaced by a more dovish, administration-aligned successor. Such a move would likely keep gold and silver prices elevated as the market adjusts to a potentially more inflationary policy environment. Alternatively, if Powell remains in his post and fights the charges, a prolonged legal battle could keep market volatility at extreme levels for months.

Investors should also prepare for a potential shift in the "flight to safety" trade. While gold and silver are the current leaders, Bitcoin (BTC) has shown resilience, edging toward the $91,000 mark as some investors view it as a "digital gold" alternative to traditional fiat-linked assets. The coming weeks will likely see a strategic pivot toward defensive portfolios, with a heavy emphasis on commodities and inflation-protected securities (TIPS) as the 10-year Treasury yield continues to climb, currently sitting at 4.19%.

Final Assessment: A New Era of Volatility

The record-breaking surge in gold and silver is more than just a commodity rally; it is a clear signal of deep-seated anxiety regarding the stability of the American financial system. The DOJ probe into Jerome Powell has shattered the illusion of a politically neutral central bank, forcing investors to re-evaluate the risk profile of every asset denominated in U.S. dollars. The $4,630 gold price and $85 silver price are markers of a market that is pricing in a fundamental shift in how the U.S. economy is governed.

Moving forward, the market will likely remain in a state of "high alert." Key indicators to watch include any further subpoenas, statements from the U.S. Attorney’s office, and the Fed’s next scheduled policy meeting. If the administration continues its pursuit of Powell, the flight to precious metals may only be in its early stages. For now, the "gold rush" of 2026 stands as a stark reminder that in times of political and constitutional upheaval, the oldest forms of money often become the most sought-after.

This content is intended for informational purposes only and is not financial advice.