# Credibility is a currency: what is the Fed still worth?
Updated on September 27, 2026
For several weeks, the gold price has seemed to hesitate. The ounce is holding above $3,300, without any real upward momentum. At first glance, that may look disappointing. But this apparent stagnation conceals a deeper reality. For if gold remains this high despite long-term rates at 5%, it is no coincidence. This atypical behaviour sends a clear message: confidence in the Fed is eroding.
When politics walks through the central bank’s door
Tensions between the White House and the Federal Reserve are nothing new. But the political pressure has intensified recently.
Donald Trump has publicly stated that interest rates should be cut by 3 points and has renewed his personal attacks on Jerome Powell, the Fed’s chairman. Some are already speaking of a climate of « monetary blackmail ».
This kind of direct interference is not trivial.
The Fed is not a mere technical instrument: it embodies the credibility of the American monetary system. And it is precisely that credibility which is beginning to falter.
The Fed’s credibility: an irreplaceable asset
An economist at the Bank for International Settlements (BIS) sums up the situation as follows:
> « Credibility is the only asset a central bank cannot buy. It can only lose it. »
The example of Turkey illustrates this risk perfectly:
– From 2018 to 2023, Recep Tayyip Erdogan forced his central bank to keep rates artificially low despite explosive inflation.
– The result: inflation at 85%, a collapse of the currency, and a massive flight of capital.
– Even today, Turkey is struggling to regain the confidence of the markets.
This scenario is no longer theoretical. The question is no longer « Could it happen in the United States? » but rather « To what extent has it already begun? »
Gold, the safe-haven asset when the Fed disappoints
In theory, long-term rates at 5% should weigh heavily on gold, which pays neither a dividend nor interest. Yet the yellow metal is holding firm, unperturbed.
Why? Because gold rests on no political or monetary promise. It does not need to be believed in order to have value.
That is what makes it the ultimate asset of trust, particularly when the Fed’s credibility is at stake.
Central banks buy in silence, analysts raise their forecasts
While markets struggle to find a clear direction, institutions are organising themselves.
The London Bullion Market Association (LBMA) recently raised its 2025 gold price forecasts by 15%, discreetly but steadily.
At the same time, central banks are buying gold at a sustained pace. Not to speculate, but to protect themselves:
– from the volatility of the dollar,
– from American political instability,
– and above all from the Fed’s potential loss of credibility.
A weakened Fed: the market looks for a new benchmark
The real issue is no longer where to invest, but whom to trust.
When the Fed loses its authority, when the dollar becomes politicised, and when even Treasury bonds become vulnerable, gold once again becomes the standard of trust.
And if credibility is a central bank’s true currency, then the market is sending the Fed a clear message: that currency is depreciating.
Gold as a barometer of confidence in the Fed
In a context where the Fed is increasingly influenced by politics, where its decisions provoke growing doubt, gold plays the role of a silent but powerful revealer.
The question to ask today is no longer « what will the Fed’s next move be? »
It is this: « Does the market still believe the Fed’s word? »
And the answer is to be found in gold.
Frequently asked questions about gold
Why does political pressure on the Fed push the gold price higher?
Gold rests on no political or monetary promise, which is precisely why it strengthens when institutions weaken. When the White House publicly demands a 3-point cut in interest rates and multiplies personal attacks on the Fed’s chairman, investors read a direct threat to the central bank’s independence. That independence is the foundation of the dollar’s credibility. The moment it wavers, part of global savings shifts towards an asset that no government can print, manipulate or politicise. This is why gold is holding above $3,300 per ounce despite long-term rates at 5%: the market is already pricing in a gradual erosion of confidence in the Fed’s word.
What does the Turkish example teach us about central bank credibility?
Between 2018 and 2023, President Erdogan forced the Turkish central bank to keep rates artificially low even as inflation spiralled out of control. The outcome was devastating: inflation reached 85%, the lira collapsed, and capital fled the country on a massive scale. Years later, Turkey is still struggling to regain the confidence of international markets, despite returning to more orthodox policies. The lesson is that credibility, once lost, takes a very long time to rebuild. As an economist at the Bank for International Settlements puts it, credibility is the only asset a central bank cannot buy; it can only lose it. For the United States, the question is no longer whether such a scenario is possible, but to what extent it has already begun.
Why do central banks keep buying physical gold?
Central banks are not buying gold to speculate on a price rise; they are buying it to protect themselves. Their purchases, sustained for several years now, are a hedge against three specific risks: the volatility of the dollar, American political instability, and above all the Fed’s potential loss of credibility. Physical metal carries no counterparty risk, depends on no political promise, and cannot be devalued by a decision taken in Washington. When the institutions that issue reserve currencies themselves diversify into gold, they are sending a signal that private savers would be wrong to ignore. Gold is once again becoming the standard of trust, and gold and purchasing power remain inseparable over the long term.
How can a private investor protect themselves if confidence in the Fed keeps eroding?
The most direct answer is to hold a tangible share of one’s wealth in physical metal, outside the banking system. That means favouring certified, numbered bars whose purity and traceability are guaranteed by an established refiner. At Gold & Silver Company, every bar is delivered with its certificate of authenticity and complies with the investment gold standards that carry VAT exemption in Belgium. You can explore our range of certified gold bars, consult our gold guide to structure a first acquisition, or book an appointment with our experts for personalised guidance. When the credibility of institutions becomes a depreciating currency, physical gold remains the asset that needs no one’s word to keep its value.