Recently, gold, silver, and Bitcoin have all fallen together, and everyone is wondering why "safe-haven assets as strong as gold have failed," and why the market suddenly changed its pricing logic.

Over the past two years, these three asset classes have essentially been eating from the same bowl: fiscal deficit expansion, a snowballing debt pile, and dilution of fiat currency purchasing power—so capital flowed into gold, silver, and BTC. One is a traditional hard currency, one is a precious metal with elasticity, and one is a digital hard asset; essentially, they are all bets that "money will become increasingly worthless." But now, this logic has been suppressed by the Fed.

Gold has fallen below $4,000, silver has dropped below $59, and BTC briefly approached $58k. On the surface, the three markets are each declining on their own, but in reality, the same positions are being unwound: as soon as rate hike expectations return and a strong dollar returns, non-yielding assets get their valuations squeezed first.

The U.S.-Iran conflict escalated, and by the old script, gold should have risen. War, oil prices, shipping risks, safe-haven demand—each looks like a positive for gold. But this time the market didn't follow the old script. Because the conflict didn't bring pure risk aversion, but rather higher energy prices, stickier inflation, and a more hawkish Fed.

Safe-haven buying didn't even have time to price in before real rates knocked gold down.

The hawkish signals after Warsh took office pushed this logic to the forefront. The May PCE year-over-year rate climbed back to 4.1%, and core PCE also stood at 3.4%. This is not data the Fed can easily brush aside. Now the market is no longer discussing "when will rates be cut," but "will there be another rate hike this year," which is bearish for gold, silver, and BTC.

Gold pays no interest—the higher the rate, the more obvious the holding cost. Silver, in addition to its precious metal properties, also has industrial properties, so when the tide turns, its volatility tends to be more severe. BTC is even more straightforward: it is packaged as digital gold but is highly dependent on liquidity; once the dollar strengthens and rates rise, this kind of long-duration narrative asset gets cut first.

Over the long term, the debt problem hasn't disappeared, and the dispute over fiat currency credibility hasn't disappeared either. But in short-term trading, the market recognizes a reality: if the dollar can still rise, Treasuries can still deliver returns, and the Fed might still hike rates, then there's no rush for capital to stubbornly hold a pile of non-yielding assets.

Next week coincides with month-end and quarter-end institutional rebalancing, so some funds were already planning to reallocate. On July 2, U.S. June nonfarm payrolls will be released early due to the Independence Day holiday. If employment remains strong and wages stay firm, then the "higher for longer" or even "another rate hike" trade will continue to weigh on the market. Plus, if the U.S.-Iran conflict continues to escalate over the weekend, oil prices and inflation expectations could re-ignite at any moment.

In other words, the real question for next week is: will the market continue to believe in Warsh's hawkish Fed?

If nonfarm payrolls cool and the dollar retreats, the debasement trade can catch its breath.

If employment is strong, oil prices bounce, and the dollar continues to climb, then any rebound in gold, silver, and BTC will be very heavy.

The thing that inflation-hedging assets fear most is not inflation.

What they fear most is the Fed actually starting to fight inflation with higher rates.

‍$XAUT $BTC