Gold Prices: Bernanke goes for the gold

Posted April 4, 2008

“(The Fed’s) message has been, more or less, that money grows on trees, which is why Ben Bernanke’s moniker, ‘Helicopter’ Ben, is catching on with the press. Gold bugs could not be more thrilled. Just recently, I wrote that we are seeing the best of all worlds for gold to shoot straight up a few hundred points.” — Ed Bugos

by Ed Bugos, Whiskey & Gunpowder

Baltimore – (TFN): When I look at the policies that central banks are adopting today, everywhere, I see an inflationary epidemic that is feeding on itself and confirming the bull market in gold. In the U.S. — arguably an epicenter of the modern global monetary system — I see a central bank whose powers are constantly expanding. This progression dates back to its birth in 1913, but as recently as 1999 and 2003, parts of the Federal Reserve Act were rewritten — granting the Fed more power to create money.

Today, with progressive calls for action in the face of crisis, the Fed’s tentacles are potentially reaching directly into the credit and securities markets. This week alone, the headlines are rife with news of its “sweeping” new powers under Treasury Secretary Hank Paulson’s “plan.”

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The Federal Reserve is in the midst of another historic interest rate-cutting campaign. Its official policy stance is that it recognizes the inflation risks, but worries more about growth, so it will inflate to sustain “growth.”

Its message has been, more or less, that money grows on trees, which is why Ben Bernanke’s moniker, “Helicopter” Ben, is catching on with the press. Gold bugs could not be more thrilled. Just recently, I wrote that we are seeing the best of all worlds for gold to shoot straight up a few hundred points.

But wait! “It’s not such a sure thing.” At least that’s what I thought I heard…from a voice in the wilderness. “What do you mean it’s not a sure thing? Look at ‘em flood the markets with liquidity. $100 billion here, a few hundred there.” Read on to learn more.

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