... US Federal Reserve chairman Ben Bernanke has made it clear that the recovery of the US economy and the reduction of unemployment depend on the recovery of consumer spending, which requires a robust stock exchange and a return of confidence to the housing market. That is where he would want to see the money go. It may also be that he does not want to see it go elsewhere.
Where else might it go? The exponential rise in demand for gold and silver coins and bullion bars tells the story of a loss of confidence in conventional banking and money. How is it, then, that in the face of rising demand; a banking system in disarray; and the "printing" of trillions of dollars, that the prices of gold and silver bullion remain subdued? Is it only in the East that the lessons of the Weimar Republic have been learned? Or have the laws of economics been reversed?
It has been said that there are no free markets any longer, only interventions. The world's most prominent intervener, by far, is the Fed. It intervenes in the interest rate structure; it intervenes in the housing market by buying mortgage-backed securities, undertaking to continue to do so until the anticipated recovery in unemployment statistics occurs; and it intervenes in the supply of money with its regular purchase of US Treasury bonds (which is to say, it creates money "out of thin air"). The US Treasury intervenes regularly to prop up the stock market through "the Working Group on Financial Markets", also known as the "Plunge Protection Team," established under former President Ronald Reagan.
Now it is contended that these serial interveners do not intervene in the bullion markets which, it is asserted, operate entirely according to free-market principles. Gold has been described as the antidollar. It is the ultimate "canary in the coal mine" on matters of banking and financial wellbeing. Is it conceivable that the compulsion to intervene will have departed in the case of gold (and silver) and will leave these commodities in splendid isolation? This proposition seems improbable if the price were to tell a story that the US officials did not like. Would they, for instance, leave the gold price to find a level of $5,000, which would cause every investor to abandon the US stock and housing markets in favour of the far more lucrative gold market? Does this scenario fit the character of ...