Gold March 1st Price Chart

After spending over a week at the upper dotted trend line ----- gold finally broke higher on Tuesday and is ready to challenge the all time highs at 1434. Resistance is the upper red channel line ---looking at 1435-1445 for the remainder of the week. As long as price is in the upper red channel lines --- the short term trend remains up. Support is now the 1418-1422 area with daily support at 1406-1412.


JC said...

Not enough metal to put dollar back on gold, Bernanke says

Submitted by cpowell on Tue, 2011-03-01 23:47. Section: Daily Dispatches
And plenty of derivatives to keep the dollar off gold.
* * *
Bernanke Unfazed By Gold Standard, Currency History Queries
By Michael R. Crittenden
Dow Jones Newswires
via The Wall Street Journal
Tuesday, March 1, 2011

WASHINGTON -- Federal Reserve Chairman Ben Bernanke defended the central bank's effect on the dollar Tuesday, pushing back at the idea that policy makers should consider alternative proposals like the gold standard.
Bernanke, appearing before the Senate Banking Committee, was pressed by Sen. Jim DeMint, R-S.C., on the viability of a return to a gold-backed economy or the idea of the Treasury Department issuing bonds payable in gold.
Bernanke, who has studied the issue, said a return to the gold standard wouldn't work.
"It did deliver price stability over very long periods of time, but over shorter periods of time it caused wide swings in prices related to changes in demand or supply of gold. So I don't think it's a panacea," Bernanke told DeMint.

Additionally, Bernanke said there were a number of practical issues that would prevent the return of gold as the world standard. Namely, there's not enough gold in the world to effectively support the U.S. money supply.
"I don't think that a full-fledged gold standard would be practical at this point," Bernanke said, declining to opine on the gold-backed bond issue because he was not familiar with the idea.
Sen. Mark Kirk, R-Ill., also engaged Bernanke on the currency issue, questioning whether the Fed's $600 billion bond-purchase program is in effect monetizing the U.S. debt. Bernanke noted that the U.S couldn't have currency outstanding if there were no Treasury securities to back it up, and that even the most steady economic times the Fed engages in the buying and selling of U.S.-backed securities.
Kirk, however, noted that the United States did have currency not backed by federal debt at one time in its history: under the administration of President Andrew Jackson, the nation's seventh president.
Bernanke, appearing amused, was quick to respond.
"So this was before the Civil War. This was during the period where individual banks issued currency. We didn't have a national currency," Bernanke said.
Not to be outdone, Kirk asked whether it was possible for a country to have a currency without a trillion-dollar debt. Bernanke said that was the case"


As I read this, I couldn't help but thinking to myself that his arguement is very one sided. Either gold and other PM's are grossly overpriced or substantially undervalued. It would appear from that the Bernanke has his philosophy wrong, as his true fiat banker mentality shows. He is thinking of Gold relative to current price with a relationship to money supply. AS he sees it, there is not enough gold "at it's current price" to back the massive money supply of the US alone. In real terms he has just supplied the basis for the argument that Gold, Silver and other PM’s are grossly underpriced within this relationship. We can have a gold standard and you do not need more metal to achieve it, the metal just needs to priced in real terms as a relationship to the money supply. This underlying fundamental would imply that the PM's need to be 10's of times higher than their current value. We may very well see this as more citizen's around the world flee their current currencies for the safety of precious metals.

Jack C.

Louis Cypher said...

Very interesting. Send me your email address or setup a temp one so that you can post articles.
I'm going to move this from comments to article.
Thx LC