Steve Forbes: Why Gold Collapsed
FED STERILIZATION
How Bernanke Fueled the Collapse in Gold
Chairman Steve Forbes discusses gold market takedown yesterday on Bloomberg.
---
Read the op-ed
Steve Forbes - Why Gold Plunged
Ben Bernanke has pulled off a neat trick that could well give us the worst of all worlds: a brief commodity deflation, future inflation and a stagnant economy. It will earn him a prominent place in the central bank’s Hall of Infamy. Usually central bankers earn opprobium from history the old-fashioned way, by debasing the currencies under their care. But Bernanke has added a new twist.
After 2009 Bernanke did something a bit different. He churned out globs of new money but then sterilized most of it by paying banks to keep the money parked at the Fed. Banks didn’t mind. It was found money on which they earned — and still earn — easy and riskless profits.
Leveraged speculators are waking up to the fact that we won’t be getting a 1970s-style inflation in the near future and are bailing out — for now. Gold rose sharply in anticipation that quantitative easing would flood the economy with excess money just as happened in the 1970s. But as we noted, most of it was bottled up. Or a better metaphor, it lies in a vast reservoir –however in this case, the water is held in place by a very weak dam.
Jim Rickards Explains How Gold Could Hit $7,000
May 8, 2013 at 7:48 PM
Reader Comments (20)
http://dailybail.com/home/santelli-on-gold-panic-selling-heres-the-rumor.html
http://www.zerohedge.com/news/2013-05-08/new-normal-greek-government-bonds-330-year
http://www.zerohedge.com/news/2013-05-08/germany-under-pressure-create-money
http://www.washingtonsblog.com/2013/05/see-for-yourself-syrian-government-likely-did-not-use-chemical-weapons.html
http://www.bloomberg.com/news/2013-05-07/debt-repair-firm-charged-in-first-cfpb-criminal-referral.html
http://www.bloomberg.com/news/2013-05-08/u-s-stock-futures-little-changed-whole-foods-advances.html
http://www.bloomberg.com/news/2013-05-08/enhanced-viagra-site-won-t-end-male-embarrassment.html
http://www.bloomberg.com/news/2013-05-08/ex-n-y-senator-huntley-recorded-city-state-officials.html
http://www.bloomberg.com/news/2013-05-08/jpmorgan-received-wells-type-notice-from-ferc-in-energy-probe.html
http://www.bloomberg.com/news/2013-05-08/goldman-said-to-earn-500-million-arranging-malaysia-bond.html
“The faith that foreigners are placing in us may be misfounded. When the claim checks outstanding grow sufficiently numerous and when the issuing party can unilaterally determine their purchasing power, the pressure on the issuer to dilute their value by inflating the currency becomes almost irresistible. For the debtor government, the weapon of inflation is the economic equivalent of the “H” bomb, and that is why very few countries have been allowed to swamp the world with debt denominated in their own currency. Our past, relatively good record for fiscal integrity has let us break this rule, but the generosity accorded us is likely to intensify, rather than relieve, the eventual pressure on us to inflate. If we do succumb to that pressure, it won’t be just the foreign holders of our claim checks who will suffer. It will be all of us as well.”
http://www.forbes.com/sites/realspin/2012/11/30/buffetts-billions-cant-buy-him-exemption-from-his-tax-averse-past/2/
A mere 12 or 13 years ago gold was under 300 an ounce.
Where is the printer responsible for these cut-outs so I can't take a hot shit on it in hopes that one of them might do something unexpected, if only for a second? Replicants were at least interesting. What the fuck is wrong with these guys? Is their hair even real?
Forbes even writes like a robot.
Shouldn't be long now if U.S. President Jamie's house account is any indication...
"Also at the comex, we saw another customer withdrawal of gold from JPMorgan to the tune of 57,863.091 oz. They now have only 137,377.04 oz left in its customer account."
http://jessescrossroadscafe.blogspot.com/2013/05/gold-daily-and-silver-weekly-charts-cap_8.html (quoting Harvey Organ).
Precious metals this year remind me a lot of 2008, when gold dropped 30% and silver 60%. Sort of a canary-in-the-coalmine thing. Just sayin.
---
Agreed, His op-ed is strangely written. And he comes across as an artificial perma-smiler in most interviews. I posted the clip because of the discussion of sterilizing bank reserves, which you don't hear very often.