Posts Tagged ‘Bernanke’

Do you really believe that the gold bull market is over?

Saturday, May 25th, 2013

Recently, there are a lot of chatter in the financial market about the end of the gold bull market. Those who believe that will use the examples of smart money to bolster their argument- George Soros selling his gold, Goldman Sach warning that gold prices  can fall further, etc. Indeed, there are no shortage of experts offering their opinion on why the gold bull market is over. It is easy to believe it because gold prices has been going nowhere since 2011. If you look at the 10-year chart for gold prices, you can be forgiven for thinking that the uptrend seems to be over. Is the gold bull market really over?

Before we answer this question, let?s look at the current popular narrative that tries to explain why gold prices is falling. The prevailing story is that the US economy is finally on track to a real recovery and hence, the money printing measure enacted since the GFC can finally stop. When money printing stops, at least the debasement of money can end. With luck, if the US economy continue to recover and become gangbusters, Bernanke may even start to clean up and unwind the money litter. In either case, gold will not be needed anymore since confidence in fiat money (ie US dollars) will return.

Indeed, the financial markets are reading Bernanke?s lips to divine when he will start to stop printing money. Bernanke did a good job of confusing the market. But in our opinion, it is very hard for him to end the monetary rain. Why? Because once it becomes clear that Bernanke will eventually stop printing money, guess what will happen to the US dollar? It will continue to rise and rise and rise and rise. That will kill the export competitiveness of the US economy and pull the US back into the economic hole that it just got out. Do you think the US will be stupid enough to score its own goal and give countries like China and Japan a chance to high-five each other? Anyway, let?s go back to the popular narrative?

Unfortunately, this popular narrative (that the US will start to stop printing money) miss one important big picture fact. Missing this fact is so mind-bogglingly stupid!! It is as stupid as missing a gigantic elephant in the room. Those who fail to see this elephant will sell their gold to those who could see it. In due time, when this elephant gets noticed, there will be a rush back into gold.

What is this gigantic elephant in the room?

The answer is found in the last section of chapter 5 of our book, How to buy and invest in gold and silver bullion.

Bernanke warming up the printing press

Sunday, August 29th, 2010

Last month, we wrote in Prepare to pull the trigger on speculating! about the signs to watch out for the timing to speculate. Well, the sign arrived over the weekend.

Last Friday, Ben Bernanke gave the strongest hint about money printing. As this article reported,

Federal Reserve chairman Ben Bernanke has laid out four "unconventional" policy options to boost the US economy.

Top of the list is more "quantitative easing" – mass purchases of debt.

"Quantitative easing? sounds technical, but it basically means printing money. In another article, Bernanke is talking tough against deflation,

Federal Reserve Board Chairman Ben Bernanke said Friday that the central bank would not sit idly and let the U.S. economy sink into a period of deflation.

"The Federal Open Market Committee will strongly resist deviations from price stability in the downward direction," Bernanke said in a speech opening the Fed’s annual summer policy retreat.

The Fed would be "vigilant and proactive" if inflation falls by a significant amount, he said, though he downplayed concern that the economy would fall back into another downturn, or a double-dip recession.

As we wrote in our book, How to buy and invest in physical gold and silver bullion,

The United States, with ?helicopter? Ben Bernanke at the helm of the Federal Reserve, is committed to money printing to solve America?s economic woes. To the extent that the US dollar is the world reserve currency, it will affect the rest of the world.

In essence, for investors who still believe in deflation, Bernanke is saying, ?Try me. I dare you.?