InvestorMind

Mike Maloney asks Ben Bernanke some important questions about gold and its role as money, along with his thoughts on our fraudulent monetary system.

(Reuters) - Federal Reserve Chairman Ben Bernanke on Tuesday took aim at proponents of the gold standard, saying that such a system handicaps the government's ability to address economic conditions. Bernanke spoke in the first of a series of four public lectures at George Washington University that is the central bank's latest effort to counter a raft of negative public sentiment that has arisen from its handling of the financial crisis. The former Princeton economics professor delivers a second lecture on Thursday and two more next week. "Since the gold standard determines the money supply, there is not much scope for the central bank to use monetary policy to stabilize the economy," Bernanke said. "Under a gold standard, typically the money supply goes up and interest rates go down in a period of strong economic activity - so that's the reverse of what a central bank would normally do today." Embodied by Texas congressman and Republican president...

Today multi-billionaire Hugo Salinas Price told King World News that central banks were definitely behind the smash in the gold price yesterday. He also said people should ignore it and continue buying gold and silver. But first, here is what Hugo Salinas Price had to say when asked about the plunge in gold yesterday: “I definitely think the central banks were behind it. I look at the graph of the gold price yesterday and when it collapses down $100 in about an hour, that is not natural market action. I think people are getting used to this. This is standard procedure and it doesn’t worry me at all.” Hugo Salinas Price continues: “The paper money people (central bankers), the fiat money people all over the world who are keeping us in this game, they are now in retreat. What you saw yesterday was a ‘Rear guard action.’ In reality, the gold and silver forces are overcoming them and overrunning them. The gold and silver buyers are forcing a higher exchange rate between let...

2012 is proving to be the 'Year of the Central Bank'. It is an exciting celebration of all the wonderful maneuvers central banks can employ to keep the system from falling apart. Western central banks have gone into complete overdrive since last November, convening, colluding and printing their way out of the mess that is the Eurozone. The scale and frequency of their maneuvering seems to increase with every passing week, and speaks to the desperate fragility that continues to define much of the financial system today. The first major maneuver took place on November 30, 2011, when the world's G6 central banks (the Federal Reserve, the Bank of England, the Bank of Japan, the European Central Bank [ECB], the Swiss National Bank, and the Bank of Canada) announced "coordinated actions to enhance their capacity to provide liquidity support to the global financial system".1 Long story short, in an effort to avert a total collapse in the European banking system, the US...

We have been saying it for weeks, and today even the WSJ jumped on the bandwagon: the sole reason why crude prices are surging (RIP European profit margins: with EUR Brent at a record, we can only assume the ECB will pull a 2011 and hike rates in 3-4 months even as it pumps trillions in PIIGS, banks bailout liquidity)  is because global liquidity has risen by $2 trillion in a few short months, on the most epic shadow liquidity tsunami launched in history in lieu of QE3 (discussed extensively here in our words, but here are JPM 's). Luckily, the market is finally waking up to this, and just as world central banks were preparing to offset deflation, they will instead have to deal with spiking inflation, because the market may have a short memory, it can remember what happened just about this time in 2011. And the problem is that when it comes to the inflation trade, the market, unlike in most other instances, can be fast - blazing fast, at anticipating what the central pl...

Central bank purchases, particularly from the official sector in emerging economies, have been the largest single driver of higher gold prices during the past five years. This development is particularly notable as central banks had been net sellers of bullion since the 1980s. We believe central banks from emerging economies have been buying gold to diversify their foreign exchange reserves, while developed Western countries with large legacy bullion holdings now see gold as a strategic reserve asset and have accordingly halted their gold sales programs. We think gold holds particular appeal for countries with large U.S. dollar holdings, such as China and OPEC member nations, given gold's historically negative correlation to the greenback. We do not believe central bank buying can maintain its current pace over the long haul, which supports our lower long-term gold price forecast of $1,200 per ounce. Still, we see a number of potential scenarios regarding official sector gold deman...

Inverse Lin-omena, the inverse of the Jeremy Lin phenomena where the unknown and previously discounted suddenly rise to prominence; here, the powerful and previously secure suddenly fall. Today, central bankers, the mandarins of capitalism, are in disarray. Their attempts to contain capitalism’s current crisis increasingly resemble the tactics of a defeated army in retreat. Like Napoleon and Hitler’s respective “Moscow moments”, the 21st century economic crisis has brought to an end the bankers’ spectacular 300 year run at the table of power and wealth. The indebting of others as a means of accumulating wealth ends when the indebted can no longer pay what they owe. The arcane and esoteric scribblings of second generation University of Chicago trained economists cannot cover up this basic fact, i.e. that the indebted are broke; and soon, their creditors will be as well. The bankers’ franchise of credit and debt built on a leveraged foundation of paper money fractionally backed by ...

The following is a missive that we received from Jim Sinclair today, who is the host of a web site called Jim Sinclair's MineSet in our humble opinion its well worth the time spent on reading what he has to say. The above link will take to his site and his updates via email are free, so you have nothing to lose by signing up for them. Dear Friends, The Gold Aficionado's greatest fear is totally without basis. The price of gold will not fall significantly from its points of true standard valuation and the introduction of a new currency system. Gold is heading back towards a monetary system and not away from it. The producing gold company of the future is the new utility as it dividends a majority of its profits to its shareholders. The fact that gold is money and not a commodity is the safety latch that opens on its own when all other forms of money close. Gresham's Law is human nature seeking a standard when all other forms of exchange have mutated to casino chips ...

With year end fund flows making absolutely no sense for the most part, thank you global central planning, as the euro plunges and the market refuses to follow, with risk assets rising on speculation the ECB (and/or Fed) are about to restart printing yet gold collapsing (on one or two hedge funds liquidating, yet econ PhDs already rewriting their theses on why the "gold bubble has popped"), and finally with Treasurys soaring to near all time highs (10 Year under 1.9% yesterday even as stocks surged on data from the National Advertisers of Realtors, aka NAR, of all fraudulent and corrupt entities), here is the latest observation to make the confusion complete. As the Fed's critical H.4.1 weekly update shows (which is leaps and bounds more accurate than the Treasury's TIC international fund flow data), in the week ended December 28, foreign investors sold the second highest amount of  US bonds in history, or $23 billion, bringing total UST custodial holdings ...

The stock market is up big time today. The Dow Jones is up 400 points as of this writing. The major central banks agreed to ease the strains in the European credit markets. The Federal Reserve agreed to provide cheaper dollar funding to the European Central Bank which can then provide cheaper dollar loans to European banks. We're not going to see an end to any money printing anytime soon.