What do I see front and center this morning on the currency screens? A nasty sell-off in the currencies and metals that began yesterday afternoon, carried over to the Asian markets…
Gold had lost the $1,400 figure in the profit taking yesterday, but has rallied back $9 this morning to push past $1,400 again. Silver, which yesterday morning looked like it was going to be on a straight line to the moon, also sold off in the late afternoon trading, but like gold, has rebounded in the morning trading.
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Gold vs. The Fed: The Record Is Clear
There were no worldwide financial crises of major magnitude during the Bretton Woods era from 1947 to 1971. Lesson: Gold is a more efficient governor of monetary policy that the Federal Reserve.
When it last met, the Federal Open Market Committee (FOMC) signaled its desire to increase the rate of inflation by providing additional monetary stimulus. This policy is based on a false – and dangerous – premise: that manipulating the dollar’s buying power will lead to higher employment and economic growth. But the experience of the past 40 years points to the opposite conclusion: that guaranteeing a stable value for the dollar by restoring dollar-gold convertibility would be the surest way for the Federal Reserve to achieve its dual mandate of maximum employment and price stability.
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