Ben Bernanke Versus the Gold Market Posted by James Randolph on March 21, 2012
March 21, 2012 – Despite all fundamental indicators, there is currently a relatively considerable dip in the gold market. The correction currently stands at 13 percent from recent highs. Corrections are normal and healthy functions of the gold market that provide evidence of a continuing bull market. Between 10 percent and 20 percent are the fundamental indicators of a downward correction in the gold market. The current correction falls within that category and will most likely begin the process of reversal in the coming two to three weeks.
In the meantime, nobody knows where gold will turn up. Certainly the Chairman of the Federal Reserve has some idea, but he is not saying on the first leg of his US college tour. Some may ask why the sitting Chairman of the Fed is going around the country and speaking to college students in order to talk about his handling of the US economy over the past five years.
Few Americans could honestly say they believe the policies of Ben Bernanke have been adequate and timely in the handling of the serious financial problems we have been facing these last years. In trading circles, Ben Bernanke is more often the butt of jokes than a revered figure whose judgment and wisdom is deferred to. Bernanke himself recently called the US recovery “painfully slow” at a gathering of small business owners.
Meanwhile, the central banks in the United States and several other countries have been buying gold on every correction. It was released in a report by the World Gold Council that during the September 2011 correction central banks around the world bought gold at forty year highs. Not since 1971 and the end of Bretton Woods have central banks been buying gold at the volume they are buying during the biggest dips.
This is a little contradictory to Bernanke’s statement today before Congress that the dollar has not been impaired by the financial policies of his administration at the Federal Reserve. If the dollar is such a strong currency, why is the bank buying gold?
Now is a time for looking at the market objectively. Prices may not lure you, but that’s generally a good thing if you’re buying low and selling high. All the fundamental indicators for a strong bull market are intact. The policy of the Federal Reserve boosts the value of gold and it has repeatedly stated it will maintain those policies. These are all the technical standards you would want in any market and a great reason to get into the gold market today.
Senior Staff Writer – Certified Gold Exchange