By now a lot of you have either heard about or read Bernanke's statements about gold in a speech he delivered at George Washington University. The speech was part of a series of five speeches which are part of the Fed's new "transparency" policies. Of course, what is communicated in Bernanke's speeches has nothing to do with removing the veil from any of the Fed policies and actions that matter or need some explanation. But I digress.We have entered the most favourable era for gold prices in our lifetime, and the share prices of the great mining companies will eventually outperform bullion prices...central banks are printing money and creating liquidity beyond the forecasts of all but the most paranoid goldbugs a year ago - Don Coxe, Strategy Advisor BMO (Bank of Montreal) Financial Group
Originally I did not want to dignify Bernanke's statements about gold with a rebuttal because the material he presented and the statements he put forth were pretty much either outright lies or outright complete ignorance. Bernanke, to try and defend his arguments, distorted historical facts, perverted all known economic laws which underlie monetary theory and completely misrepresented the historical function of gold as a direct currency (which it has been for most of the last 5,000 years) or as a device to "anchor" the surrogated paper currency. By this I mean the paper money that is issued against gold reserves in order to make gold as money fungible for the purposes of commericialism.
Rather than reinvent the wheel, I am linking three very compelling rebuttals to Bernanke's speech. These rebuttals correct Bernanke's incorrect statements of historical fact and they demolish the core of Bernanke's arguments. Quite frankly, when I read through Bernanke's speech, I found myself wondering how Bernanke was ever awarded a degree in economics, let alone a professorship and then the Chair of the Federal Reserve.
The first piece is from Paul Brodsky, a well-known money manager who has previously issued some of the most compelling work available on the current undervaluation of gold, silver and mining stocks:
Has anyone asked why so many powerful people are going out of their way to discredit an inert rock? We think it comes down to maintaining power and control over commercial economies...I sourced Brodsky's rebuttal from zerohedge.com and it's long but worth spending time reading: LINK. The second piece is short and to the point. This one is from James Turk, who is one of the few elders in the gold investing community from whom I read every word published: LINK.
Finally, to round out the rebuttal commentary, I thought it would be appropriate to throw in Alan Greenspan's "Gold and Economic Freedom" essay, written in 1966 five years before Nixon closed the gold window. If the first two pieces are aren't clear, this one will be crystal clear: LINK. For someone who professed faith in currency by Government/Central Bank fiat while he was running the Fed, Greenspan in that essay lays out why gold is the perfect anchor for a surrogated paper currency. Anyone who wonders why gold has been used for 50 centuries for this purpose will for sure understand after reading Greenspan's essay. Isn't it funny that the most accurate commentary that ever came from Greenspan occurred 25 years before he ascended to the Chairmanship of the Fed? I'm still waiting for seminal, intelligent work from Bernanke. Maybe he's better suited to be the Talmudic scholar he always aspired to be...