Monday, March 16, 2009

Bernanke: Buy Gold

Despite the plethora of criticism that has emanated from these pages towards Dr. Bernanke, we must admit that he is a man who follows through with his promises. Long before ascending into the most powerful job in the world, during his time in the Ivory Tower, Bernanke penned many a paper regarding the Great Depression. In these writings, the Fed Chairman made clear that to combat a deflationary depression, a Central Bank must "print" as much money as is possible. Sure enough, throughout the current Predicament, Bernanke has remained true to his principles, and has now appeared on natinal television to espouse his views. The message we take from the interview is clear: The Fed has, and will continue to expand the money supply, at an exponential rate of increase if necessary.

The winners under this scenario are the Government, as well as certain recipients of Fed backing/funding. The losers, of course, are those who have saved their money, and the Government's creditors. We would speculate that the Chinese Premier's call for "assurance" from the US Government was purposely delivered on the eve of a public pronouncement from the Fed Chairman. Nevertheless, we hold that given the global currency risks that currently abound, Gold should maintain its status as Preserver of Wealth.
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