Thursday, July 22, 2010

Bernanke's Misguided Policies Drive Gold Prices Up

Anyone who thinks gold prices are going to plunge, better read up on Ben Bernanke and his philosophy for running the Federal Reserve, which is nothing more than printing as much money as needed to pretty much do absolutely nothing, as evidenced by the ongoing recession.

Gold prices are going to continue to go up based on nothing else but that, although there are other factors which will contribute to the price movements of gold.

It's an incredible joke to hear economic and business writers say that gold prices are going up because the Federal Reserve will act to "stimulate" the economy if needed.

As mentioned, printing and throwing money at the problem can't be equated with economic stimulation, as the last two years have shown. There has been no stimulation, just artificial props that crash once they're removed, like the tax credit for new home buyers.

For gold investors it's good news to be reminded of these foolish actions, as it guarantees gold prices will move up for some time to come, as there can be no doubt the economy will continue to sputter, and Bernanke will crank up the printing presses yet again.

It also guarantees a robust Tea Party movement, as these types of actions are what led to organic formation of the political powerhouse to begin with, as government spending continues to spiral out of control and bring the United States to the point of ruin.

This is why gold will continue to attract new investors, and why it'll hold its own against the majority of investments for some time to come.

Gold in the short term will probably continue to fluctuate, as mixed economic news continues to be the narrative, giving differing signals at the same time.

But as the market slowly realizes Europe is far from fixed, even though some are attempting to make it look like it's back to business as usual, we'll see gold get a huge push from the ongoing sovereign debt crisis as well.

The recent downgrade of Ireland's debt reminds us of the threat still inherent in the European Union, and which isn't close to being taken care of.

For gold, all of this is going to keep support under it, and once it takes off again, will probably move to record highs, as there will be very few places to put our money.

Gold prices finished up for the third day in a row, increasing to $1,195.60 an ounce on the Comex in New York.

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