Debt chained to the ankle of business professional

Gold and the Debt Crisis

In the weeks leading up to the debt crisis in 2011, gold rose $400 an ounce to hit its nominal all-time peak of $1,895. The 2011 debt crisis was the one in which we came so close to defaulting on our debts that rating agencies downgraded the nation’s credit score. But it was good for gold. As the crisis approached, gold rose spectacularly. After the crisis was resolved, it fell dramatically but retained a portion of the gain. Can we expect a similar pattern as the current debt limit standoff progresses?

Federal Open Market Committee abbreviation on top of stacks of silver and gold coins

FOMC Fallout: Here We Go Again

As I write this morning, gold has given up two-thirds of its gains following the Fed’s decision last Wednesday to continue its $85 billion-a-month in bond purchases under QE3. One reason for this retreat is that markets overreacted to the news, just as they did back in June when Ben Bernanke’s statement about QE3 was misinterpreted as a signal the Fed would cut back QE3 in September. Buckle your seat belts; we’re in for many more days like Wednesday in the year ahead…

Four 100 gram gold bars at the base of a red arrow pointing upwards

Why Is Gold Rallying?

This weekend’s NY Times article about Goldman Sachs cornering the aluminum warehousing market has generated heated speculation about the lending practices of big banks that warehouse gold. This matter draws great interest because such lending practices could lead to delivery obligations rising to levels significantly higher than gold stocks can support.  Moreover, because these lending arrangements…

Red circle with thumbs down

Why Does Ben Bernanke Hate Gold?

Fed Chairman Ben Bernanke dissed gold in a Senate Banking Committee hearing yesterday. There’s nothing surprising in that — he’s stated his views on gold before. But it’s still interesting to take a look at what he said. “No one really understands gold prices,” said the Fed chairman with a seemingly straight face. Hmmm. There seem…