Ben Bernanke is confused. And no, it’s not just the monetary system that continues to confound him. This time it’s gold prices. During Wednesday’s Congressional testimony, Bernanke was asked about the surging price of gold and if that is a sign of no confidence in fiat currencies. He responded:
“Well the signal that gold is sending is in some ways very different from what other asset prices are sending. For example, the spread between nominal and inflation index bonds remains quite low – suggesting just 2% inflation over the next 10 years. Other commodity prices have fallen recently quite severely including oil prices and food prices. So gold is out there doing something different from the rest of the commodity group. I don’t fully understand the movements in the gold price, but I do think there’s a great deal of uncertainty and anxiety in financial markets right now and some people believe that holding gold will be a hedge against the fact that they view many other investments as being risky and hard to predict at this point.” (more)
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