Ron Paul and Ben Bernanke: Is Gold Money?
Gold’s new record highs may also have been contributed to by the debate between Federal Reserve Chairman, Ben Bernanke and Presidential candidate Ron Paul at the U.S. House Banking Committee (see video here).

Dr. Paul asked about the collapse in the value of the dollar by almost 50% in the past three years to less than a 1,580th of an ounce of gold.

“When you wake up in the morning, do you care about the price of gold?” he asked Mr. Bernanke.

“Well,” Bernanke replied. “I pay attention to the price of gold. But I think it reflects a lot of things. It reflects global uncertainties. I think the reason people hold gold is as protection against of what we call tail risks, really, really bad outcomes. And to the extent that the last few years have made people more worried about the potential of a major crisis then they have gold as a protection.”

Paul: "Do you think gold is money?"

Bernanke: "No. It's a precious metal."

Paul: "Even if it's been money for 6,000 years? Somebody reversed that and eliminated that economic law?"

Bernanke: "Well, you know, it's an asset. Would you say treasury bills are money? I don't think they're money either, but they're a financial asset."

Paul: "Why do central banks hold it if it's not money?"

Bernanke: "Well, it's a form of reserves."

Paul: "Why don't they hold diamonds?"

Bernanke: "Well, it's tradition. Long-term tradition."

Paul: "Some people still think it's money."

The Federal Reserve Chairman’s admission that gold is “protection” against “tail risks” and “really, really bad outcomes” is important and marks another step towards gold’s movement from being a fringe asset to being a core part of a properly diversified portfolio.

Gold is increasingly being seen as an important safe haven asset and indeed currency (despite Bernanke’s feeble denial of this) and this interview may be seen as another landmark in gold’s move from fringe “barbaric relic” to mainstream investment and savings vehicle.


NEWS
(The Telegraph) -- Gold price hits all-time high on European debt crisis and US QE
http://www.telegraph.co.uk/finance/personalfinance/investing/gold/8635483/Gold-price-hits-all-time-high-on-European-debt-crisis-and-US-QE.html

(The Independent) – Gold price hits record high as eurozone woes spread across Atlantic
http://www.independent.co.uk/news/business/news/gold-price-hits-record-high-as-eurozone-woes-spread-across-atlantic-2313296.html

(Reuters) – Gold hits record, extends gains to 9th day
http://in.reuters.com/article/2011/07/14/idINIndia-58251820110714

(Bloomberg) -- Gold Climbs to Record on Concern About Fed Stimulus, Europe’s Debt Crisis
http://www.bloomberg.com/news/2011-07-14/gold-rallies-to-record-on-haven-demand-as-debt-concerns-intensify-in-u-s-.html

(The Street) – Ron Paul Attacks Bernanke on Gold
http://www.thestreet.com/_yahoo/story/11184107/1/ron-paul-attacks-bernanke-on-gold.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

COMMENTARY
(You Tube) – Ron Paul vs Bernanke: Is Gold Money? - July 13, 2011
http://www.youtube.com/GoldCoreLimited

(MarketWatch) – A great day for gold — and the bugs (mostly) think more are to come.
http://www.marketwatch.com/story/gold-the-upside-is-wide-open-2011-07-14?reflink=MW_news_stmp

(ZeroHedge) – Moody's Puts US AAA Rating On Downgrade Review
http://www.zerohedge.com/article/moodys-puts-us-aaa-rating-downgrade-review

(The Telegraph) -- The countries with the largest gold reserves
http://www.telegraph.co.uk/finance/personalfinance/investing/gold/8635555/The-countries-with-the-largest-gold-reserves.html

(The Telegraph) – How to invest in gold
http://www.telegraph.co.uk/finance/personalfinance/investing/gold/8635523/How-to-invest-in-gold.html

(The Telegraph) – Italy money supply plunge flashes red warning signals
http://www.telegraph.co.uk/finance/economics/8636155/Money-supply-plunge-flashes-red-warning-signals.html

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-- Posted Thursday, 14 July 2011 | Digg This Article