Rumors Driving Short Term Price Swings
The prices of the metals dropped a bit more this week, -$7 and -$0.16. We all know the dollar is going down, that it is the stated policy of the Federal Reserve to make it go down. We all know that gold has been valued for thousands of years. So why do we measure the timeless metal in terms of paper currency?
It should be the other way around. We therefore encourage people to think of the price of the dollar measured in gold, rather than the price of gold measured in dollars. Last week, the dollar was up to 24.43 milligrams of gold.
On Friday, a curious thing happened. A report came out that Jerome Powell, who is on the Board of Governors of the Federal Reserve, is now the leading candidate to replace Janet Yellen as Chairman. This was deemed by the market to be good for gold and especially silver. Powell is not only an establishment guy, he has been part of the decision making body which has brought you the monetary policy which has caused/coincided with the drop in the price of gold from $1,558 when he took office.
Presumably the reason why he is a candidate, and the reason why the gold market bid up the price of gold, is that he will continue the current central plan. This plan could be charitably dubbed ‘monetary largesse’. Notwithstanding the theory held by both the mainstream Fed apologists and alternative Fed critics, this policy has not resulted in skyrocketing prices of either consumer goods or gold. But no matter, the likely appointment of the mainstream insider (as opposed to the other leading candidate, John Taylor, who is an academic and not a Fed official) is good news. For gold. For now.
This post was published at Acting-Man on October 31, 2017.
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