Bernanke purports to be mystified by gold price


Maybe the Fed won't show HIM its gold swap records either.

* * *

Bernanke: Gold Sends Different Signal on Inflation

By Frank Tang
Wednesday, June 9, 2010

Gold's response to inflation is different when compared with other assets and commodities, U.S. Federal Reserve Chairman Ben Bernanke said on Wednesday.

"The signal that gold is sending is in some ways very different from what other asset prices are sending," said Bernanke at a Wednesday U.S. House of Representatives Budget Committee hearing when asked about inflation.

Gold prices hit an all-time high on Tuesday above $1,250 an ounce on fears that European credit contagion could lead to a double-dip recession. Year to date, the metal was up 12 percent.

... Dispatch continues below ...


Prophecy to Become Coal Producer This Year
with 1.5 Billion Tonnes of Resource

Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen.

For Prophecy's complete press release about its production plans, please visit:

"For example, the spread between nominal and inflation-indexed bonds, the break even, remains quite low, suggesting that markets expect about 2 percent inflation over the next 10 years," he said.

Bernanke added that prices of commodities including oil and food have fallen quite severely recently. So, "gold is out there doing something different from the rest of the commodity group," he said.

On Wednesday, the metal extended losses after Bernanke's comments. Bullion was at $1,226 an ounce, down 0.6 percent for the day.

U.S. Consumer Price Index slipped 0.1 percent in April, and the closely watched core inflation rate had risen just 0.9 percent over the past 12 months, its smallest annual gain since 1966.

"I don't fully understand the movements in the gold price, but I do think that there's a great deal of uncertainty and anxiety in financial markets right now," Bernanke said.

"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," he added.

* * *

Support GATA by purchasing a colorful GATA T-shirt:

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon:

* * *

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

To contribute to GATA, please visit:


Coming Friday-Sunday, June 11-13, at the Dallas-Fort Worth Airport Marriot:
The Anglo Far-East Bullion Co.'s Gold and Silver Conference

The conference will explore the dangers and opportunities in today's bullion markets and the need for investors to diversify bullion holdings outside of bullion banking and commodities markets. Speakers will include David Morgan of, Gold Anti-Trust Action Committee Chairman Bill Murphy, and Duncan Cameron and Philip Judge of Anglo Far-East Bullion Co. The earliest conference attendees on Saturday will be able to schedule one-on-one interviews for personal consultation with Anglo-Far East's experts on Sunday.

To learn more about and register for the Anglo Far-East Bullion conference, please visit: