Paul jousts with Bernanke but presses no gold questions

Section:

House Republicans Rip into Fed Chief Bernanke

By Greg Robb
MarketWatch.com
Wednesday, March 2, 2011

http://www.marketwatch.com/story/paul-other-republicans-rip-into-bernank...

WASHINGTON -- House Republicans turned up the heat Wednesday on Federal Reserve Chairman Ben Bernanke as he appeared before Congress for a second time this week to testify on the U.S. economic outlook.

Rep. Ron Paul, R-Texas, called inflation a "deadly threat" to the economy and said it's being caused by current monetary policy.

Paul, long a fierce critic of the U.S. central bank, disagreed with Bernanke's assertion in his appearance before the Senate on Tuesday that the recent spike in oil prices would lead only to a "temporary and relatively modest" increase in consumer price inflation.

"I would suggest that we still have a lot of inflation in the system and it is going to get much worse," Paul said.

... Dispatch continues below ...



ADVERTISEMENT

Prophecy Resource Spins Off Platinum/Palladium Venture:
World-Class PGM Deposit in Yukon

Company Press Release, January 18, 2011

VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY)and Pacific Coast Nickel Corp. announce that they have agreed that PCNC will acquire Prophecy's Nickel PGM projects by issuing common shares to Prophecy.

PCNC will acquire the Wellgreen PGM Ni-Cu and Lynn Lake nickel projects in the Yukon Territory and Manitoba respectively by issuing up to 550 million common shares of PCNC to Prophecy. PCNC has 55.7 million shares outstanding.

Following the transaction:

-- Prophecy will own approximately 90 percent of PCNC.

-- PCNC will consolidate its share capital on a 10 old for one new basis.

-- Prophecy will change its name to Prophecy Coal Corp. and PCNC will be renamed Prophecy Platinum Corp.

-- Prophecy intends to distribute half of its PCNC shares to shareholders pro-rata in accordance with their holdings.

Based on the closing price of the common shares of PCNC on January 17, $0.195 per share, the gross value of the transaction is $107,250,000.

For the complete announcement, please visit:

http://prophecyresource.com/news_2011_jan18.php



Paul said that economists he follows argue that consumer prices are rising at a 9% clip and that the money supply is rising at a 24% pace.

"Inflation is exploding and interest rates are going to go up and we are going to have one heck of a problem in the future," Paul said.

Pressed by Rep. Scott Garrett, R-N.J., about how long inflation would have to rise before the Fed would respond, Bernanke said it depended on whether inflation expectations were anchored and what was going on with the broader basket of prices.

"Oil prices alone, with nothing else moving, would probably not be enough to make us respond," Bernanke said.

The central banker seemed unnerved by the strong criticism but stuck to his defense of the Fed's innovative bond-buying program.

Known as quantitative easing or "QE2," the policy has entailed the Fed buying up U.S. bonds, including cash reinvested from maturing mortgage-related holdings, in a bid to curb upward pressures on interest rates and thus foster the economic recovery. Through Tuesday, the Fed had bought back about $458 billion under the $600 billion program, according to the latest tally compiled by Morgan Stanley.

Bernanke insisted that supply and demand factors, and not Fed policy, were behind the run in commodity prices. He specifically said the weaker dollar wasn't behind the surge in commodity prices, since prices have climbed significantly in terms of all major currencies.

"The fears of some foreign governments that we were manipulating the currency ... have not come true; the dollar has not moved very much at all. And commodity prices have risen just about as much in other currencies as they have in terms of the dollar so I don't think they are primarily a dollar phenomenon," he said.

In a sign of the unusual clout of the class of House Republicans elected last November, Rep. Spencer Bachus, chairman of the House Financial Services panel, let five freshman members of the committee give opening statements. In typical hearings with Bernanke, freshmen might not even get to ask a question.

In general, the freshman members used their time during the hearing to urge the government to slash spending to achieve faster growth.

Rep. Michael Grimm, a freshman Republican from New York's Staten Island, said he was concerned about what has happened since the start of QE2 early last November.

During that interim, oil prices have risen from $84 to $100 a barrel, Grimm pointed out.

"There are more people who believe that there are aliens in Roswell than believe inflation is 1.6%," said Rep. Steve Pearce, R-N.M. His district includes the town of Roswell, where a spaceship is rumored to have crashed in 1947.

Last month, the government reported retail-level inflation running at a 1.6% clip for the 12 months through January.

Also Wednesday, Bernanke continued to urge Congress to come up with a "longer-term plan" to bring down the deficit.

In testimony before a Senate committee Tuesday, Bernanke said that whether or not interest rates will spike depends "far more on Congress' decisions about long-term fiscal planning than anything the Fed is going to do."

* * *

Support GATA by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

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

http://gata.org/node/wallstreetjournal

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

http://www.goldrush21.com/

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:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16



ADVERTISEMENT

Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Extending the Mineralization of the Southwest Vein on the Property

Company Press Release, October 27, 2010

VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:

-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.

-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.

-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.

Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface.

"The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."

For the company's full press release, please visit:

http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf