February 29, 2012 – Today’s comments by Federal Reserve Chairman Ben Bernanke have put a temporary dip on prices in the markets, but ultimately the policies of the Federal Reserve make gold and silver investments the clear winners in today’s market. Generally speaking, the Fed Chairman didn’t drop any bombshells concerning the policy of the central bank, but he did shock markets by asserting at least some power and authority over the policy of fiscal stimulus that has been prevalent for the past four years.
The main point is that Bernanke, in essence, said anyone expecting another round of the stimulus, known as Quantitative Easing, would have to wait a little longer. This caused an immediate counter reaction in the markets, particularly in precious metals markets. Precious metals have been the most prominent beneficiary of the Federal Reserve’s inflationary policy as the increased number of dollars in circulation drives the nominal price of gold and silver higher.
This is one of the primary reasons gold and silver investments have performed so well over the past ten years, but especially in the past three years. As the Fed prints more money, and Bernanke is known as “Helicopter Ben” for his reputation of printing money and dropping it from a helicopter, gold and silver continue to gain value as the most inherently immune investments.
Today’s market reaction was mainly a drunken cry from the Wall Street crowd who were denied their next drink by the Chairman of the Fed. Typically, in a functioning system the Fed Chairman would not allow such a reaction, but this is far from a functioning system and Bernanke is far from a typical Fed Chairman.
We have already seen the prices of gold and silver level out from their initial drop and smart investors are buying now on the dip. The policy of the Fed that has driven gold and silver prices thus far has not been altered in any fundamental or meaningful way and promises to continue fueling an upward climb in gold and silver as the full extent of Quantitative Easing are realized. Investments in gold and silver made now will prove to be the real winners in the market of the future.
Senior Staff Writer – GoldSilver.org