In a most stunning response to absolutely nothing new, despite some crazy swings gold and silver prices have rebounded.

August 26, 2011 – In a most stunning response to absolutely nothing new, despite some crazy swings gold and silver prices have rebounded. But stocks have shot up rather impressively as well – without the slightest encouragement from Bernanke.

Since it would be impossible to believe that equities traders are elated over all the things Bernanke didn’t say, it is safe to assume they are reading something between the lines. What that could be escapes me.

The chairman so much as said he has to mull things over a while longer and he warned us that any long-term changes must come from Congress. Bernanke also tried to reassure the world that “the growth fundamentals of the United States do not appear to have been permanently altered,” and that while recovery has been “modest,” he and the boys have inflation well under control. If anybody buys that I have a bridge for sale.

Maybe that’s the point. Wall Street is happy because they believe we normal folk have been successfully buffaloed one more time. I wouldn’t count on it.

I don’t know how anybody could read this in the NY Times and not flinch: “The renewed willingness and confidence to spend money we don’t have is vital to the continuing recovery.” We’re all still pretty busy trying to deleverage credit and build up some real wealth for ourselves. Yet that is still the basis for all of the Fed’s policies.

What Bernanke steadfastly refuses to acknowledge is the US can no longer act in isolation to the rest of the world. Money moves about too fast these days, and consuming more than one produces is a surefire way to make it move elsewhere.

Whatever tools that remain in the Fed’s bag of tricks won’t work any better than what they have already tried. By now they should have learned that you can’t micromanage an economy and they should admit defeat. Its time to shut down the Fed and let the markets take over.

That’s what the markets have been trying to do all along but the Fed keeps mucking things up. Now that the Fed has bowed out for a couple of weeks you would expect them to make their move.

But the volatility in gold and silver prices might be a sign that investors are so used to Uncle Ben leading them by the hand that they have forgotten how things really work.

Shannon King

Senior Staff Writer –

GS social media share img

Get Your Complementary Award Winning Guides Below

 Publish Real Money Magazine

 Publish Gold Investment Magazine

 Publish IRA 401K Kit Magazine

 Real Money Magazine