There’s something fishy about the way the American exchanges keep throwing a wet blanket on gold and silver prices.

August 29, 2011 – There’s something fishy about the way the American exchanges keep throwing a wet blanket on gold and silver prices. It would be easy to construct a convincing conspiracy theory or two to explain it, but I believe it’s much simpler than that.

Both the precious metals are in a speculators’ market because widespread investor interest has yet to materialize. Instead we are seeing historic levels in the M1 money supply – people are hoarding the most dangerous asset of all, greenbacks.

If the equities market were healthy all those corporate profits would translate to higher prices, but corporations too are stashing the cash in record levels. Money is sitting around everywhere doing nothing but losing value. That’s a sad commentary on the state of our economy.

It is only thanks to the government’s misguided belief that recovery begins on Wall Street and not Main Street that the equities market has not completely tanked. But by focusing all of its rescue efforts on a handful of fat cats the government has dug itself into a hole from which it cannot extricate itself.

With the fiscal year winding down the government has one last chance to show the world that it is more than a bunch of self-seeking fiscally irresponsible adolescents. Congress could roll up its sleeves and put together a budget before the deadline, proving once and for all that it places the good of the country above personal ambition. And Chairman Bernanke could come forth, admit defeat, and recommend that the Fed be dissolved in favor of something new that is restricted to the central bank’s original charter.

None of that, of course, has the slightest chance of happening. Bernanke is backed into a corner and sooner or later will have to do something. The two-day September meeting is shaping up to be the perfect venue to announce the next harebrained scheme.

Market volatility can’t last forever. It’s a very short step from hoarding cash to buying gold and silver, and it won’t take much more to convince millions of Americans to take that step.

Shannon King

Senior Staff Writer –

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