Gold and Gall

If you haven't gotten a chance to hear Ron Paul destroy Uncle Ben Bernanke in recent Congressional testimony, you've to give this a glance (these transcripts are from the second video where Uncle Ben gets reamed) -

Paul: The price of gold today is $1,580 the dollar during these last few years the dollar was devalued almost 50%. When you wake up in the morning, do you care about the price of gold?

Bernanke: Well, I pay attention to the price of gold but I think it reflects a lot of things. It reflects global uncertainties. The reason people hold gold is its protection against what we call tail risk ... they have gold as a protection.

Paul: Do you think gold is money?

Bernanke: [Long pause] No.

As we stand right this second, gold is up over $1600 and silver is back over $40.  Also, interestingly, the gold and silver technical charts are still showing a bull market.

Be sure you read the entire article.

"Gold, if you pick up a coin minted 6,000 years ago, you'd still have your money. If you pick up a piece of paper printed a year ago, it might be worth half its value. So history is on my side of the argument," says Paul.

If a true gold standard were to go into effect, meaning that every dollar was replaced with gold, then the gold price would have to skyrocket to $5,000 or the government would have to extract $9 trillion out of the system. Paul concedes that might happen but that it would be worth the pain.

Amen, brother. Gold (and silver) doesn't so much act as an investment, it acts to maintain your purchasing power. The only problem with "correcting" the system by pulling all of that fiat currency from the economy is that it would cause ugly, horrific deflation.

And when's the last time you saw a government voluntarily reduce the amount of cash it had available? LOL!


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