Bernanke Tells Congress: I Don’t Really Understand Gold
While Ron Paul is no longer part of the Congressional committees that grill Ben Bernanke twice a year, the Fed Chairman was forced to answer questions about gold on Thursday again. Asked about the falling price of gold, which is down nearly 25% this year, Bernanke admitted he doesn’t understand the yellow metal.
“No one really understands gold prices,” Bernanke told the Senate Banking Committee, adding he doesn’t portend to either.
…Bernanke had more things to say about the yellow metal. Calling it “an unusual asset,” the Fed Chairman noted people hold gold both as “disaster insurance” and as an inflation hedge. He expressed surprise about the latter, noting “movements in gold” don’t predict inflation well. Bernanke took solace in the marked decline in gold prices, though, suggesting they could reflect diminishing concerns over really bad outcomes.
Gold has been seen as a store of value for thousands of years. More recently, bullion has become an important financial asset seen by many as a sort of currency that cannot be debased, given its relatively fixed quantity.