Gold price questioning Fed's effectiveness

Gold is now below its 200-day MA and the slope is trying to roll over; both lean bearish for gold Central bankers want us to believe that monetary policy is about banks, interest rates, and the ability to get a “cheap” loan. The 2002 quote below from Ben Bernanke points to the primary goals of printing money - to boost asset prices and “scare' people into consuming and investing before prices go up. Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation. If you question the goal of boosting asset prices, watch this 2010 video, which explains how quantitative easing works in the real world. As seen via the price of gold, the markets have been questioning that “a determined government can always generate higher spending and hence positive inflation.” When you update market models every day, you notice subtle shifts in investors' perceptions relative to risk and inflation. While it looks flat in the chart below, the slope of gold's 200-day moving average ticked down on Wednesday. Continue reading this article

.