Another Update on the 2020 Georgia Election Probe...And It's Not Good
It Was Fun While It Lasted: AOC Parody Account Has Been Deleted
Republicans Jump as Biden Falls, The Hill Misplaces Liz Cheney, and PolitiFact Struggles...
If Joe’s a No-Go, Then Who?
Why Does Our Misery Surprise Us?
The Mainstream Media Threatens American Democracy
Brace for Impact: DOE Is About to Unleash Sexual Assault on Girls and...
Pride Month and Why Schools Are Sexualizing Children
Abortion and the Question of a Higher Law
A Bad Start For Pride Month
'The Idol' Normalizes a Pornographic Culture
California Residents Are Fed Up With the Ongoing 'Rampant' Crime Problem
Biden's Series of Misfortunate Accidents Prove America Needs a New President
GOP Demands the FBI to Explain Trump Probe Despite No Evidence to Attack...
Crowd Boos at Sean Hannity, Cheers 'We Love Trump'

Gold Bets Bad on Stimulus

The opinions expressed by columnists are their own and do not necessarily represent the views of

Gold was down slightly in overnight trading as the dollar gained back ground against other currencies as the investment world looks toward the Fed on Friday. 

In early trading gold was down $3.87 to $1,662.73 and silver was off $0.17 to $30.67, for a silver/gold ratio of 54.2 as silver continues its rally. 

There’s been a lot of speculation in the media that current gold prices are stimulus bets.  If that’s the case, those are bad bets.  I don’t think we’re going to get anything out of the Fed beyond reassurances that they’re watching the economy carefully and stand ready to take action if things take a turn for the worse. 

There’s more to gold’s recent rally than stimulus bets and I’m not sure gold would be accurately priced relative to the dollar either way.  The Federal Reserve has already created something on the order of $6 trillion in currency since 2009.  Surely some of that massive excess has been reabsorbed; the Fed can make money disappear as easily as they make it appear.  But the truth is there is no accurate measuring stick for comparing the price of gold relative to the money supply. 

The trading of derivatives on the commodities markets is how the daily spot price of gold and silver are set; those markets are subject to the same types of manipulation as equities, often by the same entities.  The big banks place electronic bets against one another in the world’s largest casino, all financed by a steady flow of cheap cash from the Federal Reserve. 

Technically banks are supposed to loan out the money they get from the Fed, but banks haven’t been interested in making loans since the market crash.  We let big Wall Street banks become the middlemen in our economy and now they’re not getting the job done.  Banks are in it for the banks and everyone else be damned.  In hindsight I believe one of the biggest collective mistakes we made during the crash of 2008 was not letting the big banks and AIG go under, but I’m getting off the trail a bit here. 

The bottom line is we don’t really know what the electronic blips in our bank accounts are really worth relative to gold.  All we have to go on is the spot price, which is subject to being manipulated by sophisticated traders. 

I invest in gold and silver for the same reason I buy insurance, as a hedge against the unknown.  While I’m not completely certain what my computer blips are worth relative to gold, I am fairly certain that if the real numbers came to light, gold would look incredibly cheap. 

Chris Poindexter, Senior Writer, National Gold Group, Inc

Join the conversation as a VIP Member


Trending on Townhall Video