Everything You Need To Know To Sell Gold Online

Gold Falls And Then Rises To New Record Following Fed Chairman Ben Bernanke’s Speech

by Michael Locklear

August 31, 2012 – Federal Reserve Chairman Ben Bernanke delivered his long anticipated speech to the Feds Symposium in Jackson Hole, Wyoming today. Investors who were anxiously awaiting immediate action on quantitative easing from the Fed chairman were first both disappointed and overwhelmed. The market’s immediate reaction was not positive, gold prices fell as soon as the transcript from Bernanke’s speech was released.

The Fed chief did not announce a new round of bond buying as market speculators had hoped. Despite their initial negative reaction the market quickly recovered and gold prices rose $30 to a new high as a census last April of $1685 an ounce recovering from its most recent low of $1646. All in all these reactions took about an hour.

Market watchers believe that after their initial negative reaction to the chairman’s position investors and traders paused for a moment and realized that they could find hope in some of what Bernanke had said. After taking a closer look they found reason for new hope that the Fed would indeed move toward further monetary easing in the near future. The primary impetus for their subsequent reversal of gold positions was their sudden realization that perhaps what he said was not as bad as they originally thought.

As the market chose to see the chairman’s remarks as a reflection of his inclination towards further stimulus, US commodities and equities started to reverse their earlier position as they also observed that the dollar was falling immediately after the speech. Bernanke used the expression “grave concern” which led to positive speculation on further quantitative easing to reemerge.

At first Bernanke said, “Monetary policy cannot achieve by itself what a broader and more balanced set of economic policies might achieve; in particular, it cannot neutralize the fiscal and financial risks that the country faces. It certainly cannot fine-tune economic outcomes.” He further added, “As we assess the benefits and costs of alternative policy approaches, though, we must not lose sight of the daunting economic challenges that confront our nation. The stagnation of the labor market in particular is a grave concern not only because of the enormous suffering and waste of human talent it entails, but also because persistently high levels of unemployment will wreak structural damage on our economy that could last for many years.”

Initially investors felt the sting of icy waters in their face as their hopes for clarity from the Fed were doused. The chairman did not clearly define any direction in policy measures in his speech. However, Bernanke’s words did give some insight into his thinking. He acknowledged the huge adverse effects of our housing and financial crisis on the overall economy. He pointed out that the economy which is stuck may not be benefited by the normal rules of macroeconomics. The biggest obstacles facing the establishment of sound monetary policy is zero lower bound interest rates.

In conclusion Bernanke said, “Now, with several years of experience with nontraditional policies both in the United States and other advanced economies, we know more about how such policies work. It seems clear, based on this experience, that such policies can be effective, and that, in their absence, the 2007 – 09 recession would have been deeper and the current recovery would’ve been slower than has actually occurred.”

The anticipation of further monetary easing still lives in the hearts and minds of the gold-bugs. It is likely that gold prices will continue to rise in the face of this renewed positive expectation. So the price of gold rises with the hopes of the speculators.

Fed Chairman May Hesitate On New Monetary EasingAugust 30, 2012 – Gold traders and investors are anxiously awaiting Friday’s Federal Reserve meeting in Jackson Hole, Wyoming to hear what Fed Chairman Bernanke has to say about the future possibility of a new round of monetary easing that has been fueling speculation and rising gold prices. Despite the…
Gold Buyers Still Watching The FedAugust 29, 2012 - Tuesday’s report on continued weakness in US consumer confidence increased hopes among investors for new monetary easing from the Federal Reserve. Some fear there may be a sell-off if the Fed’s position on new quantitative easing does not change. […]…
Gold Rises To Five Month HighSeptember 3, 2012 – Gold rose to a five-month high today as gold bulls and market investors continued to increase their wagers that additional monetary easing is still on the way after Friday’s speech by Federal Reserve Chairman Ben Bernanke during which he indicated an inclination toward a third round…
Record Gold Holdings Climb Awaiting Bernanke SpeechAugust 31, 2012 – Gold prices continue to enjoy record highs in the face of anxious anticipation of the big speech today from Federal Reserve Chairman Ben Bernanke at the Fed’s annual symposium in Jackson Hole, Wyoming. Exchange traded products advance to record highs yesterday as investors continue to speculate…
Will Gold Prices Wait On News About Quantitative Easing?August 27, 2012 – Gold is positioned to rise to the highest it’s been in two years as new expectations for more economic stimulus from China and the United States fuels the demand for gold as a hedge against the rise in inflation if the predicted monetary influx should occur…