Nathan Mayer Rothschild, - once the richest man in Britain and probably in the world, was appointed as the chief bullion broker to the Bank of England in 1840, and went on to operate the Royal Mint Refinery in 1852.
N M Rothschild & Sons became a powerhouse in
investment banking, lending, underwriting government bonds, discounting
commercial bills, direct trading in commodities, foreign exchange
trading and arbitrage, and dealing in Gold bullion.
When asked what the
value of the barbaric metal was worth, Nathan used to say, “I only know
of two men who really understand the true value of Gold – an obscure
clerk in the basement vault of the Banque de Paris and one of the
directors of the Bank of England. Unfortunately, they disagree.”
Ben Bernanke also
admitted on July 17th that he doesn’t understand the yellow metal. “No
one really understands Gold prices,” Bernanke told the Senate Banking
Committee, adding he doesn’t get it either. Calling it “an unusual
asset,” the Fed chief said that investors hold Gold for “disaster
insurance” and as an inflation hedge. He expressed surprise about the
latter, noting “movements in Gold don’t predict inflation very well.”
Bernanke is right. Gold has little to do with inflation hedging and everything to do with disaster insurance.
Gold is a Monetary Stability Hedge. Say it 100 times slowly.
The price of gold at $2000 an ounce reflected a combination of great worry about the management of the US economy by the major banks - including the Fed. Coupled with a certain amount of trading/gambling that attempted to game the prevailing sentiment.
Gold at $1300 represents an enormous amount of faith restored in Big Banking and the Fed - coupled with gambling/trading by those same banks attempting to game the prevailing sentiment.
To figure out which way gold will go you have to figure out the true overall risk to the US and Global banking system, which is to say you have to figure out how stable the paper monetary system is. This gives the sure fire long term direction to gold.
Shorter term you have to figure in the gambling/trading of the Big Banks who are gaming the sentiment that they are, in fact, helping to shape.
This is why unless you are a Big Bank, trading right now is a fools game.
But it is also why, over time, gold will certainly come to reflect the true overall risk factor to the Big Bank economy.
Because if you think that a monetary system based on gaming ever greater amounts of debt is inherently stable, then you should pour all your money into options on stock futures.
The question: With 60 quadrillion dollars of debt derivatives floating around, how long can a debt crisis be delayed by the exponential creation of debt?
The same answer will tell you when gold will once again take off.
FEDERAL Reserve chairman Ben Bernanke has reiterated the Fed is nowhere close to raising interest rates, assuring markets that the US easy money tap would not soon dry up.With the economy still facing risks, especially from government spending cuts, Bernanke told a congressional panel on Wednesday the Fed is still planning to trim its quantitative easing stimulus, if growth continues at a steady pace.
But expectations that the Fed was poised to start tightening monetary policy, which have sent interest rates jumping and sparked turmoil in global markets, were unwarranted, he stressed.
"I don't think the Fed can get interest rates up very much, because the economy is weak, inflation rates are low," Bernanke told the House Financial Services Committee.
"If we were to tighten policy, the economy would tank."
BLOOMBERG: Housing starts plunge to lowest level in year:
'We're bound to have some hiccups along the way'(BLOOMBERG) — The residential real-estate rebound suffered a setback in June as housing starts unexpectedly fell to the lowest level in almost a year, curbing how much construction contributed to U.S. economic growth last quarter.
Work began on 836,000 houses at an annualized rate, the least since August and down 9.9 percent from a revised 928,000 pace in May, figures from the Commerce Department showed today in Washington. The drop was led by a 26.2 percent plunge in multifamily projects, which are more volatile than work on single-family homes.
Gorilla Capital Flipping Homes as Rebound Revives Rapid Trades
By Heather Perlberg - Jul 19, 2013 7:50 AM ET