Tom Szabo

Common Misconceptions About the Fed and Gold

The Fed is only private in the sense that federally chartered banks are required (not permitted, <i>required</... -- no bank would do so otherwise because the 'investment' returns very little in profits) to own a piece of it. Congress can repeal the Federal Reserve Act anytime it wishes (with two-thirds majority if required to override a Presidential veto).

Be that as it may, I think the best way to view gold is as a competing currency. Then we can easily see that gold priced in U.S. dollars IS in a bull market partly because the dollar is in a bear market. Gold priced in euros is also in a bull market, so clearly it's not just about the dollar. In fact, it looks like about 1/3rd of gold's rise is due to dollar weakness and 2/3rds due to relative weakness of all fiat currencies. I think we can expect that most of gold's future gains will be made not against the dollar in particular but fiat in general