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[size=150]<a href="http://blogs.wsj.com/economics/2010/06/09/bernanke-puzzled-by-gold-rally/">Bernanke Puzzled by Gold Rally</a>[/size] (wsj)
<i> Federal Reserve Chairman Ben Bernanke says he’s a bit puzzled by surging gold prices. The 30% rally from a year ago, on top of gains in previous years, ... Gold is seen by many investors as a hedge against inflation risk.</i>
<i>Mr. Bernanke notes that the inflation signal isn’t confirmed by movements in other asset classes.</i>
That's because the CPI is complete BS, and everyone knows it (with the possible exception of Bernanke). Of course he's also leaving out such asset classes as "Food" and "Energy" (apart from Oil). Plus his whole "reflation" strategy is keeping prices high as household income declines (fewer hours, worse wages, unemployment), plunging everyone but the super-rich into horrible poverty (worse than we would've had even with just the recession).
<i>Yields on Treasury bonds tend to rise when investors worry about inflation, but those yields have been falling recently.</i>
1) People are fleeing the Euro 2) The fed is BUYING THE FREAKIN BONDS IN RECORD NUMBERS ON THE SECONDARY MARKET
<i>Inflation expectations as measured in Treasury Inflation Protected Securities (TIPS) markets remain low.</i>
Again...
<i>And other commodity prices are falling. Gold is breaking records, but copper prices are down 17% so far this year.</i>
Demand for copper, now that the housing market is on its last legs, is going to be reduced from the highs the federal reserve and other government agencies artificially raised them. The copper bubble popped with the housing bubble, and as of yet Bernanke hasn't been able to inflate your way out of it. Not to mention the fact that China is no longer stockpiling all the copper on the planet.
(Advanced)
