Recently, on July 18, 2013, Federal Reserve Chairman Ben Bernanke told Congress a number of things about gold that make us wonder which one of two interpretations is correct: Is he really that out of touch? Or is he telling us lies with the bumbling skill of a four-year-old?
Bernanke Tells Congress: I Don't Really Understand Gold
July 18, 2013
While Ron Paul is no longer part of the Congressional committees that grill Ben Bernanke twice a year, the Fed Chairman was forced to answer questions about gold on Thursday again. Asked about the falling price of gold, which is down nearly 25% this year, Bernanke admitted he doesn’t understand the yellow metal.
“No one really understands gold prices,” Bernanke told the Senate Banking Committee, adding he doesn’t portend to either.
Bernanke had more things to say about the yellow metal. Calling it “an unusual asset,” the Fed Chairman noted people hold gold both as “disaster insurance” and as an inflation hedge. He expressed surprise about the latter, noting “movements in gold” don’t predict inflation well.
Bernanke took solace in the marked decline in gold prices, though, suggesting they could reflect diminishing concerns over really bad outcomes.
In earlier testimony with Ron Paul in 2011, Bernanke said that he didn't spend much time thinking about gold, which supports his half-interested statements above. He seems comfortable conveying the impression of a man shrugging his shoulders, as if the matter were of no consequence.
Considering that gold is one of only three major asset classes that central banks hold – with currency and forms of debt being the other two – it's thoroughly unbelievable that the head of a central bank does not think about gold often, and very carefully.
It would be as if you were talking with a farmer who shrugged and said, Rain? I don't really think about it all that much…
As one of the three major asset classes (and usually one of the largest reserve assets) on a central-bank balance sheet, you can be sure that gold is tracked, and tracked very carefully both in terms of price and physical movements.
by rob-p 
