2012 February 29 | timiacono.com

Gold and Silver Prices Plunge

I guess I’d be a little concerned if the gold price wasn’t still up almost 10 percent for the year and if silver wasn’t still up more than double that amount. Nonetheless, profit taking apparently snowballed after Fed Chief Ben Bernanke failed to even mention the idea that the central bank was prepared to print more money for the greater good if the need arose.

Now, clearly, if you were looking to buy precious metals over the last six months or so, the first of the year was the time to do so, but, there seemed to be plenty of buyers stepping in there at the end of the day as the gold price is now back up to $1,705 an ounce. The GLD ETF added 10 tonnes to its holdings this afternoon and China’s central bankers were surely pleased to see today’s developments, probably adding to their stash of gold bars once again when Western traders pushed prices lower.

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Watch Ben Bernanke Live on CSPAN3

Before the House Financial Services Committee, Federal Reserve Chairman Ben Bernanke will soon begin the central bank’s semi-annual Monetary Policy Report to Congress, otherwise known as the Humphrey Hawkins testimony, and you can watch it on CSPAN3.

I’ve got a pretty good hunch that, like his predecessor Alan Greenspan, history will not be kind to Ben Bernanke and elected officials may want to get out in front of that development by offering up some quips at today’s hearing – about all the money printing that central banks have been doing – so their thoughts can be recorded for posterity.

I’ve never been a big believer in the idea that the world’s increasingly shaky monetary system will someday be replaced by some sort of new gold standard (that would be a huge admission of failure by the world’s plutocrats and some form of global money based on a basket of commodities and national currencies – that the world’s plutocrats would also control – is much more likely), but, if a gold standard does return, we’ll all probably look back at today’s news that Iran is now accepting gold in exchange for its oil as an important development in that process. The BBC filed this report on the subject earlier today:

Iran is to accept gold instead of dollars as payment for its oil, the country’s state news agency has said.

The move comes as US and European Union sanctions against Iran have made it difficult for buyers to make dollar payments to Iranian banks.

Mahmoud Bahmani, the governor of Iran’s central bank, is reported to have said that the country would accept payment in gold “without any reservation”.

Iran has the world’s third-largest oil reserves. Crude oil is predominantly traded in US dollars, but Iran already accepts payment in other currencies.

Likely related to this announcement comes word in this WSJ story($) about the U.S. Treasury Department interceding to stop a Dubai based bank from supporting Iranian oil sales by helping the nation evade international sanctions that were put in place to pressure Iran to give up its nuclear weapons program.

According to the report, Noor Islamic Bank, partly owned by the city of Dubai and run by Sheikh Ahmed, the son of Duabai’s ruler, was believed to have handled as much as 60 percent of Iran’s oil sales last year totaling nearly $50 billion.

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Q4 GDP Revised Up to 3.0 Percent Rate

The Commerce Department reported that higher levels of spending by consumers and businesses resulted in an upward revision to U.S. economic growth during the fourth quarter of 2011, the annualized rate of 2.8 percent that was reported a month ago revised up to 3.0 percent in the second of three estimates for the period.

Rising business inventories continued to be the most important factor in producing the best performance by the U.S. economy in a year-and-a-half as this volatile component accounted for a full 1.9 percentage points of the overall 3.0 percent growth rate. Personal spending accounted for 1.5 percentage points, due primarily to rising auto sales, while government spending subtracted 0.9 percentage points from the total.

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