Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Why Does the Fed Hate Gold?

  by    3   2

Joel BaumanThis article was submitted by Joel Bauman, SchiffGold Precious Metals Specialist. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.

When central bankers talk about gold, it’s usually with an attitude of disdain. So, why do they hate gold so much?

The Federal Reserve operates under a dual mandate. It must maintain price stability while also simultaneously promoting maximum employment.

The Fed hates it when the price of gold rises because it correlates with a rising unemployment rate.

labor gold

Gold also reveals the weakness in the US dollar and the Fed’s failure to stabilize prices.  For this reason a rising gold price is an embarrassment to the Federal Reserve as it undermines its purposes.

The hatred of gold is nothing new. When it operated on a gold standard, the US government was limited in terms of its ability to pursue deficit spending. It could only accrue so much debt. The gold standard forced the practice of austerity. When the government abandoned the gold standard, it gained the power to finance any national expense by simply borrowing from the Federal Reserve. Today, no amount gold is necessary for the Fed to purchase treasury bonds. It is blessed with the ability to expand their balance sheet with zero limitations.

Simply put, gold limits the power and influence of central bankers. No wonder they hate it.

Despite what the central bankers tell you, there are a lot of reasons to buy gold. Download SchiffGold’s Free White Paper: Why Buy Gold Now?

Back in the day when Alan Greenspan’s economic philosophy fell more in line with the Austrian School of Economics, he understood what gold meant to the government. Greenspan wrote in his 1966 essay Gold and Economic Freedom:

This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”

Gold falls under the true definition of money. Gold neither gains nor loses wealth, but acts as the measuring stick against every action of the Federal Reserve. Since the abolition of the gold standard, it is well known that the US dollar has depreciated by 98.5% in comparison to gold.

At the end of the day, it’s important to know the Fed will never have a keen attitude toward gold. Central bankers will always downplay the significance of the gold price appreciating, and they will also always over-emphasize the significance of the gold price falling. By extension, institutions that are influenced by the Fed will also condemn gold out of their own self-interest. For these reasons, you will do well to be skeptical of those who criticize gold.

Get Peter Schiff’s latest gold market analysis – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

Benjamin Franklin: Government Welfare Is Not “Doing Good to the Poor”

The federal government lacks any legitimate constitutional authority to establish welfare programs for the poor. Not only that, the federal welfare system fails in its promise to “help the poor” out of poverty.

READ MORE →

Five Inflation Myths

Inflation is running rampant. At first, the powers that be tried to convince us it wasn’t a problem because it was just a temporary phenomenon caused by coronavirus. (As if a virus could cause the money supply to increase.) But now, the transitory inflation narrative is dead. Jerome Powell recently admitted that it’s time to […]

READ MORE →

The Fed Is Between a Political Rock and an Economic Hard Place

Black Friday was a black and blue Friday as US stock markets saw their sharpest declines since April 2020. The selloff was spurred by a new COVID variant and fear of new lockdowns. The markets recovered on Monday, but the sudden stock dip was telling.

READ MORE →

The Pilgrims Did Socialism and Died Trying

When I was a kid, we used to say some things only “sound good on paper.” In other words, they seem like good plans, but there is no way they’re going to work in the real world. That’s socialism in a nutshell. The Pilgrims found this out the hard way during their first couple of […]

READ MORE →

Booming Retail Sales Don’t Necessarily Signal “Strong Economy”

Retail sales surged at a higher than expected rate in October, rising 1.7%. The mainstream reported this as fantastic news signaling a strong economy. American consumers are out there buying lots of stuff. The stock market rallied and gold fell. But the mainstream narrative isn’t giving you the full picture.

READ MORE →

3 thoughts on “Why Does the Fed Hate Gold?

  1. Mark says:

    They hate gold , because they haven’t got any and they can’t print it.
    They helped to push price of gold to $1920 but after 2011 they started to short the gold. Their plan was to push price to $700 or less and start buying, but of course they needed strong dollar too.
    That’s why for last 5 years they were fooling everybody about improving economy.It kept strong dollar and weaker gold but sentiment is changing.They will try very hard to keep control and use whatever they have got to keep status quo

  2. Mark says:

    Maybe for them gold is useless , but don’t forget they need 3000tons of gold they owe to Germany.

  3. Here & Now says:

    Government does NOT control gold. But the US can always forbid private ownership as they have done before. Yes, and the commies were quick learners !

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Call Now