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

A Black Swan With Teeth

For years, I have been warning that during the age of permanent stimulus (which began in earnest with the Federal Reserve’s reaction to the dotcom crash of 2000), each successive economic contraction would have to be met with ever larger, increasingly ineffective, doses of monetary and fiscal stimulus to keep the economy from spiraling into […]

READ MORE →

Fed Chair Powell’s Solution Is the Root of the Problem

Federal Reserve Chairman Jerome Powell went negative in a webcast speech on Wednesday, May 13. I’m not talking about negative interest rates, although that could be coming down the pike as well. Powell went negative on the prospects of a quick economic recovery. He’s right about the prospects for the economy, but he’s wrong about the […]

READ MORE →

Are Negative Interest Rates in Our Future?

Are negative interest rates in our future? The markets are starting to think so. On Thursday, Fed fund futures contracts began pricing in negative interest rates. They were initially priced in for December but then shifted to early 2021. This doesn’t guarantee negative rates, but it does indicate markets are beginning to expect them.

READ MORE →

What Is the NFL Telling Us About the Economy?

What is the NFL telling us about the economy? The conventional wisdom seems to be that the economy will quickly recover once governments open things up again. But recent moves by the National Football League indicate its leadership isn’t so confident.

READ MORE →

They’re All High on Fed Fairy Dust

Everybody realizes the US economy is in a bad spot. But most people still seem to believe it will bounce right back once we deal with the coronavirus. They’re all high on Federal Reserve fairy dust.

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