Apolitical Money, Where Art Thou?

Gold appears to be slowly but surely stabilising above the $1,600/oz mark. Likewise, the bleeding in silver that saw it come close to $26/oz mark recently appears to have been stemmed. Precious metals investors received encouragement yesterday from Eric Rosengren, President of the Federal Reserve Bank of Boston.

Talking to reporters, uber dove Rosengren stated that America needed a “pro-growth monetary policy,” and that the Federal Reserve should commit itself to an “open ended programme” of Treasury and mortgage-backed securities purchases until “we start seeing some pretty significant improvements in growth and incomes.” As The Big Picture’s Peter Boockvar says dryly in response: “got gold?”

Over the other side of the pond, speculation that the European Central Bank is about to fire its “big bazooka” in support of stretched PIIGS governments continues to grow, something which is paradoxically helping the EUR/USD. Likewise, the yield on the 10-Year US Treasury Note gained six basis points yesterday while the Dow rose as traders moved back into risk assets, in anticipation of ECB action.

Axel Merk of Merk Funds believes Draghi’s verbal intervention last week was a game changer, and that “a new wind” is blowing in the eurozone. Despite delays and no concrete guarantees of action from the ECB, Merk believes that “a number of tail risks have been taken out of the Eurozone [sic]. In our assessment, that alone warrants a significantly stronger Euro versus the U.S. dollar.”

As one or more US soldiers supposedly said during the Vietnam War: “we’ve got to destroy the village in order to save it”. Similarly, the ECB appears set on destroying the value of the euro in the name of “the greater good”. In this sense it is no different from any other central bank, though as James Turk points out in a new article at FGMR, this is an obvious and swift betrayal of the organisation’s founding principles – which were supposedly modelled on the hawkish Bundesbank.

All of which makes a great argument for apolitical gold and silver money.