The Daily Nugget: Central Bankers Say ‘Screw You’ To Savers

Gold is currently holding close to a 1 ½ year high having reached it yesterday following political uncertainties in Italy and Bernanke’s testimony.

Yesterday saw the best performance of 2013 for both gold and silver. Gold rose by 1.9% yesterday to $1,619.66 – its biggest daily gain in over three months. Resistance was expected to be found at $1,619 with gold retreating to as low as $1,604.

Bernanke pushes savers to gold investment

Fears over QE finishing prematurely were assuaged as Bernanke appeared as dovish as ever during his congressional testimony. Many of you will recall gold’s reaction when last week, FOMC minutes appeared to suggest that not everyone was comfortable with the infinity element of the latest QE. This sent gold to the death cross but not, it seems, to its death.

Bernanke quickly dismissed any concerns over savers losing money, thanks to non-existent interest rates, stating that he was more concerned over long term unemployment and that they economy was too weak to pay a fair amount of interest to those sensible people.

Whilst gold has experienced a phenomenal rally following Fed QE announcements, it has traded sideways in recent months as fears over the US’s recovery seemed to fade. Bernanke’s comments yesterday however showed that those fears remain.

Bernanke’s comments weren’t enough for everyone however, holdings of the SPDR Gold Trust saw its sixth session of decline – falling by 2.408 tonnes.

Bernanke will remain in the spotlight today as he appears is from of the FSC to deliver his testimony.

Asian demand continued to delight yesterday, climbing for the fourth straight day.

Also making headlines yesterday was Paul Tucker, deputy governor of the Bank of England, and apparently competing with Japan’s latest governor for ‘Dove of the Year’ award. Tucker stated yesterday that he believed negative interest rates may be the next step. Let’s be clear for those of you saving money; this is basically theft. For those of you in debt, enjoy.

As Max Keiser tweeted earlier, ‘negative interest rates are the final admission by the state that financial freedom and independence is not to be tolerated. #BuyGold.’

Over in Europe, a confidence survey has come in higher than expected. The index of executive and consumer sentiment rose to 91.1 from 89.5 in January. The survey was carried out prior to the Italian elections. The results are causing the mainstream media to declare that the single-currency zone might be able to avoid a recession.

Bernanke’s comments so far have not proven particularly reassuring for savers or those who favour sound monetary policy. He’s shown his big concern is over long-term unemployment, and sees more benefits from asset-purchases than costs.

His concerns over a ‘weak’ economy can only lead us to one conclusion – that QE finishing early is not a possibility. This in turn will drive more into gold. I think this is the big story; despite FOMC minutes last week, Bernanke’s testimonial shows he’s as dovish as ever and he’s leading the show when it comes to asset-purchases and easy monetary policy.

Bernanke’s statement was music to precious metal bull’s ears, and strong economic data is just not enough any more to convince markets that all is well.

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Both the weakening of the Euro, Bernanke’s testimony and sequestration worries go back on everything that was said last week – Europe is not in recovery, the US is making no positive ground with its current quick fixes, and problems like sequestration will continue to rear up – governments are not fixing this. So safe-havens will become increasingly more attractive.

Yesterday served as a reminder to those who were declaring the end of the bull-market last week, that the reasons to buy gold remain – political uncertainty and the devaluation of currencies.

Platinum regained its premium over gold late yesterday, but its premium remains small.