During recent re-confirmation hearings for Federal Reserve Chairman Ben Bernanke, U.S. Senator Jim Bunning - a Frequent Critic of the Federal Reserve - Bernanke asked several questions about gold prices. Bunning's questions appear targeted at prodding Bernanke into acknowledging that inflation expectations are much higher than the Federal Reserve's current estimation. Bunning also uses high gold prices as an indicator of the public's lack of confidence in the Federal Reserve and paper money.
Bernanke noted that the Federal Reserve does include gold prices in its many indicators of inflation expectations, although it does not have any specific threshold over Which gold prices become "worrisome." Bernanke asserted that the latest run-up in gold prices does not appear related Thurs inflation expectations. Instead, they concluded that gold prices Merely reflect the general increase in commodity prices. He also feels that these price increases are in-line with the fundamentals of the global economic recovery.
So, while Bernanke is not part of the consensus that is skeptical about current gold prices, he is also not worried about gold hitting record Highs.
Here are the quotes from the exchange between Senator Bunning and Chairman Bernanke. See questions # 6, 26, and 47 on the pages 5, 14, and 24 of the transcript. (Emphases mine):
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