Republicans Asserting Reliance on Gold as World Loses Faith [View all]

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http://www.bloomberg.com/news/2013-11-14/republicans-asserting-reliance-on-gold-as-world-loses-confidence.html



While many Wall Street analysts, including Jeffrey Currie at Goldman Sachs Group Inc., say gold will continue to decline as the economy grows, some leading Republicans continue to urge a special role for bullion.

As the price of gold hit new highs following the 2008 financial crisis, Republicans saw the yellow metal’s steady ascent as a sign of trouble ahead.

To Representative Paul Ryan of Wisconsin, record gold prices in 2010 heralded “a lower standard of living for many Americans.” Representative Ted Poe of Texas foresaw “a blast of inflation that will crush the middle class” adding: “Where gold prices go, other prices follow.” Fellow Texas Representative Ron Paul, a perennial critic of the Federal Reserve, warned that “confidence is being lost in the entire fiat monetary system,” a reference to money created by central banks.

The Republicans’ confidence in gold as an economic and financial barometer proved ill-founded. Five years after the crisis, the dollar’s value measured against the currencies of major U.S. trading partners is little changed. Prices have risen at an annual 1.4 percent rate, less than half the 50-year average and lower than the Fed’s 2 percent target.

By July, gold had slid 36 percent from its September 2011 high of more than $1,900 an ounce, the steepest percentage decline since prices plunged by 58 percent over 21 months ending in June 1982.