It’s too early to say what trend will define the Bernanke era of central banking, but the bull market in gold may get a footnote or two once the final history is written. Indeed, the precious metal is soaring, suggesting that something less than unwavering faith prevails when assessing the odds of success among mortal beings charged with defending the integrity of paper currencies.
As of yesterday’s close, gold has climbed 10% so far in 2006. Catalysts driving the metal higher come in two basic flavors: geopolitical and economic. The obvious suspects in the former include rising anxiety over any number of Middle East tensions (Iran’s nuclear program, Hamas’ election in Palestine, the ongoing terrorism in Iraq, etc.) The economic worries start with the red ink that defines America’s budget and trade ledgers, and move on to the ongoing elevation in the price of oil, which some say portends higher inflation.
