First off, I have to applaud Chairman Bernanke for admitting he doesn’t understand something in public. The only problem is that he reserved this admission to Gold’s performance, instead of applying it to the entire US economy, financial system, derivatives, inflation, human behavior, investor psychology, and a slew of other topics.After reviewing what the Fed has done over the last three years, the author points out that other commodities are falling because they advanced on hopes of a recovery that isn't panning out as expected.
Indeed, so far the guy’s record has been 100% accurate… if you basically interpreted what he said as the exact opposite of reality. In the past three years he’s told us that the sub-prime mortgage Crisis was contained, that there would be no spillover into the US economy, that the financial markets were sound, and that the US economy was stronger than ever… right up until the entire financial world imploded.
Regardless, at least he’s finally admitting he doesn’t understand some things. Hopefully, this is the beginning of a new pattern in his speeches: admitting his mistakes....
In other words, the commodity market as a whole is forecasting stagflation ahead.