U.S. Senators Bash Gold during Fed Confirmation Hearings
U.S. Senators Bash Gold during Fed Confirmation Hearings from Gold Silver Worlds
The U.S. Senate weighed the issue of pegging the currency to a gold standard last week. Not surprisingly, the mere mention of gold ruffled the feathers of some Senators.
More on that in a moment.
In recent days, the monetary metals have contended with a rising U.S. dollar versus foreign currencies, a familiar story. The Dollar index has risen steadily since the beginning of the year and got an added boost from fears over the China virus outbreak.
The USDX is now close to taking out its 2019 high, although it may be getting overbought near term.
We have already seen most major commodities including copper and crude oil come off their coronavirus lows. A reversal in the dollar would likely add fuel to a recovery rally in raw materials. Since economically sensitive commodities got hit much harder than precious metals, they would also likely snap back more strongly – at least until they work off their oversold condition.
Meanwhile, gold continues to serve its function as a core safe-haven — holding quite well. It has stair-stepped modestly higher this year. While succumbing to some selling at the beginning of the month, gold has been far less volatile than other assets.
Gold remains the ultimate money, as former Federal Reserve chairman Alan Greenspan has acknowledged. And President Trump’s nominee to an open seat on the Fed Board of Governors would perhaps help revive gold’s standing in the monetary system.
But first she has to win approval by the U.S. Senate. Prospective Fed policymaker Judy Shelton faced a difficult task in trying to explain her unconventional views to Senators who are steeped in conventional thinking when it comes to monetary policy.
A sore spot for many of her Senate interrogators was Shelton’s history of supporting a gold standard. Reactions on both sides of the aisle ranged from confusion to concern to hostility.
On the Democrat side, Senators Sherrod Brown and John Tester led the attacks on Judy Shelton:
Sen Sherrod Brown (D): Ms. Shelton is not a conservative. She’s far outside the mainstream. She’s off the ideological spectrum. For three decades Ms. Shelton has been a prominent advocate for returning to the gold standard.
In making the case for Ms. Shelton’s nomination, her friend, James Grant, wrote in The Wall Street Journal, “With the nomination of Judy Shelton to the Fed the discussion is tilted to gold. Gold is money or a legacy form of money Ms. Shelton contends, and the gold standard is a reputably and superior form of monetary organization.”
Sen. John Tester (D): The gold standard, also in The Wall Street Journal let’s return to the gold standard. You hope that Vice President Pence would hasten a return to the gold standard. You talked about a new Bretton Woods would be held in Mar-a-Lago. If that isn’t advocating to returning to the gold standard, I mean what is?
Sen Sherrod Brown (D): The American dollar is the world’s reserve currency. It should stay that way. We want it that way. We agree that it should be that way and we’re proud of it.
On the Republican side, Shelton has the support of Senate Banking Committee chairman Mike Crapo. But at least two Republicans appear reluctant to support someone with ties to sound money principles.