In a blog post titled, “Beck fans strike gold…for now,” Bunch argues that Glenn Beck is causing a speculative bubble in gold by hyping doom and gloom. “[N]o one does more in his supposedly untainted editorial commentary to invoke panic about a future currency collapse or societal breakdown than the Fox News and radio host,” Bunch writes.
As evidence Bunch cites a single Wall Street Journal item, an op-ed by Peter Cohan on AOL that relies on an unnamed source, and a blog post from Bman409 (whoever that is) on a Motley Fool discussion board.
Bunch quotes approvingly from Cohan: “When the U.S. recession ends and the Fed starts to raise interest rates, those who buy gold now will likely suffer for their faith in the metal.”
Bunch is guilty of short-term thinking. He doesn’t seem to understand the long-term damage that President Obama and the Democratic-dominated Congress have done to the economy. Even if Republicans take back both houses of Congress in November, Americans will still experience the fallout from their folly for years.
Bunch’s assertions about inflation make no sense. People buy gold because they are anxious about the future. Gold investors are nervous that inflation will skyrocket. There is ample reason to believe that inflation will be on the march in the not-too-distant future because of the massive increases in the money supply that have taken place during the Obama administration. Even if the Fed raises its trend-setting interest rate a few points there is no guarantee that consumer prices won’t shoot up.
Moreover, there is no quick resolution expected for the worsening fiscal crises in Europe. Everyone with a lick of sense knows that the bailout of Greece won’t make any difference at all. The Greek left won’t give up its government jobs, early retirement age and all the other accoutrements of the welfare state. The Greek situation will not be resolved any time soon and other European countries (Spain, Portugal, and Ireland) are also on the verge of fiscal collapse.
In the U.S. the economy has yet to hit bottom. The commercial real estate market is poised to implode, residential real estate foreclosures are climbing, and private sector job-destroying government spending is at an all-time high and more useless government stimulus spending is on its way.
If you believe the crises endemic to socialism are at an end, don’t buy gold. If you think President Obama’s policies (ObamaCare, higher taxes, cap and trade, increased Wall Street regulation, crackdown on oil companies, nationalizing student loans) will promote economic growth, don’t buy gold.
But if you think the worst is yet to come, load up on it.
For all his bluster and mood swings, Glenn Beck happens to be right.