Mostly: Classical

[xerxes]

I saw either Greenspan or Volker (I think it was Volker) quoted as saying that one of the big errors made by the Fed in the mid to late 70's was to allow the gold price to rise, decreasing confidence in the fiat money.

Proving central bank interference in a market is not easy. But it would be easy for the Fed to suppress the price of gold if they wanted to, because it is such a small market compared to the currencies.

I can't imagine that they would be happy to see the price of gold rising more than it has in conjunction with the dollar falling relative to other currencies. Greenspan is not stupid, whatever else I think of him. It's not a good idea to underestimate one's opponents. I see no reason to expect him to repeat the Fed's admitted error of the 1970's. Therefore I expect that he is, and will continue to suppress the price of gold.

The "upside" of that price suppression is that we have thus far avoided the crushing corrections in the POG (but not in the junior PM stocks) like the one(s) seen in the mid '70's.