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Yellen on gold: “People want to hold (it) when they’re very fearful”

November 14, 2013, 3:40 PM
Blogs.marketwatch.com

While Janet Yellen’s testimony suggests she’ll stick to the Federal Reserve’s current playbook, Sen. Dean Heller thinks she’s different — better, actually — when it comes to analyzing gold prices.

Heller, a Nevada Republican, said he liked her take on the yellow metal better than Ben Bernanke’s.

At Yellen’s confirmation hearing on Thursday, Heller asked the Fed chair nominee whether she follows gold prices and what causes them to rise or fall.

“Well, I don’t think anybody has a very good model of what makes gold prices go up or down,” Yellen responded.

“But certainly it is — it is an asset that people want to hold when they’re very fearful about potential financial market catastrophe or economic troubles and tail risks. And when there is financial market turbulence, often we see gold prices rise as people flee into them.”

Heller followed up with this statement: “Well, that was a better answer than I got from Chairman Bernanke last July. I asked him the same question, and he said that nobody really understands gold prices, and he went on to say, and I don’t pretend to really understand them either.”

The Twitterverse certainly had some fun with Yellen’s take on gold:

After Bernanke’s soundbite on gold in July, MarketWatch’s Commodities Corner column suggested what he should have said instead: Gold is difficult to understand and it takes a lot of work to analyze the factors and their influences on the precious metal.

Wonder how Heller and other lawmakers might be linked to gold and the mining industry? The blog Open Secrets provided a nice roundup earlier this year.

Also worth noting: Gold settled higher on Thursday for the first time in six sessions.

–Victor Reklaitis

Follow Vic @vicrek
Follow The Tell @thetellblog

http://blogs.marketwatch.com/thetell/2013/11/14/yellen-on-gold-people-want-to-hold-it-when-theyre-very-fearful/?mod=sfmw