It was compelling political theater on Capitol Hill last month when Fed critic and Republican presidential hopeful Rep. Ron Paul, R-Texas, a...
Bernanke paused before answering, "No."
Paul: "It's not money?"
Bernanke: "It's a precious metal."
Paul: "Even if it's been money for 6,000 years, somebody reversed that and eliminated that economic law?"
Bernanke: "Well, you know, it's an asset. Would you say Treasury bills are money? I don't think they're money, either, but they're a financial asset."
Paul: "Why do central banks hold it if it's not a form of money?"
Bernanke: "Well, it's a form of reserves."
Paul: "Why don't they hold diamonds?"
Bernanke: "Well, it's a tradition, a long-term tradition."
Paul: "Some people still think it's money."
On Wall Street this week, as gold was setting a series of record highs, the idea that the precious metal is indeed a form of currency was sometimes cited as a factor in the bullishness.
"At the end of the day, you have to find a place where your money is safe, and it goes back to the ultimate currency, the ultimate safe haven, and that's gold," Graham Leighton, the director of precious metals at Newedge, told Dow Jones on Friday.Soaring demand for gold is good news for Yamana Gold (AUY +1.44%, news) and other mining companies.
The Toronto company appears on a daily ranking created with StockScouter, an MSN Money tool that identifies stocks with strong growth prospects in the near term. All stocks with Scouter ratings of 8, 9 or 10 are considered for the list, which is then shortened to exclude stocks with a trading volume below 50,000 shares a day. The remaining stocks are ranked on the basis of market capitalization, sector membership and whether they are growth or value stocks.
Yamana mines gold, copper and silver in Brazil, Argentina, Chile and Mexico. The company said second-quarter profit nearly tripled, as it produced more gold and sold it at higher prices. The results exceeded analysts' expectations.
While rising metals prices have helped Yamana, which is up 26% over the past three months, bullion prices have been rising faster than shares of mining companies. Gold soared as high as $1,881.40 an ounce on Friday, an all-time high. Less than three years ago, it sold for around $715 an ounce.
Gold miner stocks have been held in check by rising costs of steel, cement, fuel and other equipment, as well as labor. Yamana CEO Peter Marrone said the company was undaunted by inflation when it raised its 2011 exploration budget by 25% to $105 million U.S. dollars.
On Aug. 3, Marrone told the Canadian Press that Yamana would maintain its focus on precious metals and resist the urge to capitalize on rising copper prices, something the world's biggest gold miner, Barrick Gold (ABX +1.80%,news), did with its recent acquisition of Equinox Minerals.
"At almost $1,700 an ounce, I think gold is the new gold," Marrone said at the time.Yamana Gold has a StockScouter rating of 10, meaning it is expected to significantly outperform the market over the next six months with average risk.
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