This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Steve Forbes on the Gold Standard; Fed

NEW YORK ( TheStreet) -- In this interview with Debra Borchardt, Steve Forbes discusses the gold standard and the Federal Reserve. A full transcript appears below.

Steve Forbes:
Weak dollar always means weak recovery. When you make an investment if you don't know five years from now you're going to get paid in 20 cent dollars, 100 cent dollars, 10 cent dollars, you get less investment. People always ask me, should I invest in gold? Why would you want to invest in gold in a normal environment with a stable currency? Answer - you wouldn't. That's just a block of metal. It doesn't pay you interest. You only want it if you're in the jewelry business or like putting stuff in your cellar.

So, in a normal environment you wouldn't get these hard asset investments. But in an environment where the dollar is fluctuating all over the place you go for that rather than investing in the future, doing research and development.

Well, a stable dollar is what you want. You don't want it being up or down. You just want it to be steady. That's like saying 60 minutes in an hour. You don't want a long hour, 80 minutes, you don't want a short hour, 20. You want it stable so you know what an hour will give you. The same is true of a currency. So, if the U.S relinks the dollar to gold, which I think it will in the next few years, then I think it's the other currencies do the same thing just because it's convenient.

Every ounce of gold that's been mined is still on this Earth. You can't destroy the thing. The amount that's mined each year is only about two percent of the outstanding supply. So, it's fairly stable in terms of intrinsic value. So, let's pick a number. Let's say you fix it at $1,500 an ounce. All that means is if it goes much above $1,500 an ounce the Federal Reserve or central bank will tighten up, withdraw money. If it goes much below $1,500, which means there's not enough money out there, the Fed would print up some more to get it up to $1,500. It's like a speedometer. You just keep it steady.

Deborah Borchardt:
You bring up the Federal Reserve. What do you think about their latest plan to buy mortgage-backed securities? Is that a good idea or do they need to just stop doing this?

Steve Forbes:
They should take to heart what they tell medical students. Don't harm the patient. What the Fed is doing now is the definition of insanity. Something doesn't work but you keep doing it hoping that the next time it will work. They don't learn from experience. Manipulating interest rates has destroyed the credit markets. I mean what is the real price of money. No one really believes anyone in their right mind would buy a Treasury bond with 10 years of duration with a 1.8 percent interest rate with finances of the US government. But that's what happens when the Fed is manipulating the market. It corrects capital to government, corrects capital to big businesses, and starves the rest of the economy. Not good.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs