Video News/In Focus with Jeremy Szafron

(Kitco News) - Gold tends to climb when confidence in the Federal Reserve weakens, and foreign central banks have found physical gold more desirable than Bitcoin as they diversify away from US Treasuries, according to Jim Bullard, former president of the Federal Reserve Bank of St. Louis. Speaking with Kitco News after Fed Chair Kevin Warsh's Jackson Hole address, Bullard said gold "runs up" when the central bank's credibility is being eroded, and that the metal's role as a signal of waning faith in the Fed is "on the radar screen." He noted that some foreign central banks have been shifting reserves out of Treasuries, and that over the past year physical gold proved more desirable than Bitcoin. On the fiscal backdrop, Bullard warned of 6% deficits "as far as the eye can see," with little political will to curb them, and said every politician he encountered in his career wanted interest rates lower regardless of the level. Turning to the $42.22 statutory price at which the US carries its 261 million ounces of gold, he suggested the government could simply "mark to market." Bullard also characterized the rate-setting committee as split "pretty much down the middle," roughly 10 to nine, following Warsh's speech.