Which way to gold profits?

I see the House of Representatives passed a bill yesterday calling for an audit of the Federal Reserve.

In the center of it, of course, is Rep. Ron Paul, who now says the prior audit was too limited in its scope.

The U.S. Senate might or might not also pass it.

Buyers of gold and silver bullion coins should probably hope the Senate doesn’t act and the legislation dies.

Why?

Well, bullion has kind of had a bad year. Gold is almost $300 below its peak from last year and silver is about $20 below its peak 2011 price.

One of the often cited online reasons to buy bullion is defiance of the Fed and its supposed effort to suppress precious metals prices.

There is always something appealing about little David bullion buyers triumphing over the Goliath Federal Reserve. It is a narrative we can all understand.

But what if an audit is conducted and it is found that there is no effort by the Fed to suppress bullion prices? What if the Fed turns out to be the very model of a modern central bank?

Bullion buyers will be reduced simply to discussing central banking policies with a host of economists.

How boring is that?

It is much more exciting to be part of an insurrection that is limited to bullion buying, the profits from which are shared by all.

If the audit bill dies, we might very well experience another, “We’ll show you” bullion rally.”

The little guys win. They make lots of money. Who can object to that?

Buzz blogger Dave Harper is editor of the weekly newspaper "Numismatic News."