Presidents like to take credit for the economy’s performance—when it’s strong—but the truth is it’s the Chairman of the Federal Reserve Board and the Fed governors who have a much greater influence on the economy. By determining what banks have to pay to borrow overnight funds and controlling the availability of money in the banking system through its monetary policy the central bank has powerful control over credit conditions and the cost of borrowing for businesses as well as consumers. This tremendous concentration of power in the nation’s central bank means the Fed can keep the economy afloat, but also sink it.

In December, financial markets were fearful the later was about to happen. Markets began telegraphing their concern by declining precipitously, but the Fed went ahead and raised its overnight bank lending rate, known as the fed funds rate, on December 19 for the ninth consecutive increase. Moreover, the Fed announced, “some further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity.” Markets panicked that the Fed was about to torpedo the economy.

Only after stocks crashed did Fed Chairman Jerome Powell on January 4 say the bank would be “flexible” in its policy and “patient” in considering further interest rate increases. For equity investors who panicked in late December the assurances came too late. Some in the financial markets have accused Powell of having a tin ear, of failing to heed the markets’ warnings. Such a misstep could easily happen again.

Holders of gold, however, were safe and secure. The precious metal rose nearly six percent during the weeks leading up to Powell’s apparent backtracking.

This is just the latest example of how tremendous power concentrated in the central bank’s hands can cause turmoil for investors, a very good reason to keep assets safe in gold.