ALAN GREENSPAN, who stepped down last week as chairman of the US Federal Reserve after 18½ years, yesterday blamed the threat of terrorism for the soaring gold price, in his first private sector speech since being let off the leash of officialdom.

According to members of his audience of international investors — watching a holographic image in Tokyo as he spoke in New York — Mr Greenspan said that the high cost of gold did not reflect inflation or the strength of commodities, but rather a fear among investors of a major geopolitical conflict.

There were people who believed that a nuclear weapon could be detonated within five years, the American central bank supremo said.

The low probability of such an event occurring would not necessarily avert a spike in the gold price, he added.

Dr Greenspan went on to discuss a range of topics, including the problems created by a lack of investment in refining capacity by the oil industry. He said that this failure by the oil majors meant that the era of cheap energy was almost surely over.

The former Fed chairman is also said to have indulged in a moment of self-criticism over the central bank’s failure to prevent the market bubble in the late 1990s.

He admitted that, at the time, he and his colleagues could not see that the notion that they could diffuse a bubble with incremental rises in rates was an illusion.

Dr Greenspan’s decision to appear in public so soon after stepping down clearly demonstrates that the revered figure in central banking is not one to revel in retirement, after almost two decades at the Fed. The 79-year-old is believed to have earned $120,000 (£69,000) from his one-hour speaking engagement.

He revealed that on his first day of retirement last week he told his wife how strange it was to wake up and not worry about what had happened on the Tokyo market the night before.

The question of where Dr Greenspan would deliver his first public speech since retirement had been the subject of fierce debate and intense commercial rivalry. Numerous Wall Street investment banks, including Goldman Sachs, Morgan Stanley and Citigroup, are understood to have offered to pay him large sums for his time, but they were beaten by CLSA, an aggressive securities firm based in Asia that runs an annual forum on Japan for investors.

Two years ago Bill Clinton, the former US president, gave the opening speech at the forum — also via hologram — for which he was paid $200,000.

From the comfort of an apartment in New York, Dr Greenspan fielded questions from investors at the forum and offered some cheer by declaring that, after years in the wilderness, Japan had become a normal economy again.

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