I mention this in the context of pulling some key quotes out of Stewart Thomson's latest freebie commentary (here's the link, the quotes below are from this article: LINK). The key point in this commentary (aside from his excellent analysis on the price action in gold), is that the Fed is in the process of massively devaluing the US dollar, which is an insidious and subtle way for them to confiscate your dollar-based wealth, including your IRA, 401k. any cash-equivalent investments like Treasury bonds, muni bonds, defeased munis AND bank savings and CD accounts.
Here is the key comment from Thomson's commentary with regard to wealth confiscation via dollar devaluation:
The most important news item of the past few weeks is Dr. Ben Bernanke's statement yesterday. He says he sees no overvaluation, let alone bubble-action, in the "asset markets". His number 2 man Kohn backed him up. This is a very powerful statement from the Fed. Note that he spoke of valuation more than price, and correlated the rise in commodity assets against the 64% rise in the stock market...Dr. Bernanke is laying out is that he doesn't care about $80 oil against a Dow at 10,000. He doesn't care what your food costs [are]. He's pretending prices are low and giving the green light to dollar devaluation.The key point here is that the massive dollar devaluation going on right now is going to lead to a much higher dollar-based cost of living for everyone, especially as it translates into higher prices for imported goods, which make up a large portion of U.S. consumption. The inflationary price effects of Bernanke's systematic devaluation of the dollar may not be obvious right now, but it will be in the next couple of years - and believe me, he is well aware of this fact.
In the meantime, as pointed out by Mr. Thomson, the entire financial media apparatus is trying to convince everyone that a massive, short-squeeze dollar rally is on the way - that the whole world is too bearish on the dollar and that will lead to a huge move up. Well, who do you think is taking the other side of this trade? We know every huge institution and Central Bank that is participating in the dollar carry trade is feeding the market with a steady supply of dollars. Furthermore, we are seeing most large-country Central Banks (and some small ones) using billions of dollar reserves to buy gold. This is flooding the market with dollars as well. Those are not exactly the conditions under which we would expect a big move up in the dollar.
Mr. Thomson notes: The US dollar monthly chart is in a horrific situation. It shows many of the major indicators on sell signals. This is a disaster in the making, and Ben Bernanke has better chartists in the world at his beck and call. He knows the score, and the score is: Thumbs Down On The US Dollar.
In other words, despite the common view being propogated by the usual bourgeois-worshipped idiots (see Prechter, CNBC, Gartman) about an imminent move higher in the dollar, if you "follow the money," the money trail and the statements from Bernanke point to a continued depreciation in the value of the dollar.
All this is to say that you may think that you are being "safe" by keeping your money in dubious "higher quality" fixed income investment (bonds, CDS, money markets, etc), but the fact of the matter is that these are nothing more than stagnant cesspools of paper, the value of which is being confiscated by the Fed/Government thru the process of massive dollar devaluation AND the massive transfer of your taxpayer wealth from the Treasury to the big banks. To ignore this ongoing process is to suffer the consequences of my warning back in 2003.
The ONLY way to protect yourself against this devaluation is to move your money into precious metals and perhaps some investments based on hard commodities, like oil, natural gas and agricultural products. And for those of you who think the mad rush by the public to sell gold to these cash 4 gold schemes is a sign of the gold bubble topping out, who the hell do you think is on the other side of that trade? Smart money and Central Banks. To emphasize this point, I will conclude with another key quote from Mr. Thomson's article:
Ben Bernanke and the US Treasury are going to revalue gold against the dollar. The mechanism is the US dollar carry trade, not a confiscation of gold. Joe Public doesn't have any gold, he sold his 2 carat ring to the pawnshop months ago.Got gold? How about silver, which is even better?