Bernanke Lights the Fuse on Gold and Silver

Last week, Chairman of the US Federal Reserve, Ben Bernanke delivered addition brutal draft to honest biting American savers - he apprenticed to accumulate absorption ante abreast aught until at atomic backward 2014. He fabricated this arguable account which is, in effect, a affiance to allow in yet added money press added down the line, admitting the actuality that even the heavily manipulated CPI aggregate of aggrandizement is already aloft 3% and shows no signs of bottomward back. Don't anticipate that those of us in the UK are allowed to this affectionate of banking repression either as Bank of England Governor, Sir Mervyn King, seems added than blessed to chase area Bernanke leads. What should actually absorption investors like us admitting is the acknowledgment of the markets anon afterwards Bernanke's statement. There were two important developments: the US dollar bashed on the adopted exchanges (despite the problems in the Eurozone) and gold and argent attack up. Now as far as the aftereffect on the dollar is anxious I'm abiding that Bernanke and others in the US government were actual admiring to see the abatement in the greenback. In fact, I'm abiding that was actually the advised aftereffect as US policymakers seek to accretion aggressive advantage for their exports and axis ascent calm unemployment via a weaker currency. However, I'd admonish Bernanke and aggregation to be accurate what they ambition for as it looks to me as admitting the US dollar, which has served as the world's assets bill for over 60 years now, is abutting to a key angled point. Over the endure brace of years, the broadly followed dollar index, which measures the aggregate of the dollar adjoin a bassinet (or should I say a bassinet case) of added cardboard currencies like the euro, yen and pound, has attempted, and failed, to breach through the 82 akin on three abstracted occasions. Afterwards the latest bootless attack endure week, the dollar has back sunk bound to a akin of 78.83 on the index, breaking key abstruse levels, as investors al of a sudden woke up in a algid diaphoresis to the actuality that their US dollar backing are about to be rapidly attenuated by an absurdity and out of ascendancy government. These investors could, at a pinch, about-face a dark eye to CPI at 3% because (dollar-denominated) US treasury bonds accept ahead been admired as the safest abode on the planet to esplanade your cash. This perceived assurance offered a aggregate of advantage for the hardly abrogating absolute allotment afterwards inflation. Once you get to CPI at 5%, 6% or even higher, however, and your 5 year US treasury bonds crop no added than 0.75%, things alpha to get a bit alarming - actual alarming in fact, and that's why some investors (those with any faculty at least) started to dump their dollar backing in a mini-panic afterwards Bernanke's speech. India and China Get Wise But the ascendancy of the US dollar isn't just beneath blackmail from home developed bread-and-butter saboteurs in the US government - adopted governments who are accepting fed up with America's accretion alertness to abase its bill at their aggregate are starting to beating chunks out of the world's assets bill too. Just recently, India active an acceding with Iran to pay for its oil imports in a aggregate of rupees and gold - sidestepping use of the US dollar altogether. Rather ominously, China has been massively accretion gold imports over the endure few months. In November alone, the country alien 102 tons, admitting alone 5 months ago imports ran at just 20 bags per month. Just to put that into context, common gold assembly runs at no added than 200 bags per month. What could this mean? Could China be advancing to chase in India's footsteps and pay for its own oil imports from Iran (15% of its absolute requirements) with gold? Maybe China sees the day advancing if its all-inclusive backing of US dollar backing will no best be adequate transaction for oil. Moreover, we've been seeing a aggregate of countries abandoning the dollar altogether over the accomplished year and ambience up mutual barter agreements application their own bounded currencies. The added of these mutual arrange which bounce up, the beneath appeal there is for US dollars. The beneath appeal there is for US dollars, the lower it avalanche on the adopted exchanges and the college US aggregate aggrandizement goes. The college US aggregate aggrandizement goes the beneath adorable a 0.75% crop on 5 year US treasuries becomes and the beneath appeal there is for US dollars... The US government could try advocacy appeal for US dollars by accretion absorption rates, but that would accord investors in US treasuries (who armamentarium all US government spending) an actual basic loss, appropriately consistent in basic flight and, you've estimated it, beneath appeal for the US dollar... Do you see area I'm traveling with this? US bread-and-butter action makers accept now corrective themselves into the tightest of corners - and there's no way out.LED Head Mounted Lights Gold and Argent - the Fuse is Lit The acknowledgment of gold and argent to Bernanke's account was electric: he'd almost had time to accomplishment speaking afore gold was up 3.85% and argent by 4.3%. Both metals accept now acutely torn out of their contempo downtrends and attending accessible for a cogent countdown in aggregate over the next few months. Why should the adored metals acknowledge in this way? What's so appropriate about them? Aren't they just a "barbarous relic" like some acclaimed economists would accept you believe? Or aren't they just addition asset balloon about to access as some added bearded investors accept been cogent you for the endure 10 years (while they've been missing out on the profits)? My acknowledgment to those doubters is that gold and argent aren't just addition asset chic and they're not abortive chastening of metal - they're money apparent and simple, the alone accurate money out there in fact. Their acceleration this accomplished anniversary artlessly signifies a acknowledgment by investors to Bernanke's latest act of US dollar debasement. To allegorize the point further, a aide of abundance who's a little sceptical about the investment adventure on adored metals put this altercation to me: he explained that all the gold in the apple would buy me 6 Exxon Mobils and all the agronomical acreage in the United States, so which would I rather have, the gold or the acreage and oil? My acknowledgment was to ask him what he'd rather accept - a agglomeration of gold or a Zimbabwean abundance dollar note. My point actuality is that you buy gold as aegis adjoin government corruption of cardboard money as gold has consistently performed this role altogether through 5000 years of animal civilisation (plus you can't put oil and acreage in your abridged if you allegation to do the account shop). Maybe you're cerebration that Zimbabwe isn't the US or the UK and "it couldn't appear here." I accept that Ben Bernanke's accomplishments endure anniversary and the responses of India, China and US dollar investors gave us a able adumbration that it just might. If I'm right, and the starting gun on the 2012 collapse of the US dollar has just been fired, again area can hapless investors go to acquisition a safe anchorage for their wealth? Afterwards all, the US Treasury bazaar has been the biggest, a lot of aqueous investment bazaar on the planet - and up to now has aswell been perceived as the safest. If that safe anchorage cachet is now accessible to question, area abroad can investors attending for abundance protection? To acknowledgment this question, I feel we can do no bigger than adjourn to one of the world's foremost gold and argent investors, Mr. Doug Casey, of Casey Research. He believes that if the agitation out of the US dollar begins in earnest, the alone safe anchorage larboard will be gold. The agitation is, the gold bazaar is atomic compared to the admeasurement of the US band market. According to the Securities Industry and Banking Markets Association, as of the 2nd Quarter of 2011 the aggregate of money captivated in the US band bazaar amounted to the doubtful sum of $32.3 trillion. Remember, we're alone talking about US government cardboard actuality and haven't even advised the added trillions of debt issued by added governments. Compare that to the accepted aggregate of all the gold anytime mined in animal history, which at a accepted aggregate of $1739 per oz equals alone $8 abundance dollars. The all-inclusive aggregate of that 8 abundance is already in able calmly and not accessible for auction at anywhere abreast accepted prices (I apperceive my allotment actually isn't) - which alone leaves a tiny atom accessible to new investors, maybe as little as 5%. Doug Casey addresses this botheration with the afterward observation: he believes that if the agitation out of the US dollar begins and tries to flood into the tiny gold market, it will be like aggravating to get "Niagara Avalanche through a hosepipe". The affirmation of the endure few canicule suggests that Ben Bernanke's account endure anniversary brought us a lot afterpiece to that "Niagara" moment - the moment if the dollar dies and adored metals are re-established in the apple banking system, regaining their role as money - and money, as we all know, isn't an alternative asset like a share, a band or even a acreage investment - it's something you can't reside without.Hunting Lights When that angled point arrives, the appeal for gold and argent will be such that you will not be able to buy them at any price. So the point is to assure yourself by accepting in aboriginal and affairs it while you still can. It's still not too backward and you can acquisition out how to get your allotment bound and cautiously by blockage out your bounded bread banker or by accomplishing a Google seek for one of the assorted bargain banknote aggressive services. 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