Get Out of the U.S. Dollar Now. Right Now. This Is Not a Drill

With Monday’s surprise announcement, China dropped a bombshell on global currency markets. Action to take: Get out of the U.S. dollar. Now. Right now.

Serenity Now! Serenity Now!!
- Frank Costanza, Seinfeld

Let’s see, how can I put the appropriate subtlety and nuance on this...

Get. Out. Of the U.S. Dollar. NOW.

Do not pass go, do not collect $200, do not stop to conduct an impromptu inventory of your unmentionables.

In the slightly profane vernacular of internet slang, just GTFO. Do not walk, RUN, to the nearest exit. Barring that, find the most appropriate hedge for your dollar-denominated investments and GET THAT HEDGE ON. Toot sweet.

If you don’t know of a high quality dollar hedge off the top of your head – other than those oldies-but-goodies, gold and silver – then you’re in luck. I’m about to tell you (yet again) about an excellent anti-dollar counter measure that is smart, IRA eligible, FDIC insured, and set to deliver potentially staggering returns over the next 12 to 18 months.

But first, let me catch my breath.

Whew. That’s better...

Cool Customer Nearly Spits Out His Coffee

Now that I’ve composed myself a little, let me apologize for the above outburst. Your humble editor is normally more reserved than that... a cool customer, if you will (except for the occasional temper flare-up in response to what comes out Washington).

The reason for this morning’s mini freak-out was a Financial Times bulletin that, quite literally, almost made me spit coffee all over my keyboard. Here are the first two paragraphs, reproduced just as they hit me between the eyes:

China wants dollar replaced as reserve currency
By Jamil Anderlini in Beijing

Published: March 23 2009 12:16 | Last updated: March 23 2009 14:22

China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.

The goal would be to create a reserve currency "that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies," Zhou Xiaochuan, governor of the People’s Bank of China, said in an essay posted in Chinese and English on the central bank’s website.

Remember that old advertising jingle, "Uh-Oh, Spaghettios?"

One might say this could mean, "Uh-Oh, Confetti-O," for the greenback.

On Friday we talked about Financial MADness and the complex gamesmanship playing out between Washington and Beijing.

If Beijing’s mandarins are engaged in a high stakes game of poker with the Fed, then Monday’s thinly veiled "death to the dollar" statement from China was the equivalent of raising the stakes by an order of magnitude.

This is huge news, folks. I don’t know how else to put it. It may take a little time for the forex market to further digest the implications of this blow – due to shell-shock from last week’s big news and whatnot – but the fallout shouldn’t be long in coming.

Now, getting back to that ideal dollar hedge... one which could do BETTER than just gold and silver by the way... to explain why it looks so compelling now, I first need to lead in by telling you about a very small country set to reap an astonishingly large windfall, courtesy of Fed Chairman Ben Bernanke.

This Tiny Country, Pop. 4.8 Million, Could Reap Hundreds of Billions From the Fed

When the Fed announced its intention to create a trillion bucks out of thin air last week (by printing up dollars with which to buy bonds and mortgages), few had more reason to be pleased than a quirky, introspective man named Yngve Slyngstad.

Not to be confused with Yngwie Malmsteen (the glam-rock ‘80s-metal guitarist), Yngve Slyngstad is a former scholar of German philosophy. With his slim build, shaven head, and Teutonic goatee, he certainly looks the part.

But Slyngstad is no philosopher or academic... he is the CEO of Government Pension Fund-Global, Norway’s (rather clumsily named) sovereign wealth fund. Thanks to Norway’s $300 billion pool of assets – the third largest in existence – that CEO title also makes Slyngstad one of the most powerful investors in the world.

The reason Yngve Slyngstad (and all of Norway) should be deeply grateful to Fed Chairman Bernanke is because of the electrifying effect the Fed’s dollar-destroying actions will have on hard assets – with China’s recent announcement pouring kerosene on the flames.

Norway, you see, is the fifth biggest oil exporter and third biggest gas exporter in the world. That’s how a country of 4.8 million people – just over half the population of greater Los Angeles – managed to amass $300 billion in savings, or $62,500 for every man, woman and child.

Again, to understand how Norway has just been handed yet another mega-sized windfall, just consider what effects a plummeting dollar will have on the price of oil and gas.

Here Comes the Triple Whammy

If you pull up a crude oil chart (or USO, the popular oil ETF), you will quickly see that oil has already worked its way through a multi-month bottoming process.

When news hit the wires of the Fed’s trillion-dollar printing spree last Wednesday, natural gas jumped like a scalded cat with boiling hot water poured on its back. It took oil and gas traders a time span of roughly two seconds flat to realize that if the Fed and Treasury are well and truly going "all in" in terms of printing money to save the U.S. economy, the nominal price of dollar-denominated hard assets should shoot up like a bottle rocket.

China’s remarks on Monday, and the reality of America’s fiscal situation, mean that the dollar has a lot – and I mean a LOT – further to fall. We’re talking journey to the center of the Earth here.

It may well be in fact, too, that many paper currencies have troubles ahead, as country after country engages in a "race to the bottom" in an effort to monetize debt and shore up export sales. But, as we have said repeatedly in these pages, nobody but nobody does it bigger or better than Uncle Sam... and that includes unleashing weapons of mass currency destruction by way of the printing press.

This is great news for gold and silver. But if the period of paper currency debasement comes against a backdrop of global recovery in emerging markets, it could be even better news for hard assets like oil and gas and copper... and hard-asset PRODUCERS like Norway, Australia, Canada and so on.

The potential "Triple Whammy" is an explosive cocktail composed of the following three factors:

• Hard assets rising in price as the result of extreme paper currency devaluation.

• Oil, gas and metals being repriced upwards to reflect economic recovery and renewed global demand.

• Supply constraints, bottlenecks and peak oil concerns coming back to the fore with even more vengeance than before as a result of production cutbacks and outright shutdowns due to the credit crunch.

If we get just two of those factors working in concert, oil is on its way back to triple digits. And if we get the mojo of all three working at once? Whoo doggies. Crude could be back at $150... or even $200... before the decade ends.

And Yngve Slyngstad could well have a big smile on his face as Norway’s investable assets soar from $300 billion to $400 billion... $500 billion... or even beyond.

The looming "Triple Whammy," in other words, is absolutely fantastic news for the "hard asset" economies – countries like Norway, Australia and so on – that make their bread and butter from hard assets: stuff like nickel, uranium, iron ore, and of course, oil and gas. That means serious upward trajectories for their currencies too.

Which finally gets us around to...

How to Hedge – And Profit Too

Earlier I pledged to tell you about a truly excellent hedge – a way to counteract the diving dollar that could prove as good as, or maybe even more worthwhile than, traditional precious metals holdings like gold and silver.

The hedge I was referring to is the EverBank Ultra Resource Index CD. Conceived by the Taipan Publishing Group and created by EverBank at our request, the Ultra Resource Index CD offers a basket of the following currencies:

• Australian dollar
• Hong Kong dollar
• Canadian dollar
• New Zealand dollar
• Norwegian krone
• Singapore dollar

If the name "Ultra Resource Index CD" sounds familiar, that’s because we’ve already told you about it. As a matter of fact, in a special webinar for Taipan readers and subscribers not too long ago, Sara Nunnally and I specifically went over the attractiveness of the various commodity currencies... and specifically predicted that the dollar would soon crash.

Here’s proof, direct from the webinar transcript:

JL: And when would the time to act be? Do you see a window of opportunity here?

Sara Nunnally: Yes, the time to act would be soon because all these currencies have been discounted by the crash of 2008. When we saw the "margin call to the system" as you put it everything was thrown out the window in the face of a panic rise in the U.S. dollar and Treasury bonds.

JL: So when the global economy roars back to life again and the dollar buckles under the weight of the printing press, these currencies could appreciate extremely quickly.

SN: Absolutely.

Doesn’t get more direct than that, eh?

Now there’s good news and bad news here... the bad news is that you would have been better off acting on the opportunity the very first time the webinar aired. Since that time, the "commodity currencies" have jumped substantially. (Just check out charts of the Canadian and Australian dollar to see what I mean.)

The good news is, it’s still not too late to act. One nice thing about currencies is, when they trend they REALLY trend. We could be in the early stages of a new paradigm shift – away from the greenback and towards the currencies of the world’s hard asset producers and "ultra resource" countries – that lasts for years and years. If so, the time to get involved is right now... before the dollar falls down another six flights of stairs.

To make sure you get a full sense of the scope of this opportunity, I asked our web team to set up a special re-viewing of the original webinar – a discussion between Sara Nunnally and me – explaining just what is happening now and why in the world’s major currencies.

Keep in mind that this webinar was originally broadcast a little while ago and basically predicted the flow of current events... with that in mind, you can access a special re-viewing of the "ultra resource" currency webinar here.

Or, if you have already seen the webinar but chose not to act on it the first time... or if you fully understand the argument and simply want to go straight to the details on how to sign up for the EverBank Ultra Resource Index CD... then you can find out what you need to know about the Ultra Resource Index CD here.

Keep in mind, too, that the Taipan Publishing Group has a mutually beneficial relationship with EverBank. They occasionally create CD products for us (like the Ultra Resource Index CD), and we in turn receive a small commission when those products are sold. I feel strongly that it is a win-win-win relationship: not just for Taipan and EverBank, but for you, our beloved readers and subscribers.

And remember: "Uh-Oh Confetti-O" doesn’t have to mean "Uh-Oh" for your investment funds or your retirement. Through various trading and investing opportunities, not to