All eyes and ears are on the Fed this week. With Bernanke in New York discussing potential new bubbles and the New York Fed getting heat for overpaying AIG’s many creditors, investors are having a tough time knowing exactly who to follow.

For those of you who hold up the “Fire the Fed” signs, move over. I am thinking about joining your camp.

Gold gained yet another powerful ally yesterday — hedge fund icon Paul Tudor Jones. The man who famously called Black Monday in 1987 and the Nikkei crash a few years later now thinks “gold appears to be cheap.” In a note to his investors, Tudor said, “I have never been a gold bug. It is just an asset that, like everything else in life, has its time and place. And now is that time… gold’s value should increase as its scarcity relative to printed currencies increases.”

The U.S. stock market has enjoyed a strong rally since the early spring, but while the economy has shown improvement, it still faces major headwinds. So it may be best to hedge against the U.S. dollar, which is likely to experience a significant decline over the next few months.

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“Just how can the Fed credibly promise to be irresponsible…?”  Here’s a thought—that tiny handful of investors and analysts warning how Fed policy risks hyper-inflation are in fact doing the central bank’s work.

Gold fell to a one-week low on Tuesday, dropping sharply as the dollar strengthened broadly and crude oil prices tumbled, reducing the metal’s appeal as an inflation hedge.

The Organization for Economic Cooperation and Development (OECD) raised its growth outlook for industrialized countries for the first time in two years and said the United States would experience a quicker recovery than Europe.

We’ve been musing on the fate of US debt for some time now. It’s no secret that we’re bearish on the fate of US Treasurys and the buck. (It’s no accident, dear reader, that your editor lives outside the US of A. We see the threat of inflation on the horizon, a dark and foreboding cloud, and we don’t like it one bit.) And the mixed signals from China and Russia on their Treasury holdings doesn’t make us sleep any easier at night.

The big daddy of underground investors, Jim Rogers, says the best way to play this downturn is to focus on commodities and agriculture ETFs (hat tip The Daily Crux). The primary logic behind this play is simple to understand.

We keep having bad dreams about all the phony money central banks are creating to ‘fix’ the economy. This is not a figure of speech. We are actually having nightmares about this. We wake up in cold sweats.