The Fed described the economy as recovering at a “moderate pace” in its statement, a dovish downgrade from the “firmer” recovery it stated before. The Fed also kept the language that it would remain accommodative for an “extended” period. In his first monetary policy press conference, Bernanke made no hints that his ongoing purchases of $600 billion in Treasury securities would be ended earlier than their June expiration date.

“QE2 has artificially reduced the risk premium of U.S. government bonds to below the level necessary to compensate investors for the worsened U.S. fiscal position,” added Woo.

Gold settled at a record for a 12th time this month on Thursday and is now up 31 percent from a year ago on concern that Bernanke has lost control over inflation. Silver is inches away from its 1980 record and is up 150 percent in the last 12 months.

“The recent parabolic spike in silver and to a lesser degree gold, shows that the market considers a ‘disorderly decline’ of the U.S. dollar an increasing possibility,” said

Jim Iuorio, managing director at TJM Institutional Services. “Devaluing your currency has always been a risky proposition and its success is dependant on knowing how to exit gracefully from monetary stimulus.”

The dollar was convertible into gold until the early 1970s, when President Nixon ended that agreement. Soon after, as the major currencies went from fixed rates to floating, the U.S. dollar established itself as the world’s reserve currency because of its economy’s size and relative strength. Floating, paper currencies are only worth what others deem them to be and the country’s central bank can print as much, or as little, of it as it wants.