Skip to comments.U.S. Dollar Teetering On The Abyss
Posted on 11/15/2011 9:10:18 AM PST by blam
U.S. Dollar Teetering On The Abyss
Currencies / US Dollar
Nov 15, 2011 - 03:01 AM
By: Toby Connor
We all better hope I'm wrong on this one, but I think the CRB just put in its three year cycle low in October. I'm also afraid that Bernanke has done irreparable damage to the dollar. If I'm right about both of those assumptions then we are on the brink of a historic inflationary period.
I've marked the major three year cycle bottoms in both the CRB index and the dollar index on the chart below with blue arrows. (Actually the CRB cycle tends to run about two and half years on average).
The dollar is now a great risk of forming a left translated three year cycle. A break below the October 27 intraday low would initiate a pattern of lower lows and lower highs of an intermediate degree. When the intermediate cycles start to roll over that is usually a sign that a major cycle has topped. If the dollar's three year cycle has topped after only five months we will be at great risk of a severe currency crisis in the fall of 2014 when the next three year cycle low is due. Even more concerning is if the CRB cycle has bottomed. If it has then commodities are poised for a huge surge higher during the next two years as the dollar deteriorates.
The next couple of weeks are going to be critical for the dollar. Sometime in the next two weeks the dollar is going to drop down into its next daily cycle bottom. On average that cycle lasts about 20 to 25 days. Monday will be the 12th day of the cycle.The reversal last Thursday has the potential to mark the daily cycle top. If that top holds then the dollar is at great risk of moving below the October 27 intraday bottom sometime in the next two weeks as it moves down into its next daily cycle low.
The dollar must hold above the October 27 low. Failure to do so would indicate that the cancer has now infected the currency markets, most specifically the US dollar. A penetration of the October 27 low would indicate that the current intermediate cycle topped in only two weeks. That should potentially lead to another 15-20 weeks of generally lower prices on the dollar index with the next intermediate degree bottom due sometime in early to mid March.
If that scenario plays out we are almost certainly going to see the CRB break its down trend line confirming a major three year cycle bottom has been formed.
The extremely mild nature of the decline so far is a serious warning sign that QE1 and QE2 are going to eventually trigger massive commodity inflation.
At this point all we can do is hope that the three year cycle in the CRB will stretch slightly long and bottom early next year. If it fails to do so and the major three year cycle low did occur in October, then we have some serious inflation heading our way in the next two years.
More importantly to precious metal investors, if the dollars three year cycle has already topped then there is a very strong possibility that the next two years, as the dollar collapses down into its 2014 bottom, will drive the bubble phase in the gold bull market.
Hard to say. I’ve been watching silver prices closely all year and I don’t really see anything too scary(up or down) happening for at least the next 6 months...probably all of next year will be kinda blah is my guess.
And six months ago lots of people were saying silver would reach $50 by the end of the year. Unfortunately, I believed them.
One thing about the dollar becoming worthless. It means all those congress people who’ve made millions of dollars on insider trading will have nothing of value. Of course I’m sure they’ll get the inside scoop and will convert all their dollars to some other currency. God, I hate politicians.
It got very close to $50/oz briefly this year...then dropped like a rock.
Silver will hit $50/oz. Do I care if it happens end of this year or middle of next year......not really.
I wish I could read/understand these charts!
Can someone explain what I should be watching the dollar do, price-wise?
The illegal Federal Reserve has been busy destroying the dollar since its inception in 1913. The dollar passed the 5%-of-its-original-value mark a while back and is still falling.
Should have listened to me. I bought USD since it’s very low, and will continue buying as it stays weak. Doom and gloom articles about the USD are good for me.
The Euro weakening, means that the USD will increase.
You can watch the dollar at this site: http://finviz.com/futures_charts.ashx?t=DX&p=w1
Click around, try the home button, and this link is the futures page.
My understanding is that the writer is saying that the dollar is heading down. If you look, you can see that the dollare hits lows for 2011 that hit and went below 74. He is saying that he expects the dollar to continue to drop, and eventually drop below the lows of this year.
The trouble is that the market is very unclear at this point. Lots of people know that our banks and foreign banks are in trouble. If the market actually crashes, the dollar will go up. It is anyones guess this fall. Lots of unexpected “news” can rock the markets.
Thank you, I think!
I have some homework to do!