Dollar Headed Down, Gold Headed Up

Beginning in early 2002 the US dollar Index began a steep decline with a few minor bounces along the way, but eventually losing nearly half of its value—the most recent of those bounces being in early 2008 (when other major currencies began to decline) and continuing…until recently. So what’s next for once almighty dollar?

There’s a good breakdown of some important upcoming financial dates here. Specifically, the quickly approaching 28th of this month and going into December could bring a short squeeze in the Comex gold market, not boding well for the dollar and sending gold upward.

Failed CB Franchise & Gold Explosion
The USDollar DX index has topped. Conversely, the gold price has bottomed. Each has experienced a clear vivid pronounced reversal off the extreme. Signs point to December as being a battleground month. The moving averages have begun to reverse, a more stable signal. A MACD crossover is near, which would give a billboard notice to technical traders. Beware that this is the phony paper gold price. Actual large physical gold transactions are conducted at prices in excess of $1000 per ounce. The undue influence of paper price discovery is soon to end. As the Gladiator said in the 1999 movie by the same name, to the phony emperor who usurped power, “The time will soon come to an end for you to honor yourself.” Expect severe discontinuity in the gold price in the next few months, maybe sooner. If [Max] Keiser and others are correct, and the assault on the COMEX gold succeeds to liberate its price, a gap up is assured, a big gap up, like a few hundred dollars per ounce.

Deflation will be in terms of gold, like in 1929
The US dollar has already lost its status as the world’s reserve currency due to the government’s fiscal irresponsibility, especially over the last year. Political and financial leaders around the globe are furious with the US and its financial sector, and they are determined to move away from the dollar. Meanwhile, clever investors who see the writing on the wall are already accumulating physical gold and other precious metal, creating shortages. However, none of these signs are needed to know the dollar’s time has come.

By February we should have a clear indication of the economic damage done from a dramatically decreased Christmas consuming season. But for now the writing is on the wall:

U.S. Dollar Putting in a Top as Risk Aversion Diminishes 11.24.08, Market Oracle

Citigroup says gold could rise above $2,000 next year as world unravels Telegraph.co.uk, 11.27.08

US debt puts strain on dollar: Outlook for Dollar is poor Financial Times, 11.26.08

Dollar Collapse Has Begun Market Skeptics, 11.24.08