US Dollar Index Has Fallen Below $75.50!
Previous All Time Low was $78.33.
The present devaluation of the dollar below healthy, long-term support of $80 on the US Dollar Index is very ominous. Has the final descent of the dollar begun? Could the dollar rally one more time, and head back toward $80 or even above $80? It could. On the other hand, what we are witnessing could be the beginning of a descent--ratcheting up and down--but generally a descent toward something quite low, say, in the neighborhood of $40. The odds are the final descent has either begun or will begin in relatively short order, if proper corrective action is not taken. The window to rescue the dollar and economy is closing. Do we have several years in which to act? Do we have a matter of months instead? Whatever time we have, it is imperative to institute emergency measures. We can avert disaster but we must act comprehensively and decisively. Original Republican policies predating 1972 will save the country. What follows is an excerpt from Joe Arminio's new book, The Decline And Fall Of The American Way. “Dollar Index Portend An Imminent Collapse” Pages 12-14.
To the experienced eye, the chart of the US Dollar Index, which is set down on this page, portends with high probability an imminent collapse of the US Dollar, relative to other currencies. Indeed this analysis of imminent trouble is consistent with the views expressed at www.gold-eagle.com, and this particular site is a clear favorite of the investor community, averaging two million hits a week. If the “fundamentals” of the economy are weak--and they certainly are--, then this chart says we are fast approaching a point where the purchasing power of the dollar will plunge or free-fall. The US Dollar Index is hovering perilously above $80. Should it fall below $80, it is likely to fall to half its value. (Footnote 8) How is this?
The US Dollar Index measures the purchasing power of the US dollar relative to a basket of other top currencies, including the euro, British pound and yen. This chart of the index shows an ominous “head and shoulders” formation. Heads and shoulders are fancy words for bell shape curves. In this case, the head is the biggest bell curve (the top is $120). The shoulders—the smaller bell curves—are on the right and left. Notice that for more than the last 36 years there has been “support” for the dollar at around $80. Whenever it threatened to fall below this support, there has been a recovery. But the dollar is threatening to fall to $80 again. This time the odds are not favoring a recovery.
The history of charting tells us that when you have a head and shoulders formation and when the forces (in the economy) trying to sustain the price of a stock or commodity or currency are weak—our massive debt bubble is one of many indicators of weakness—then the odds are good that a fall will occur when support is tested on the right-hand edge of the right-hand shoulder. $80 is a major support point. In other words, it has served as support for many years. To fall below $80 is to tempt fate. Typically the price falls about half its value before a new point of stability is reached. For the US Dollar Index to fall to $40 is to halve the purchasing power of our dollar in short order! If this happens, we are probably talking about a depression.
Footnote 8. Robert McHugh, “No Way Out: A Fifty Percent Dollar Devaluation,” www.Gold-Eagle.com, Editorials, Jan. 14, 2007.
