Death of the Dollar, Again

By Nico Isaac

If you want the latest news on the U.S. Dollar Index, try a search under its new ticker symbol, RIP. — as in, “rest in peace.” Let the record show: In the early morning hours of Tuesday, October 6, the mainstream financial community officially declared “The Demise of the Dollar” (The Independent).
The “coroner’s report” cites these details as the causes of death:

  • An alleged (and later denied) secret meeting among leaders of certain Arab States, China, Russia, and France which aimed for the immediate discontinuation of oil trading in U.S. dollars.
  • And, an open statement from one senior United Nations official that proposed the dollar be replaced as the world’s reserve currency.

In the words of a recent Washington Post story: “The growing international chorus wants the dollar replaced… a move that would end the greenback’s six-decades of global dominance.”

And with that, the line between negative sentiment — AND — “EXTREME” negative sentiment was crossed. It occurs when the beliefs about a market lean so far over in one direction, that the boat investors are sitting in is about to tip over… Just like the last time.

Case in point: Spring 2008. The U.S. dollar stood at an all-time record low against the euro after plunging more than 40% in value. And, according to the usual experts, the greenback was “dead”-set to meet its maker. On this, these news items from early 2008 say plenty:

  • “The dollar is a terribly flawed currency and its days are numbered.” (Wall Street Journal quote)
  • “It’s basically the end of a 60-year period of continuing credit expansion based on the dollar as the world’s reserve currency.” (George Soros at the World Economic Forum)
  • “Greenback is losing Global Appeal… the ‘Almighty’ Dollar is Gone.” (Associated Press)

YET — from its March 2008 bottom, the U.S. dollar came back to life with a vengeance, soaring in a one-year long winning streak to multi-year highs. In the most current Elliott Wave Theorist (published September 15, 2009), Bob Prechter presents the following close-up of the Dollar Index since that trend-turning bottom. (some Elliott wave labels have been removed for this publication)

At a measly 6% bulls, the bearish dollar boat tipped over. The situation today is even more remarkable: The percentage of bulls is lower, at 3-4%, while the dollar’s value is higher than the March 2008 level.

It’s crucial to understand that markets don’t necessarily respond to sentiment extremes immediately. But, such extremes do indicate exhaustion of the trend — which is usually the opposite of what the mainstream expects.

For more information, download Robert Prechter’s free Independent Investor eBook. The 75-page resource teaches investors to think independently by challenging conventional financial market assumptions.

Comments

One Response to “Death of the Dollar, Again”

  1. KERRY GITCHEL on May 17th, 2010 11:10 pm

    The dollar isn’t the dollar the Federal Reserve Note is a Bank Note issued by a private bank it is the William Patterson Scam money not a dollar Federal Reserve notes are loaned into Circulation at interest and WHICH ISN’T PAID OFF LIKE A CREDIT CARD WHICH MAKES THE DEFIT GO UP UP UP PLUS IT is a fiat currency that isn’t backed by gold or silver . Now you know what the problem is the solution

    You replace the Federal reserve note that is the label on the $1.00 bill with the CONSTITUTIONAL LEGAL TENDER THE “UNITED STATES NOTE ” WHICH THOMAS JEFFERSON MADE UP.WHICH IS NOT LOANED INTO CIRCULATION LIKE AN UNPAID CREDIT CARD LIKE THE FEDERAL RESERVE NOTE IS WHICH MAKE TRILLIONS OF DOLLARS IN INTERSET ON THE BACKS OF AMERICANS.

    The only thing the that should be replaced is the Fed should be bought back into the US govt. surprise its ran by a private bank in England. The William patterson Scam money has to be replaced with our UNITED STATES NOTE nothing other but Constitutional legal tender that isn’t usury interest to its people. If you aren’t financially free then YOU ARE NOT FREE. You have the chains of debt without the United states note. Get rid of the Federal reserve notes now they are a war weapon to kill the country by drowning its people in interest and debt by the Fed and its banks. Congress is suppose to be printing our United states notes not the Fed and private banks. GET RID OF THE WILLIAM PATTERSON SCAM MONEY NOW. WILLIAM PATTERSON STARTED THIS IN THE 1600’S IN ENGLAND THAT IS WHY JEFFERSON MOVED HERE BUT THEY FOLLOWED US HERE AND GAVE US BANK NOTES WHICH ARE IOU’S WITH HIGH INTEREST TO AMERICANS. Even if you make the United States notes with out gold or silver backing it at least it would be interest free which means it won’t bankrupt America.
    I hope America wakes up quick.
    Kerry Gitchel

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