Dollar Demise is Premature - A Discourse on a New Gold Standard

Lots of people sending around this story of a secret cabal working to get the oil trade off the US Dollar. The story seems to have engendered a lot of comment on the web; the mysterious Web Bot Project has called for a financial crisis on Oct25 that could lead to a Dollar Crisis. It apparently tracks web trends and attempts to make predictions. I wouldn't take this prediction to the bank but if it is widely crawling the web it may be showing the level of chatter on the demise of the Dollar is high.

I find this waaaay overblown. The cabal is not so secret and the timeline is not so fast (2018, not tomorrow). Mish does a good job of showing the impotence of the effort. Foreign Policy writes a really good piece on how hard it would be to push the US out of its hegemony.

The global reserve currency falls into the lap of the dominant power, and it does not leave easily. Even under the classic gold standard, it was the Bank of England that managed it, until 1914. After WWI the dominant power had moved to the US, and even then the global standard stayed in England. When the gold standard resumed in 1925, it was managed again by the Bank of England; but it had to create a bastardized standard, a gold exchange standard, where the Pound was backed by the US Dollar and the gold in the US. Only after WWII did the standard shift to the US, under Bretton Woods. Even when the US broke with the Bretton Woods gold exchange standard, the USD has continued to reign supreme against attempts to replace it as the reserve currency. 

Consider what is required to make the alternative work. The secret story says it will be based on gold. Now, a small amount of gold can go a long ways - global trade in 1913 was huge, and not matched until the mid-1990s. (I know that may seem hard to believe, but things fell a long ways down due to WWI and then the Great Depression). It was based on a 90-day instrument called a Real Bill, backed by gold held in the Bank of England. This Bills could be used to borrow against, and traded multiple times. A merchant in England contracted for cotton in the US to be shipped to a plant in China to be manufactured and shipped back to a store in London. The same, single Bill would be used at each step and often got traded or 'discounted' over 20 times. It all got cleared within 90 days and everyone paid off their debt - the many swaps down the chain simply paid off each other. (If you play with the math you can see it works.) As long as the balance of trade of the Bank of England was even, no net gold went in or out; it simply got shuffled in the vault from one bin to another. A small pile of gold could support a huge and growing trade system.

To make the new secret system work, the net gold flows in and out of whatever the bank or clearinghouse is have to balance. In the classic gold system, exchange rates were fixed and nations had to adjust their trade policy to make sure gold did not run in or out. Under a floating exchange system, the rates would adjust. Now in both systems nations could try to cheat, and did, much as the mercantilist countries like China today keep their exchange rates low by holding excessive Dollar reserves. So such a new system has to deal with the cheaters. (If you list who is behind it, you find them likely to want to cheat!)

Real Bills worked independently of such shenanigans. They were an emergent property of capitalism, arising early-on in the Italian city states, and hence were a very resilient system. Yet they died during WWI and have been largely lost to economic history. Instead we have commercial paper and other short-term instruments to finance trade, and are beholden to the whims and fancies of the banking sector.

To remain in balance, the secret system would need to handle much more than just oil purchases; it would have to set up some form of clearinghouse with relatively stable trade flows across a wide variety of trade. This is very hard to pull off. Perhaps if the cabal thinks it through, they will establish in effect a clearinghouse for a new form of Real Bill, and use it for only half of what banks do: the commercial supply chain trade, not investment or venture finance. The central authority might be called a bank but would function more like a clearinghouse.

As an aside, a lot of people do not appreciate the power of the Real Bill system. The Federal Reserve when created in 1913 was supposed to be a Real Bill clearinghouse. WWI threw a monkey wrench into that. The Austrians never got Real Bills, and have called for a 100% reserve banking system. This would be an utter disaster. Even the normally astute Mish went into a recent rant about fractional reserve banking being fraud. He got seriously slapped down by Karl Denninger's rebuttal. A 100% reserve system would lack sufficient capital to grow; fractional reserves are a marvelous way to leverage a small amount of cash-on-hand. Anyone serious about changing the global financial system must separate the trade finance system of the Real Bill (or its modern equivalent of commercial paper. factoring and A/R finance) from the investment system of bank loans, private equity and venture capital. A banking or trade system backed by real stuff (houses, cars, goods-in-transit) does not need to have much in the way of reserves, since the financed properties themselves are collateral.

While hard to pull off, it is not impossible for the USD to be replaced. Mish is too sanguine on this as well in his first article linked above, under-estimating the benefit for the US to power the oil trade. Other nations need to hold excessive Dollar reserves to finance the oil trade, and cannot easily convert out of it without impacting the value of the USD itself or of their own home currency. The US gets the benefit of seigniorage, and can run trade deficits much longer than possible under the classic gold standard.

I have a bet that by 2020 the US Dollar will be replaced or supplemented by some form of gold-backed reserve. It would take a much more serious Dollar Crisis to get there than anything going on right now, but if you look at the long term chart of the US Debt (see chart from CBO) you will see it is complete fantasy that the US can continue with the current policies - and this chart is from late 2008; the picture is much worse today. At some point we will face a huge Day of Reckoning. My 2020 bet looked far off when I made it a couple of years ago .. we shall see if it is far enough out.

The US can continue for a while with increasing deficits. Right now we are deleveraging faster than the Federal government is borrowing; see second chart. This is why we are in a fundamentally deflationary environment. And why the Dollar Demise is not imminent, nor is a new gold standard somehow imposed from our trading partners.

Comments

[Mamma Boom Boom]

Story floating around that Prechter covered today. (right at the top?)

[john walker]

Thank you for this. A well considered post; no EWT tautologies; no reference to Prechter. Damn, Yelnick, you /are/ getting better by the week.

[Elliott RULES]

DG Says anyone can fight with him as much as they want. But what he don't say:

Lookout if you do, motherf-ckers. He's seen your ilk and, he's earned his stripes. So bring it on if you think you're man but he and I know the score:

You don't know Elliott.

John Walker, I agree this was an excellent post Yelnick!

Now let's get back to making some serious dough/moolah/"smackeroons"

[Mamma Boom Boom]

Total comp-store sales for September in the Johnson Redbook Index declined 2.2%, beating an expected drop of 2.9%.

Department store comps fell 5.4% last month, doing better than Redbook’s projected 5.8% decline. Discount store comps slipped 0.4%, beating the forecasted 1.2% decline.

(good, huh?)

[Jing Chen]

It is only fitting to see this US dollar demise story while the US dollar is making a major bottom in the next a few days or so.

I could not even dream of a more bearish news story to accompany this bottom. All the pieces are coming together to mark this final 5th wave at multiple degrees of the downtrend. And the emotional climate is exactly what one would expect for the 5th wave personality.

[Lazarus]

Yelnick

Wave 5 of Super Cycle 3

or...

wave b of Wave C of an A-B-C Wave 4 and then Wave 5 UP!!

You had the correct count three years ago only you dismissed it.

[Mamma Boom Boom]

Jing Chen, excellent.

[won't get foolS]

Wave 5 UP????!!!

Uh oh. Time to cover those shorts...

Damn!!!!!!!!!!! Last time I listen to Prechter!!!!

[JR]

I see that Daneric once again changed his count back to P2 for the umpteenth time! This guy is TOTALLY lost!!!

[Jing Chen]

Thank you Ned Bushong! :-)

Here is a description of market bottom personality, excerpted straight from Elliott Wave Principle, by Frost and Prechter, Chapter 2, Page 77:

BOTTOM: Large degrees: question of existence, survival; depression; war.

[george]

yelnick,
i found a recent 10 part interview on
youtube.com with the head of the web bot
project. i lost interest when he said
that the aliens from other planets would
be invading earth in less than 2 years....
he also discussed 30 per cent of the
current world population having alien
dna immune to mind control. everyone
else being able to have their minds
controlled.
pretty far out stuff. too far out
for me :-)

[DG]

JR,

The problem is those guys see every move as an Impulse. There have been no Multiwave Impulses since the March bottom, i.e. Impulse waves you would label 1-2-3-4-5, although there have been Monowave Impulses, where the subdivisions don't show up, although those guys use 1-minute charts sometimes, so they'd show up there, but they still aren't looking for the right structures, clearly.

Anyway, knowing Neely's "Essential Construction Rules" for Impulse waves from Chapter 5 of Mastering Elliott Wave allows a person to see this quite quickly on a properly plotted chart.

Here is what I said on my blog on September 26th, when it was already clear to me that the move off the top was not an Impulse. 102.5 SPY is actually 101.99 SPY because I haven't changed my chart and price targets to reflect the 51 cent SPY dividend. I'm lazy about things like that sometimes. "wave-d" refers to the September low.

"The decline off this week's top has most likely already become too large for it to just be an x-wave, so a retest of wave-d seems in play. Since wave-e was a Double Combination, at least in my chart, that means it probably wouldn't get retraced more than 70%, which would put us around 102.5 SPY. If we take the initial move from the high as a :3 and the consolidation that followed as an x-wave, there is a "waterfall effect" measurement that takes us to just about that level. However, given the time taken by the consolidation, I would say it looks more like a B-wave than an x-wave. Still, I would expect a possible reaction around that 102.5 area, if we get there."

Anyone trying to trade using Elliott Wave without understanding how to quickly and accurately differentiate Impulse waves from Corrective waves is BOUND to fail. It is the most crucial distinction in the entire theory and they are continually failing to make it correctly.

[george]

http://www.youtube.com/user/webbotproject

web bot link to interviews
here is the link i forgot to post it
to the webbot project. i only listened to
the first 2 parts.

[yelnick]

george, thanks for the links. I got through a few seconds when the host talked about China genetic engineering dragons. That was it for me. So much for the web bot whatever. BTW I think one could do a much better version of it today using Google Trends, which correlates searches with volume and not just direction.

[vipul garg]

we can have more 1-10 minute charts and labels to understand whats happening on spx.

[Cornhusker]

Comex Gold closed at an ALL-TIME high today; that means EVERY SHORT is under-water on their trade.

The MONSTER-OF-ALL-SHORT-SQUEEZES could happen at any time in Gold...the move will be violent and sudden...BE WARY...

[Hank Wernicki]

Ned: I didn't know Prechter went short again and now covered. Are you sure ? Thanks

Hank

Wednesday October 7th
9:30 am

10/1/09 3:50 pm 10 m generator bottom NDX ( perfect )

Unbelievable

I missed it this afternoon  

It bottomed at 2:20 pm

May buy on the Open again tomorrow

Look at the futures tonight for a Long trade

[Edwardo]

Denninger, gifted at financial forensics though he is, is, in essence, stuck in an ideological mindset that is fairly rigid. Mr. Shedlock also is clearly in thrall to a particular ideology, but where this debate is concerned he is quite correct. Now I am going to soften Mish's language so that instead of Fractional Reserve Lending being characterized as a fraud-which in strict terms it is- I will simply describe it as tenuous. It is tenuous, or better yet, fragile, because all along the daisy chain of lending, borrowing, and buying that Mish portrays in his post, sans perfect conditions, many things can (and clearly do) go very wrong which act to imperil the original capital. This has been the case even in economies that were more productive and structurally sound than the U.S. economy has been of late.

I have not read Rothbard's case against Fractional Reserve Lending, but I suspect that the seed of booms and busts in systems based on capital inexorably owe much to the unwieldy Fractional Reserve system of borrowing and lending.

However, of much more interest to me is acknowledging that, whatever merits the Fractional Reserve Model may once have had, it, equally, in this time, may no longer be in the best interests of a planet where the dangers of constant growth run head first into the unavoidably obvious physical limits of the planet's resources and ecosystem.

This is a discussion very few are willing to engage in having mostly to do with the seemingly intractable nature of the problem.

[Sherman McCoy]

OK, great,the dollar won't face the music until 2020. God that makes me sleep better.

Gold is going to new all time highs today. Are you on board, or buried in some obtuse Prechteresque fantasy that the dollar tracks gold and is still going to $105?

At the end of the day, you have to decide if you are an intellectual, or a behaviourist. EWT is behaviourism. Funnymentals will follow the price, not precede it.

[yelnick]

Edwardo, we know how to handle a run on banks with small reserves - the Bagehot Remedy of massive liquidity to abate the panic. It works. The problem in 1931 as described by Milton Friedman in his seminal work (The FInancial History of the United States) was no one came to rescue State banks, and specifically the Bank of the United States, a Jewish immigrant bank in NYC that suffered a run and went under. Immigrants thought it was THE Bank of the United States, not a "BankAmerica". Panic set in. The Austrians urge the central bank to always be prepared to stem the secondary crisis after a bubble bursts - the runs on the banks.

The problem we had last year BEFORE the secondary crisis was lack of clarity of counter-party risk, a fancy way of saying the banks didn't know who held the hot potato (the bad toxic waste) and hence the system began to freeze up. Milton Friedman's co-author Anna Schwartz and John Taylor of the Taylor Rule both implored Bernanke to focus on that issue, but given that he was a so-called Student of the Great Depression, he instead went about solving THEIR crisis not his. He fought the last war, so to speak. Hence he let the secondary crisis emerge and in a panic had to dump huge liquidity after Lehman fell when AIG was about to go. Unlike the Fed in 1931, he went way beyond legal limits and provided liquidity broadly. I think he made the correct call in Sep 2008, but blew it in the prior year.

Point is we have no problem with fractional reserve banking. People confuse bank reserves (cash on hand or easy to get a hold of to pay off panicked depositors) with bank solvency. Banks are suppose to remain solvent, meaning their deposits plus borrowing plus capital are backed by more than enough assets, defined as loans WITH COLLATERAL and liquid instruments. When the toxic waste began to go gray (ie not liquid and hard to value), the banks became potentially insolvent. This is a different problem and one we have yet to deal with. Again, this is NOT a problem of fractional reserve banking but of unsafe banking practices.

A 100% reserve banking system would starve the economy of capital. There simply is not enough 'reserve' around to finance growth that way. Growth becomes limited to currency and liquid assets. Disaster. The Austrians for some reason never grasped the Real Bills Doctrine, and Rothbard despite his brilliance makes a huge mistake to propose 100% reserve banking, 

The classic gold standard never made such a mistake - the Real Bills system enabled leverage (in effect) of 20-50x above the gold in the vault - more than reserve banking, but without anything like the same risk since the Real Bill tracked a real set of goods flowing in commerce. The risk would be liquidated one way or another in 90 days, and if the merchant failed to sell the goods the gold would move to the supply chain and the merchant would go under, but the suppliers would get paid. 

My proposal to remake the system looks like this:
- re-create the real bill trade system backed by gold
- divide banks into safe and risky, and regulate the safe (and guarantee deposits, etc.) but limit their activity
- separate investment banking, hedge funds, derivatives, CDS etc. from safe banks
- take the $330B left in TARP and finance 5 fresh banks without any encumbrance of the bubble- simplify the regulatory scheme by
(a) combining SEC and CFTC to oversee markets, equities, derivatives, commodities and
(b) empowering the FDIC not the Fed to manage the safe banking sector (it becomes a lot like Canadian banking system)
- allow safe banks to have 10% reserves but regulate their activities and monitor their solvency

[Edwardo]

Thank you, Yelnick, for your thoughtful and illuminating response.

Edwardo, we know how to handle a run on banks with small reserves - the Bagehot Remedy of massive liquidity to abate the panic. It works. The problem in 1931 as described by Milton Friedman in his seminal work (The FInancial History of the United States) was no one came to rescue State banks, and specifically the Bank of the United States, a Jewish immigrant bank in NYC that suffered a run and went under. Immigrants thought it was THE Bank of the United States, not a "BankAmerica". Panic set in. The Austrians urge the central bank to always be prepared to stem the secondary crisis after a bubble bursts - the runs on the banks.

-Perhaps I have not made myself clear with regard to my primary issue/concern with Fractional Reserve Banking which does not concern inevitable bank runs and busts. My concerns have more to do with the tendency for the process of Fractional Reserve Banking to become distorted and/or corrupted. Equally, I am aware that Fractional Reserve Banking is not the proximate cause for our present distress.

The problem we had last year BEFORE the secondary crisis was lack of clarity of counter-party risk, a fancy way of saying the banks didn't know who held the hot potato (the bad toxic waste) and hence the system began to freeze up.

-Interesting idea. I'm not really in agreement that it was about a lack of clarity regarding "who held the hot potato" as all the major players did, though one can argue about who may possessed, as it were, the largest scalding spud.

Milton Friedman's co-author Anna Schwartz and John Taylor of the Taylor Rule both implored Bernanke to focus on that issue, but given that he was a so-called Student of the Great Depression, he instead went about solving THEIR crisis not his.

-That, I am afraid, is a too benevolent view of the reasons why Mr. Bernanke chose the path he did.
But we can agree to disagree as they say.

He fought the last war, so to speak. Hence he let the secondary crisis emerge and in a panic had to dump huge liquidity after Lehman fell when AIG was about to go. Unlike the Fed in 1931, he went way beyond legal limits and provided liquidity broadly. I think he made the correct call in Sep 2008, but blew it in the prior year.

-Though Lehman was certainly responsible for putting themselves in harms way, they didn't fall, by any means, of their own volition, but were given a good healthy shove off the high cliff's edge. I do agree that Mr. Bernanke has, by any honest appraisal, almost certainly violated The Fed's charter many times in a multiplicity of ways. As for correct calls, well, I am loathe to give the man much credit, no pun intended, since he was so derelict, and that too is being kind, in the buildup phase to the crisis.

Point is we have no problem with fractional reserve banking. People confuse bank reserves (cash on hand or easy to get a hold of to pay off panicked depositors) with bank solvency. Banks are suppose to remain solvent, meaning their deposits plus borrowing plus capital are backed by more than enough assets, defined as loans WITH COLLATERAL and liquid instruments.

-Ah, and there's the rub, liquid instruments. So much of the vaunted collateral is anything but liquid.

When the toxic waste began to go gray (ie not liquid and hard to value), the banks became potentially insolvent. This is a different problem and one we have yet to deal with. Again, this is NOT a problem of fractional reserve banking but of unsafe banking practices.

-Yes, and I just conceded this point in an earlier response.

A 100% reserve banking system would starve the economy of capital. There simply is not enough 'reserve' around to finance growth that way. Growth becomes limited to currency and liquid assets. Disaster. The Austrians for some reason never grasped the Real Bills Doctrine, and Rothbard despite his brilliance makes a huge mistake to propose 100% reserve banking.

-I don't know who, besides ideologues of the Austrian School, advocate 100% reserve capital, but I do not. That is clearly excessive, but there is a lot of room to play with between what Rothbard and his ilk advocate and what has been common practice.

The classic gold standard never made such a mistake - the Real Bills system enabled leverage (in effect) of 20-50x above the gold in the vault - more than reserve banking, but without anything like the same risk since the Real Bill tracked a real set of goods flowing in commerce. The risk would be liquidated one way or another in 90 days, and if the merchant failed to sell the goods the gold would move to the supply chain and the merchant would go under, but the suppliers would get paid.

- I am familiar with The Real Bills system through the writing of Antal Fekete, so I imagine we are more in agreement than not regarding most of your remedies.

[Mamma Boom Boom]

Hank, it's only what I heard.

[MHD]

With interest rates at close to the panic lows, one has to wonder what the heck is going on. If everything is so much better, how can we have rates this low? How can the 3 month T-bill be at .07 and the recession is over.
For those of you who think this is a new bull market and not a bear market rally, please stop smoking that stuff!!

[Francis Schutte]

Inflation and deflation are monetary phenomenons and not economic ones. If you 'understand' this, you will not pretend that we are - at this time - in a deflationary cycle.

[Eventhorizon]

Inflation and deflation are always and everywhere a monetary phenomenon. Given the collapse of credit, the largest compenent of the money supply, and the concommitant decline in the velocity of money, one would have to be delusionary to believe we are in anything but a deflationary environment.

[Francis Schutte]

This bull market is a "ZIMBABWE effect bull market". For your information, over the last years, the stock market in Zimbabwe has probably been the best in the world. Zimbabwe had a hyperinflaton but the shelves of the shops were empty... In nominal terms all Zim's were billionaires, so were the stock holders: people preferred to keep their money in stocks instead of in worthless paper money. Similar conditions occured in Germany during the Weimar hyperinflation.

[Hwan]

Let's cut the crap, folks.

Inflationists: Gold and stocks have gone up but nowhere remotely close to Weimar or Zimbabwe levels

Deflationists: We had a little asset crash, but it ended and didn't take most classes or most consumer prices along with it

We're kind of in limbo or maybe a little of both

[yelnick]

Edwardo, would you like to lay out your argument and remedy in a guestpost? This topic deserves it!

[Mamma Boom Boom]

Francis and Hwan,

Look up that tree, see it? Arf..arf

[Web Bots]

Web Bots see October 24 thru November 4 as military dates between Israel and Iran.

Dollar demise likely wont occur until this military action (Web Bots say bunker busted bomb) causes the panic.

[Henry]

http://www.coasttocoastam.com/show/2009/07/21#

George Ure & 'Clif' discussed their web bot technology which has continued to give archetype descriptors of future events. Their method captures changes in language patterns within Internet forums. This aggregated data is then processed with software to determine various keywords, which they interpret in a predictive fashion. They foresee a number of negative cycles/events converging over the next few years:

A big crisis is kicked off on October 25, 2009. It could be that Israel bombs Iran, or that Swine Flu goes into a level of extreme lethality. 10 days later, in relation to this crisis, the Obama administration will be thrown into chaos.
When Israel bombs Iran, they'll use a nuclear-tipped bunker buster that will hit something unforeseen underground. As a result, a radioactive cloud will form that will pollute and sicken Southeast Asia. This will cause much of the world to turn against Israel.

The "Death of the Dollar" will be a continuing trend, with a hyper inflationary period in 2010, and banking crises/confidence losses that will begin in August 2009 and escalate by November 2009.

[Mike McQuaid]

As XLF closes above 15.62 for 7 days the market will continue it's robust advance off the March reversal. That's the conservative assesement, look for gaps up in the meantime.

[Mamma Boom Boom]

IMO, if a Dollar Demise were actually immanent, gold would be in blast-off mode. But, while it is at the upper end of it's range, it is not at the top or broken out. That is according to my 2 main trend indicators.

I think Jing Chen nailed it, and one should trade accordingly.

[Mike McQuaid]

RTH (retail) bumped the golden mean retrace of the '07 high to the '09 low on Sept 22 and is now making a second attempt at this resistance. A close above this mark should add to the evidence that the bull is dominant.

[Web Bots]

Dollar implosion/Gold blastoff should occur as we approach the military crisis due between October 25 through November 4.

Still 18 days or so to go.

[Lishnu]

Gold is up $35 in 2 days.

[Rick V]

Everyone will see real action only from 15th of october 2009. from this day prechters dreams of a market crash will come true. until then be prepared for GFC part II.

[Hank Wernicki]

thanks Ned

[A Fan]

Hank, what do you care? You've got your own system and it's better than Prechter's.

Godspeed and keep your eyes on the beam.

[Edwardo]

That's a very generous offer. And just so I understand you, Yelnick, you are asking me if I would like to make an argument on behalf of the sort of banking system I have in mind, and also, to offer ideas on how I would address the present situation?

If the answer is yes, it may require a grant from The Ford Foundation, (just joking) but I am willing to try.

[yelnick]

you got it!

[Mamma Boom Boom]

Ed Waddo, try not to make it too long. I have a short retention span.

[Edwardo]

Okay. I'll have something in a week's time.

[Hank Wernicki]

A Fan :

I Worry Sometimes :-)

Hank

[Hank Wernicki]

Tomorrow : The NAS Fractal

http://www.elliottfractals.com/webinar_page.htm

[Rob]

Not sure how to interpret your impressive-looking charts, Hank.

Also, what are your time frames? Clearly you are thinking hourly or, say, daily. But what about longer terms?

[Wave Rust]

This 5 is not over yet. more time and price higher needed.

http://yelnick.typepad.com/yelnick/2009/09/have-we-topped.html?cid=6a00d8341c563953ef0120a59f082e970b#comment-6a00d8341c563953ef0120a59f082e970b

wave rust

p.s.
please help the web bot people
- repeat 50 to 100 times per day, all of the key word phrases that web bot is looking for on the internet.

try these:
obama resigns and ascends to heaven
federal reserve gives all americans a billion dollars
the beatles re-unite for one last concert with elvis

[mikeksk]

Today 8 October will be the start of the bear rally.

I am using an alternative system to complement wave count to identify turning points.

Let's see whether it works.

[Sunder]

Gold $1500?

http://www.ft.com/cms/s/0/51671c84-b372-11de-ae8d-00144feab49a.html

[LoneStarHog]

I just had to stop by and say, "I Told You So!"

The movement upward of both gold and silver is just beginning. As I have always stated, THE MOVE will have virtually nothing to do with the U.S. Peso on the USDX. It will have to do with the LOSS OF CONFIDENCE. First in the U.S. Peso, and THEN all other fiat currencies.

You ain't seen nothing yet!

If I remember correctly, my last post here said that the USDX would drop to 75 with a small bounce and then to 70 with a larger bounce. Now, you will be lucky to see a bounce to 80 before it PLUNGES!

I have been screaming for people to get into gold/silver since 2000 for gold and 2003 for silver. Gold was approximately $275 and silver $4.50.

Well good luck if you are into ANYTHING U.S. Peso denominated, he says for the UMPTEENTH TIME.

Hog