Wednesday, April 27, 2011


Today's FOMC meeting and press conference has the potential to either put in a daily cycle bottom in the dollar index or initiate a waterfall decline into the dollar's three year cycle low. There is a lot riding on this meeting.

Let me explain. Today will be the 26th day of the current dollar cycle. That cycle typically lasts about 20-25 days. So it's already starting to stretch here. The last few days the dollar has been consolidating while it waits to hear what the Fed has to say. I suspect if the Fed clearly states it will close down QE2 in June that will give the dollar the impetus for another dead cat bounce.

Make no mistake though, this will only be a dead cat bounce. Just because Bernanke ends QE2 in June doesn't cure the problem of the trillions of dollars he's already printed. The foolish attempt to print prosperity is going to have dire consequences, it is going to cause a dollar crisis. There's no way Bernanke can avoid that now. The damage has already been done. There's no way to push the toothpaste back in the tube.

In the event that the Fed does clearly state their intention to end QE (and I think this is the most likely scenario) the minor dollar rally should drive a continuing correction in gold and silver. They are due for a daily cycle correction. It will only be a correction though. The dollar catastrophe isn't done yet and Gold's C-wave still has further to go (alot further).

The other scenario, and the one I think is less likely, Bernanke doesn't state a clear intention to halt QE and the dollar tanks. Thus initiating a final dollar crisis immediately.

Only an Keynesian academic would think lasting prosperity can be created, with no unintended consequences, by printing money. But only an imbecile would risk sending the dollar over the cliff that it's hanging on. Bernanke had better say the right things this afternoon or all hell is going to break loose in the currency markets.


  1. Incredible that so many educated people can be so stupid. It's simple economics. If you have an asset and set a currency against it's value at one hundred units per unit of asset, then double that to two hundred units, you have just cut your purchasing power in half. Why don't we have QE 3 and 4 so we can all be paying 16 dollars for gallon of gas (or milk)! Unbelievable that when this country's finances needed a watch dog, we filled the coop with foxes.

  2. Well here comes the dollar crisis (early)!

  3. ITS OFFICIAL.....!!!
    New motto for the Fed.....
    "Pedal to the Metal"
    applicable to the stock market (on its way up), to the CRB index (on its way up), to the USD (on its decline), to the cost of living (heading much further north), and last but not least PM's to skyrocket.
    ...and the cycle count says ??
    When all and sundry talk about the end of QE 2 with the expectation for a delayed QE3 ..the Ben comes out and does what everyone least expects.
    What's in his glass...rocket fuel ?

  4. Keith; These people aren't stupid. They're acting with concerted intent. Crash the US Dollar, cause a crisis and then allow the IMF/UN to institute a one-world currency. That's not conspiracy BS, that's plain as day if you read news reprts regularly.


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