The US Dollar Is Going to Break Down

By Jeff Clark, Growth Stock Wire:

Parabolic moves are fun while they last. But the problem is they don’t last.

A parabolic move is a nearly straight-up move in an asset. The move often starts slowly. Then it gains momentum as investors get excited and rush in to buy. This results in large-percentage gains in just a short period of time. That generates even more excitement and an even greater urgency for investors to buy… and prices increase even more.

Then, just as it looks like the asset is going to rally straight to the moon, the parabolic move ends. The market runs out of buyers, the price peaks, and everyone rushes for the exits at the same time. In most cases, the resulting decline takes back all the gains of the previous rally. We saw it with gold and silver in 2011. And we’re about to see it with the U.S. dollar.

Take a look at what happened to silver back in 2011…

After a rally in February and a good pullback in early March, silver started to rally again – slowly at first. The rally gained momentum in April. Investor sentiment turned wildly bullish for the metal. Silver rallied from $34 an ounce to just above $49. Analysts talked about the possibility of silver taking out its $50 all-time high set in 1980.

That was a six-week, nearly vertical rally. And everybody was in love with the move while it lasted.

But parabolic moves never last. They almost always blow up in spectacular fashion. And that’s what happened with silver. It took just two weeks for silver to give back 100% of the gains from its parabolic rally.

Look at what happened to gold just a few months later…

After a rally and a small correction in July 2011, gold kicked off a parabolic move from $1,600 an ounce. It gathered momentum in August. Investor sentiment hit extreme bullish levels. And analysts talked about how the metal could break the $2,000-an-ounce mark. Gold gained $300 an ounce in just about one month. It was a wonderful move while it lasted.

Then it blew up. It took just over one month for gold to give back all of the gains of its parabolic rally.

Now, let’s take a look at the recent action in the U.S. Dollar Index…

The dollar enjoyed a rally in July. Then it consolidated for a couple weeks in August.

Starting in about mid-August, though, the dollar kicked off a parabolic rally. It went slowly at first, then gained momentum. Traders are now wildly bullish on the dollar. They’re bidding the buck higher in anticipation of the Federal Reserve raising interest rates soon – while other central banks keep their interest rates low. Rising rates are generally bullish for a currency. So everyone seems to be piling into the dollar. And the buck has gone parabolic.

There’s no way of knowing for sure when this move will end. But IT WILL END – just as it ended with silver, gold, and nearly every other parabolic move in the history of the financial markets.

And when this move ends, the dollar will likely blow up in spectacular fashion. I expect the buck to give back all of its gains since mid-August. By Jeff Clark, Growth Stock Wire

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  10 comments for “The US Dollar Is Going to Break Down

  1. matt says:

    you just can never fix stupid people. They just never ever learn

  2. Petunia says:

    The US dollar is backed by all those bombs and weapons we produce. As long as we keep up our stockpile the dollar will remain a strong currency. Having said that, I think this is the reason gold and silver will continue to decline. They are becoming third world stores of value. We are heading toward a digital mobile currency. That is the future for the first world.

    • Owatica says:

      P.S. Petunia, “due diligence”… study fiat currencies and realize it does not matter how many bombs you have if people do not have ‘confidence’ in the dollar or reject being dominated by it through withdrawing support; a process well underway throughout the world. I believe you will discover the East has the gold and will ultimately make the rules. The process of QE by ALL the world’s central banks working in unison guarantees the death of fiat. Relegating REAL MONEY to ‘third world’ status is simply silly. Also digital currency will remain unusable for the majority of people in every ‘world’; I wouldn’t touch it with a ten foot pole. More to the point is the irony of that statement because when the dollar falls as reserve currency and eventually turns to dust the United States will officially be what it already is darlin’, a third world country. Are you a troll?

  3. Michael says:

    Comparing what happened to gold and silver to what may happen to the $US is utterly ridiculous. The “paper” precious metal markets markets would have to be the most manipulated and suppressed markets around. Any person with even a semi-functioning brain can see this just by looking at the daily action of the metals. It really is about time the Chinese and Russian crushed these paper shufflers in Wallstreet by demanding delivery of physical metal. I really am curious top see if there actually is any physical silver at the Comex or SLV.

  4. dc.sunsets says:

    In the larger context, the recent rally in the dollar is pretty small, with DXY still below the tops of 2008/9 and 2010. Also, depending on ones technical viewpoint, this may be an upside breakout of a very long consolidation period so, while in the short term the USD is overbought, the new trend may well be higher vs other currencies.

    The USD need not be well-managed if the rest of the world’s currencies are even more poorly managed. If the USD is just the “tallest pygmy,” it still means that writing USD epitaphs is massively premature.

    • jeffries says:

      No one has any idea of the exact date the dollar will lose its status as the world’s reserve currency- the point is to get ready. The federal government and the federal reserve have acted in concert to bring the rest of the world to its knees while American citizens looked the other way. Today it is important for them to know that this inattention is going to cost them and prepare. No one knows exactly how it will play out but Americans need to know it will be different. The government does them a disservice not to let them know it will happen and how they might prepare. It is a natural outcome- nothing lasts forever. Those with power will abuse it when they feel they can and it has gone too far. You are in D.C. you should know that.

      • Owatica says:

        I don’t believe the “government is doing a disservice”; I believe the government is working diligently to create itself as a totalitarian state. For this purpose they are not only knowingly destroying the dollar but militarizing local police, utterly destroying the middle class by orchestrating; under the guidance of their masters who operate the global central banking system, the greatest transfer of wealth and power in the history of humanity; disarming the public as much as possible; conducting phony “elections”, spewing the most amazing propaganda 24/7 from every mass media source; lying with profound malice; creating “detention centers” across the country otherwise known as concentration camps; arming the Orwellian Nazi “Homeland Security” to the teeth and much, much more . The LAST thing the government wants is for the People to be “prepared”. The very last thing…. If you believe this is an hysterical rant…. alert me to that fact a couple of years from now….

  5. economicminor says:

    perceived safe haven

    Where do you want your store of value.. In China? In Russia? Brazil? Maybe Mexico? Then there is Europe? Real estate isn’t proving to be such a good place and neither has been commodities. So if stocks are toppy and risky, where do you go? Maybe NJ munis? Ha!

    No, makes sense, best house in the slum is still the best house.

  6. Owatica says:

    I agree with Michael, technicals have ZERO to do with silver/gold and the totally fraudulent price fixes. Silver and gold have been real money for four thousand years and counting; silver will also outperform gold and, in my arrogant opinion, is a far better and safer conversion out of fiat paper than gold. In addition all fiat currencies fail, as they must, and comparing the “value” dollar to other dying currencies racing to debasement is also an illusion. China and Russia, along with at least 133 other countries, have declared they will do whatever is necessary to end dollar domination and “bombs” are not going to stop them; however much the West has attempted to push Putin into warlike behavior, Putin and the Chinese are long term strategists and our puppet “leaders” are actually insane. As noted by others, every time they make a mistake/lose they double down. Truly Frightening… However, at the moment the dollar is being pumped because the rest of the world can see the ‘Paper Tiger”…. The head of EXXON asked from France, why DO we need to buy/sell oil in dollars? The same question being asked all over the world… When the Saudis accept payment for oil in something other then the dollar, the dollar dies on the spot. Promise.

  7. chistletoe says:

    In a frantic race to the bottom, does it really matter at all who happens to be leading at the moment?

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