Why There Will Not Be A Dollar Crisis!

Sentiment towards the dollar is still very bearish, with as little as 7% dollar bulls in the latest survey from Trade-futures.com. Many had anticipated a meltdown in the dollar alongside the bursting housing bubble and banking crisis. However, this much-anticipated crash never occurred,........

Since I wrote and saved this in a PDF format, here is the link to the rest of the article. It contains charts that I could not post here.

http://www.aspentrading.com/uploaded...arcrisisP1.pdf

Thank you for that very informative article.

What are your views on the fact that we have a much more streamlined and efficient infrastructure in terms of food supply and communications in the developed world than during previous economic crises?

Mike H

Mike - thanks,

You pose an interesting question, and I am not sure I have a good response.

Just because the anticipated crash hasn't occurred doesn't mean it won't.
The dollar can probably go for decades, but not forever. Every fiat currency that has ever existed has failed. Unless, "this time it's different".


Interesting article. I agree that in Forex it is probably a battle of the least ugly currency, but for your personal cash I'd get some gold. My understanding as a lay person is that all the money printing will take a few years to get in the system fully. That is what now 12 Trillion and climbing?

As far as trading goes, I just do my best to look for Price Action at key supply and demand areas. So they can do whatever they want with the currencies.

Do not disagree with your point, but as you said, price action tells the tale and as of now, the dollar is not going down - but I am well aware that fiat currencies all fail.

Oddly enough, I just came across this news item (see below). I will touch upon this idea of SDR's in part 2 next week.

BRIC to debate dollar role at Russia summit BRIC officials are meeting in Moscow this week to set out the summit agenda, which will include a wide rethink of global institutions, Brazilian Strategic Affairs Minister Roberto Mangabeira Unger told Reuters. "What is now being proposed is that we go beyond the debate about political and economic issues within the regime and develop the debate about the regime," Mangabeira Unger said. He said officials would discuss the role of the U.S. dollar, strengthening the G20 group, reshaping of the world trade regime, reform of the United Nations and nuclear disarmament. Mangabeira Unger said BRIC countries were deeply concerned about the dollar being the world's sole reserve currency but that they did not want a new global monetary authority with wide discretionary powers. "We don't want a European style central bank made global. We don't want a global Brussels," he said, adding that the International Monetary Fund's Special Drawing Rights were an option as long as the issuer's powers were limited. "We bilaterally in our trade with China have already begun to replace the dollar. We are not waiting for some kind of international agreement," Mangabeira Unger said, adding that unilateral initiatives on other issues were also possible.

Thanks for the interesting article. I see a very weak dollar as it relates to a monthly time frame, however, the Dollar has been fluctuating up and down a great deal as it relates to Dailies and has been up for this week so far. This is the third charts and is a strength relationship between the currency and the complete host of all other major currencies in a basket, as a bid ratio of the range of the basket, normalized to a value of 0 to 100 Percent.

In relation to the Commercial traders, the USD Index has been in a steady decline for some time since it's peak high of 09/16/2008, and we all know what a fire storm that week was. LOL

Thanks for posting this.

Regards, Scott

Yes, this is what makes a market! Some say up others day down. I'm willing to learn and grow, look forward to your analysis.

I have noticed this battle of the uglys. There have been really no big contrasts until just very recently were we are now seeing some dents in the armor of some of these currencies such as the Yen. I have also seen some good strength in the Pound of late, however, the Commercials are very bearish on it. So, it is the epic tug - O - war right now. I would think though that currencies like the EURO and the Pound may fare better, simply because of how far they have fallen. However, I would certainly defer to your Fundemental expertise. As I am very lacking in that area.

If one of the major fiat currencies fail, in an actual doomsday situation, not a simple and gradual "swap" or fading out process, gold will plummet due to the severe and off balance turmoil around the world. The only asset worth anything, as everyone will "wake up" will be gold and other materials, thus the market would be flooded. Ma and Pa will be just trying to get food, they will take all their jewelry and dump it all in the market. Corporations with large holdings will be paying their employees off with it or exchanging it for energy to stay alive while other companies fail. Those desperate for REAL assets will be ditching their gold for less than the other guys in order to get what they need. Remember, there wont be as much of what is "needed" due to the bad times. The only thing that can happen is gold go down.

Now, if the economies stay strong, if currencies like the US$ start to gradually fade out (as we may already have been seeing), then sure... I can see gold going up and staying quite strong. Having said that, gold is as big a scam as any currency. The only concept I can see that makes a whole lot of sense is the basket of oil, grain, steel, etc. Common materials that are actually used and valued BEYOND the specified realm currency, money, etc.

Just a technical follow-up to the the article I wrote last week. It appears that a meaningful low is developing for DXC with 2 possible interpretations for how it will bottom.

I just posted the story here at FF in the 'News' section:

http://www.forexfactory.com/news.php?do=news&id=172820

So far, the triangle interpretation I noted here on Tuesday has played out. This mornings spike higher was rather interesting but has thus far not held. Conditions have been incredibly volatile so it is tough to read too much into the price action. As long as 79.02 holds, prices should remain firm and push higher.

http://www.aspentrading.com/uploaded...xcwhichway.png

Today's thrust higher in the Dollar Index (DXC) coincides with the bearish S&P forecast too.

http://www.aspentrading.com/uploaded_files/0842spx2.png

In sum: weaker equities (S&P 500) should push DXC higher and drive the major pairs like EUR/USD, AUD/USD & GBP/USD lower. It might be a bumpy ride, but that is the hand we are dealt with presently.

Very nice article.