My work suggests the USD is in the second month of a 3 month topping process, and will start to head back down again around the turn of the year. The highs have been put in for this rally, right around this 85.00-87.00 level.
The USD will then head down in what many will anticipate as a re-test the lows over the first six months of 2009. However, the USD will not quite get there. It will go as low as 75.00 by May, then head higher in weak fashion for about 3 months back up to the 80.00 level in Autumn. So, we have topped for now, but will hang out here for another 4-6 weeks. The next move down will not reach the previous low, but the blip higher will not come back to current levels either. But starting late next Autumn, it will then head lower again into May of 2010, to an all time new low below 70.00. This is when the catastrophic break could occur.
There is going to be a solid commodity rally that is already stirring right now, that will take place into a typical May high. However, this will not be a spectacular rally. It will merely be solid. This rally will stall out in late Summer of 2009. But, when it gets going again in Autumn of 2009 it will be very strong and will explode higher into May of 2010.
I continue to accumulate Silver at current levels. If a catastrophic currency crisis is coming for the USD, I have now concluded that it will occur in 2010, not 2009. There are many reasons for this, but just one is the nature of markets to not crack until after the pressure which is making them crack actually eases off. In other words, as I have written, this gargantuan supply of Treasury debt is indeed the thing that will break the USD. But ironically, it will not break the USD in real time. It will break the USD after it has been sucked up into the system and ironically after the system is better functioning. What would be typical therefore would be for the USD to finally crack AFTER the wall of treasury supply started to abate some. So, I see 2009 as follows supply, supply, supply of treasuries with no let up into Q1/Q2 2010, with lots of gnashing of teeth that the USD is going to collapse. Then, the govt. finally says OK no mas treasury supply--we are going to ease off. And then, ka-boom, USD problem of a serious nature.
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