SP: US DOLLAR COLLAPSE OVERDONE A SHORT TERM RALLY AHEAD
The mainstream media is eating up the possibility of a US Dollar Collapse. When there are articles on CNBC and Yahoo! Finance that have the headlines “US Dollar Collapse Likely” or “Buy Gold as Dollar is in Freefall” then things are likely to turn around. I am a firm believer that the long term trend of the US Dollar is down as the Federal Reserve Bank has printed way too much money out of thin air for basic supply and demand to not effect the dollar. With that being said, there is a chance that we are going to see a short term rally in the US dollar soon.
When everyone you know is talking about a particular investment vehicle then it is likely time to get out. As of October 26th, 2009, we see article after article about the commodity bull market and the decline of the dollar. Do not get me wrong, I believe in the commodity bull market but I think the returns are much greater when all the analysts and headlines are pointing out the reasons for the bull market to be over. With headline news being the collapse of the US Dollar I currently believe we will soon see a short term rally in the dollar which will cause the price of commodities to fall.
The short term rally is likely to lead the US Dollar Index back to or above its 50 day moving average. Since March 2009, the US Dollar Index has plummeted from 89 to 75.5. There has been no real bounce since the decline began and it looks as if a short term rally is long overdue. Once again, I am a strong believer that the overall trend is down and commodities are going to flourish in the future but right now we need to shake out some of the pseudo Gold/Commodity bulls. The investors that invest in the “hot” investments are going to have to realize that nothing goes straight up or straight down forever. When I see the headlines “Gold Bull Over” on CNBC or Yahoo! Finance I will once again be extremely bullish on the commodity sector and bearish on the US dollar. As of now, I expect to see a short term rally in the dollar with a subsequent fall in commodity prices.
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