Dollar Smoke and Mirrors

For years I have followed the machinations of the U.S. Dollar Index. But then there was a time when this Index conveyed a useful message. Today, it’s simply smoke and mirrors.

Why is the U.S. Dollar Index irrelevant today? Because no matter whether it is rising or falling, the Dollar is in the process of dying. The Dollar Index today simply tells us how the Euro (and others in a basket of currencies) is doing in relation to the collapsing dollar.

If the Index is rising, the basket of currencies is recovering in its own relentless downtrend. If the Index is falling, the performance of the currency basket is even worse than that of the disappearing dollar. So I have renamed the Dollar Index the “Obama Index”. It is totally meaningless.

How then do we assess the real “progress” of the dollar as it pursues its one-way path to oblivion? The answer is easy...Watch the price of gold.