U.S. Dollar Update...

The dollar has plunged another 60 basis points, from 78.90 to 78.30 (spot basis) from my post yesterday.  It looks like Tim Geithner, that moron and tax criminal who Obama annointed to be in charge of the management of the U.S. dollar, stated overnight that there is no threat of a U.S./China trade or currency war.  This was after the House overwhelmingly passed legislation which would enable the U.S. to impose trade sanctions against China.  Thus, Geithner's idiotic statement of course means that both a trade and currency battle with China  are imminent.

Here's a weekly chart of the U.S. dollar:

(click on chart to enlarge)

Just to be clear, I expect that the dollar, on a technical basis, will soon experience some kind of trading bounce.  I'm not sure I would trade this from the long side.  The better bet would be to cover your dollar short partially and add even more to it if the dollar does bounce.  I can't see any bounce going much higher than the the 80 area.

Of course, the highest probability way to play this is to just keep adding to your gold, silver and mining stock positions.  Make no mistake about it, a substantially weaker U.S. dollar will lead to a significant and painful decline in the lifestyle and wealth of most people in this country.  The only way to protect yourself from this impending disaster is to move as much of your wealth as possible into the precious metals and mining stock sector (and commodities).

As many of you have noticed and commented, the HUI/XAU mining stock indices have been lagging the movement of the metals for the better part of 4 years.  I think this dynamic is shifting into one in which the mining stocks will outperform the metals - and the junior mining stocks offer explosive upside.  More on this next week...