How low might the bonar go?

[Jim Nickerson]

Peter Schiff http://www.safehaven.com/article-6367.htm on 11/24/06 opined, "Unfortunately the technical outlook for the dollar, and by extension that of the entire U.S. economy and the financial markets it supports, is rapidly deteriorating. The dollar Index, now trading near 83.5, has broken though some key support levels and the next test will likely be its all time record lows of just under 80. If that test fails, as it most likely will, look out below. Once the dollar moves into uncharted territory, the selling could intensify, with the dollar index trading below 70 in short order. My ultimate target for that index is 40, which would literally cut the dollar's value in half. I think the entire move could occur in just two years. Again, putting that decline into perspective, it is the equivalent of over a 6,600 point decline in the Dow. Of course this assumes the Fed finally gets religion and Congress and the President heed its sermon. If not, and hyperinflation ensues, the dollar index could fall far lower, perhaps even breaking into the single digits before bottoming out."

What do you think? I should have perhaps noted a time frame, so think in terms of 2 years.

[jk]

Re: How low might the bonar go?

i voted for low 70's, not because i think the dollar will retain much strength measured against tangibles, but because the dollar index measures the dollar relative to other pieces of paper. foreign cb's will not allow their currencies to appreciate against the dollar too much, too fast, for fear of disrupting their own economies.

[metalman]

Re: How low might the bonar go?

central banks will prop up the dollar to prevent a melt-down as part of a deal. as galbraith says, they'll all print euros, yen, yuan, etc., and buy dollars again and gold will go up some more. if the usa keeps the deal... increases public and household savings and cut deficits ala an imf plan to s. korea in 1997-8.... then gold levels off then falls... or the usa fails to keep the deal and the shit hits the fan.

[Jim Nickerson]

Re: How low might the bonar go?

An interesting assessment of forces that may influence the direction of the $.

http://www.safehaven.com/article-27018.htm

December 03, 2006
Everyones Favorite Whipping Boy (the dollar) Takes Center Stage
by Clif Droke

"Question: Why would the "forces of nature" desire to purposely wreck the U.S. economy, which is the chief engine of growth behind the emerging global economy, by crashing the dollar? Why tear down the super-structure that has taken them years to construct and which has been the major goal of the entire financial Establishment for decades? For what purpose? Has it occurred to anyone that maybe, just maybe, the dollar bears are being set up once again for another false alarm (just like in late 2004/early '05)? Something to think about..."

[spunky]

Re: How low might the bonar go?

76-72 ' ish .