King Dollar: “I’m Back, and So Is Deflation!”

King Dollar: “I’m Back, and So Is Deflation!”

Dollar UP.  Everything else DOWN.  Sound familiar!

Forget Facebook – this is the real financial story.

There has not been a lot of green on many screens of late, except for one castoff – the buck.  Call it what you will – the best house in a bad neighborhood, the flight to safety – fact is that when the scales tip towards deflation, the greenback shines.

Since QE2 wrapped up, the dollar has rallied like crazy.  Whatever monetization been has done since has not been enough to keep the buck down.

As you can see from the chart, it is almost deflation time – we’re close to a major breakout:

US dollar daily price chart

The buck nears a breakout. (Source:

Sure, the dollar is overbought of late.  But since 2008, when it’s rolled, it has really rolled, so I wouldn’t get in the way of this freight train.

It was interesting to see gold finally have an up day today.  One day does not a trend make, of course, but it will be interesting to see if gold is able to decouple from the other falling assets sooner rather than later.

From the archives: Deflation Investing Strategies