What a freefalling U.S. dollar means to commodity prices

Market Pulse: September 18

Fundamentals

Look very closely at the monthly charts below and you can see a very clear picture regarding what will happen if the USD does freefall. The 10-year monthly charts show the USD Index at 120 back in 2002 and the CCI at 180. Look at the extreme low of the USD and the extreme high of the CCI back in July 2008. See where crude and gold were trading back then. Now look at December 2008 and see where crude and gold were trading then, just five months later. My concern here is where commodities are trading now and where they will be trading if the USD retests 74 or 72. Now trading crude was great back in 2008. However, the toll high commodity prices will take on average Americans is just not good. So keep an eye on where the USD is heading and be prepared for all-time highs in commodities if the USD continues its slide.

Have a prosperous trading week. 

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