A Look at the Dollar Index and Its Long Term Cycles.

In this report, I cover the early market action from London on Tuesday, May 7th, 2019. I look briefly at the precious metals, the stock market, the dollar, the bond market and the price of WTI and Brent crude oil.

Today I look at the history of DXY or the Dollar Index and why it was created and why it is only a good measure between paper or irredeemable currencies but not a great way to hedge against inflation or fiat currency debasement.

Ever since its inception as an index in 1973, the Dollar Index has fluctuated in a seven to a nine-year cycle of tops and bottoms. At the begining, the DXY was 100 and now it's just below 100 at 97.50 so the message for me is that the major fiat currencies are all sinking together versus the precious metals as gold was around $100 in 1973 and is now at just under $1300.

My conclusion is that even though the Dollar Index is a good short term indicator of dollar strength, in the long run, it is a massive distraction about what is really going on in the currency world which is the massive debasement of all national currency and their loss of purchasing power.

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