Another day – another round of brutal Dollar selling. If it is unclear in anyone’s mind that the Fed is in the process of killing the Dollar in order to keep the “animal spirits” of investors from falling into a funk, let the price action of the Dollar convince you to put aside any such reservations. It has now crashed through another support level. First it was critical support near 80. That gave way easily. Then it appeared it might hold 79 for at least a little while after it popped yesterday on the approach towards that level. Today, that gave way like a rotten wooden plank taking it down near 78 before it got a bit of relief. Ominously, there does not appear to be much if anything standing in the way for a fall to 75, where if it takes that out as ignominiously as it has previous “floors”, it is heading to 72 and we are heading to a currency crisis.

As said the other day, ‘overbought’ and ‘oversold’ are relative terms and are meaningless when there is a fundamental driver behind a market’s rise or fall. In the case of the Dollar, once governor Dudley signaled his intent to see the Fed engage in another round of QE, the “oversold” status of the Dollar was rendered moot in today’s session. The reason – traders and investors world wide understand that the supply of dollars is going to be increasing at a faster rate than the demand for those dollars. The result is economics 101 – a drop in price.

As long as the market is convinced that the Fed is going to be engaging in another round of QE, the Dollar is going to fall, not only against the other currencies of the globe, but against the metals, which is why gold and silver prices are rising.

At this point, the only thing that I can see which would cause the Dollar to mount a SUSTAINED rally would be a definitive end to any Fed QE whatsoever. Barring that, the trend for the Dollar remains firmly lower.

That brings us to gold which continues to rise as the Dollar continues to fall. It set yet another all time high in today’s session with the bullion bank barrier at $1,315 giving way. Yesterday’s rebound from the session low indicated good levels of buying continue to surface on dips preventing the shorts from getting any downside traction. Their short covering combined with another influx of fresh money resulted in a surge to $1,322. If the previous pattern holds true, we can expect the bullion banks to retreat towards $1,330 and make yet another stand near that level. Downside support remains near $1,300.

Silver put in another fresh 30 year high today (see the >JSMineset.com