Greenback Attack

You say goodbye right now
I'll still survive somehow
Why should we let this drag on?
--Tom Petty

John Hussman posits that the Fed's recent announcement of more quantitative easing (QE) materially increases the chances of a collapse in the dollar.

I have little doubt that such a collapse will occur. The question, of course, lies in the timing. Individuals who believe inflation is eminent think are likely to think this collapse may come sooner rather than later.

Personally, I believe there is a near term case for stronger dollar as folks close out debt projects and seek securities denominated as 'safe.' Major dollar decline comes later, when either a) enough debt has been destroyed or b) outside creditors close the borrowing window.

Dr J is careful to point out that dollar destruction is likely to be quick rather than gradual. He notes that the Fed's change in bias toward more QE has him reorienting his funds toward more precious metal exposure ("...the Federal Reserve has begun to play with fire, the effects of which I doubt Bernanke fully appreciates.").

A week or so back I (once again) initiated a position in SLV. John's comments have me wanting to bump my gold, silver exposure a bit. Like John, I hope to use price weakness to my advantage.

position in SLV, gold, USD