Big Picture Dollar: 300-year Study Predicts 100-year Rally

[Note:  This article was originally posted on September 3, 2011, and can be found in
the blog archives.  The dollar starting taking off immediately thereafter, which seems
to validate the views expressed in this article.]

[Also note an update was posted on October 29, which nailed the most recent bottom in the Dollar.  See:  US Dollar Update: Zero Hour Approaches; Bottom Appears Imminent]

Here's a long-term Elliott study of the dollar I just completed. The study encompasses everything since the dollar's inception. Took more than a few hours. ;)

Since the DX index has only existed for about 40 years, I had to find a proxy for earlier price data. I selected "dollar purchasing power relative to gold" as the proxy. Credit for the base, unannotated long-term dollar and dollar/gold charts goes to

It's an interesting study, and the implications of the results are numerous:

1) The long-cycle corrective wave since the dollar's inception implies that the dollar was "near perfect" when introduced, and thus has been correcting ever since.

2) The potential of a base in the Grand Supercycle wave implies a century-plus-long rally from the 2008 print low.

3) There is a strong implication that the dollar may be on its way to eventual extinction. If the Grand Supercycle wave HAS based, which is my view, extinction will be a long time off while we rally in Grand Supercycle B for a century or more... if the wave hasn't based, extinction may come in the next few decades.

4) There is a very clear indication of gross mismanagement by the dollar's shepherds (i.e.- the government), and of the systemic rape of America's wealth by those in power. But we knew that already.

What never ceases to amaze me about Elliott Wave is the seeming ability to predict the news.  One could imagine that if the Euro continues to struggle, the dollar will again be The currency.  

This should lead to a long, sustained bull market in the dollar.  And here we have a 300-year chart that seems to be telling us that right here, right now is an inflection point and potential monster trend change to the prior 300 years.  How did the chart know 100 years ago -- or even 20 years ago when we were bottoming the c wave, before the Euro existed -- that the European crisis would be unfolding now?  How did it "know" to develop the pattern it has developed? 

It's almost as if there's a secret mathematical formula designed into human psychology and creation itself...

It's certainly food for thought.