The Dollar Is Set to Drop

Thoughts on the Market – Interim Report

December 3, 2025

In recent write-ups I have written about some underlying cracks in the system that could lead to widespread contagion in the markets.  One of the more immediate bi-products of these cracks is the Dollar’s vulnerability.  You can see from the chart below of the Dollar Index that the Dollar is down nearly 10% on the year.  It staged a decent corrective bounce from its low on September 17, but that correction is now over. 

I have positioned myself with short US Dollar exposures against a basket of currencies.  I haven’t picked my ultimate targets yet, but I have been expecting at least a 3% or 4% drop.  Do I have a favorite currency to be long right now?  Not really.  That is why I have put on a diversified basket of currencies. 

Separately, I want to quickly point out that gold seems to be doing a more complex correction which can play out in one of several different scenarios.  In the first scenario, gold will have another sharp decline, not unlike its 11.3% drop in late October.  In the second scenario, gold will continue to chop around for a while as it works off its extreme overbought conditions.  (Please note that silver might also be close to finishing this part of its bull run.)  As you know, I have been a long-term bull on gold, but after rallying 145% from the time in 2023 that I first started recommending a purchase, I am happy to sit on the sidelines and let the market consolidate. 

Regarding Bitcoin, it has staged a sharp recovery from its recent 84,000 low, but l see this as part of the corrective price action; this is quite normal after dramatic sell-offs such as the one we recently had.  Remember, the market had gotten quite oversold during its crash of roughly 36% from 126,110 down to 80,800, so a period of choppy consolidation is normal as the market tries to find its equilibrium.  It wouldn’t surprise me to see a bit more upside in this correction, but in the big picture, I am still expecting further downside. 

 In the meanwhile, I want to wish you all the best of luck with your trading.

 Andy Krieger