I feel it necessary to bring this to everyone's attention. I am sending this in an email as well to everyone I have advised over the last several years to own gold and silver and our metal in the ground.

I am not trying to sound alarmist, and indeed short-term predictions are always risky, but I believe we are in store for a major drop in the dollar, to new all-time lows, starting soon.

This is not based on fundamental analysis, which as we all know can be horrible for short-term timing. This is based on technicals and the recent Commitment of Traders report for the US Dollar. I was first alerted to this by Dan Norcini on JSMineset, but it has become even more extreme since he wrote about it several days ago.

Commercial banks are now SHORT the US Dollar in the largest amount they have been since the start of the dollar's decline in 2001: 46,793 contracts. Above is my mesh of two graphs that show the strong correlation between high levels of commercial bank shorts in the US Dollar and multi-year highs in the US Dollar Index. The top image shows US Dollar shorts; the red line is commercial banks. The bottom image is Rob McHugh's recent chart and shows the US Dollar Index during this same timeframe. The graphs do not line up perfectly, so I have drawn the golden line from each of the major tops in the US Dollar and corresponding high level for US Dollar commercial shorts.

As you can see, we are in uncharted territory for commercial US Dollar shorts. If recent history is any guide, over the next several weeks and months we should see the US Dollar start to roll over, come back down to the 74 level, and then crash through it. To what extent we go below that will depend on factors I cannot predict at this time, but we have never seen such a lopsided COT report result in anything less than a 10 point US Dollar Index drop, so I believe this next drop will take us to new all-time lows.

This next downleg in the US Dollar should correspond with gold taking out the $1,224 high from December, silver taking out the $21 high from 2008, the HUI taking out its high from 2008, and most junior miners still stuck in the mud at least approaching their 2007-2008 highs.

This may not start tomorrow; indeed, in the past these extreme readings in US Commercial US Dollar shorts have lasted up to 2-3 months before being resolved in their favor. However, unless we want to believe the four most dangerous words in investing -- "this time it's different," -- we know how this will be resolved: the dollar will plunge.

This is coming soon. The next several weeks may be our last time to load up on anything related to precious metals at levels below all-time highs.

Hysteria