Beware the Dollar Rally?

The next flight to dollar safety may very well be faster and more violent than the first.

It doesn’t make any sense — unless the buyers ‘know’ something that the rest of the investing public doesn’t. If we are on the verge of another collapse, the dollar, as bad a shape as it’s in and crazy as it seems, will be the beneficiary.

Here’s why: When the dollar began its meteoric rise late in the summer of 2008, nearly everyone believed it was a countertrend. But as it grew in both intensity and volatility, and as it became clear there were mounting troubles coming to the surface, then the real rush began. Folks were flocking to the dollar. But it was the Johnny-come-latelies who really accelerated the move.

This time around, nobody wants to be the Johnny-come-lately. Standing with their fingers on the button, folks are trying to squeeze every last bit of profit from the stock rebound, but I think most of them know that it can’t last. Fundamentally, nothing has improved or changed. Actually, many things are much worse. And the buyers of PowerShares know it.