We watched the whole drill at a safe distance from the mayhem it caused, since the only trade with which we had deigned to intercept the trend - a tightly stopped short in Comex May silver - had its moment of truth, or rather of abstention - when silver blew past our pivot at an hour when most of us who live in the Western Hemisphere were sawing logs.

And what of the 308,000 jobs that allegedly were added to the domestic payroll last month? Should it matter that neither you nor I know a single new hiree? Of course not. Everyone understands by now that such statistics are just make-believe, just as we understand, from evidence that virtually engulfs each of us every day, that consumer inflation is not nearly so tame as the government's statisticians and spinmeisters would have us believe. In case you hadn't noticed, such staples as milk, eggs and meat seem to be enjoying a faddish and unusually strong revival that might account in part for their upwardly spiraling prices. But I don't recall anything in the Atkins diet that should have helped to push then price of crude toward $40 a barrel.

Anyway, I've explained here many times before why we shouldn't get too worked up about whether the impending statistic-of-the-week will be bullish or bearish for the stock market. The spasmodic reaction of some financial markets to yesterday's employment news was neither a bullish nor bearish indicator, but rather a frenzied and ultimately futile attempt in the trading pits of the world's bourses to guess exactly how, in the micro-moment, all the other headless chickens might react. As Yogi Berra might have observed, all of those chickens seemed not have their heads screwed on tight.

Powerful as Friday's reactive rally in the dollar may have seemed, the June dollar futures contract, currently at 88.85, would need to surpass the 89.90 peak made on March 12 to qualify as -- potentially -- the real thing. That, presumably, would lead to a staging period just above 91.17 (an important hidden pivot) to muster strength for a much larger rally that very few seem to expect. Nor do I; and it is for that very reason that I am about to switch over to instrument controls, so to speak: because my extreme bearishness on the dollar no longer accords with the undeniably bullish evidence that has been accruing for the last six weeks on its daily and weekly charts. Indeed, if someone were to put an unlabeled June dollar chart in front of me and ask, "What do you think of this gold stock?" I'd say it looks pretty enticing. More specifically, the June futures appear capable of moving straightaway to at least 91.17 -- a 3.5 percent rally which, if it pans out, would send euro and precious metals bulls scrambling for cover.

Complicating the picture is the 30-year bond's swan dive on Friday. On the face of it, yields rose commensurately because of a payroll report suggesting that the U.S economy is returning to life. However, I must admit that this interpretation is very nearly inconceivable to me, if for no other reason than that practically every friend I have who owns or manages a business is struggling just to survive, never mind return to vigor.

So if interest rates have not jumped because the economy is about to strengthen, what then? The answer seems obvious: Yields are rising, finally, in anticipation of something that few dare even think about - namely, the onset of a precipitous phase of the secular dollar-bear begun in August. If so, then we should expect the greenback's current rally to conclude with a major top no higher than 91.17, basis the June futures. If not, then we can only infer that a world already drowning in easy credit is quite literally about to go for broke.

Putting our charts aside so that we might ponder the dollar's fate from a fundamental perspective, relative to gold the buck would seem to have nowhere to go but down. This is notwithstanding the heroic support it continues to receive from Japan and China, as well as from the growing number of institutional investors around the world who perceive the statistical U.S. economic recovery as real. A major concern for Japan and China is maintaining and/or growing their export market-share, and the most effective way to do this, at least over the near-term, is by keeping their respective currencies cheap. They can continue this game for a while, though not indefinitely; for the longer they resist market forces that would naturally push their respective currencies higher, the greater the price they eventually will pay. The cost of keeping their factories humming now will ultimately be paid via drastic markdowns in the value of the dollar-denominated assets they presently hold.

Less obvious but no less likely is the impending fall of the euro relative to gold. The euro has been stomping the dollar since last summer -- but then, so has nearly every other currency except the yen, the yuan and Yap Island stone money. In fact, the euro is winning in the global marketplace only because it is perceived as "less worthless" than the dollar. I can think of three reasons right off the bat why this is so: 1) the euro has not had to endure a verbal assault such as Fed hatchet-man Ben Bernanke has heaped on the dollar; 2) Europeans do not use credit cards to borrow, and 3) neither do they consider price appreciation in their homes a form of wealth, let alone collateral.

For the time being, the euro will continue to benefit from hedging on a global scale because of perceptions that the dollar is on a ruinous path. Although gold, too, has benefited from this mentality, it is still years from becoming the asset of choice for mainstream investors. When there are 1,000 mutual funds pushing this change, and when Joe Sixpack understands the concept of mineralization levels per hectare, we'll know the precious metals sector has reached a top. But for now, rest assured, the smart money is quietly diversifying into precious metals, euros, energy and resource stocks, and it will continue to do so until some unforeseeable, exogenous shock triggers the long-awaited run on the dollar.

Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers' initials will be used unless express written permission has been granted to the contrary. All Contents © 2004, Rick Ackerman. All Rights Reserved. www.rickackerman.com