The Dollar Index, currently trading for around 95, is poised for a breakout that seems likely to hit the century mark within the next 12-24 months if not sooner. This is going to put added pressure on foreign earnings of U.S. multinationals as well as increasing the already ponderous weight on bullion. My long-term forecast for the Dollar Index calls for a test of highs near 120 that were made more than 17 years ago. If so, the implication is that February’s 88.25 low marked the beginning of a monster rally like the one that took DXY from 79 to 100 in 2014-15.  There’s no way the dollar could reach 120 in a normal economy. The forecast implies that at some point, the U.S. will experience a catastrophic deflation that makes dollars scarce. A wave of bankruptcies could cause this, and the most logical place for it to start would be in the collapse of a public-employee pension system that is already a sinkhole waiting to happen. This is a liability that cannot be monetized — at least not without touching off hyperinflation. For reasons that I have written about for more than a decade, it is all but certain to occur. For further discussion of this, click here to access an interview I did on Wednesday with Cory Fleck of Korelin Economics Report and National Investors‘ Chris Temple. _______ UPDATE (August 21, 5:25 p.m.): The dollar has gotten sacked recently, but it would trigger a theoretical ‘mechanical’ buy signal if the weakness continues to x=94.64, shown as a green line in this chart.  A 93.18 stop-loss would obtain. _______ UPDATE (August 27, 9:33 p.m.): Gold bulls beware: DXY has tripped the ‘mechanical’ but signal flagged in my update from a week ago. _______ UPDATE (Sep 15):  The dollar rallied then relapsed after tripping a mechanical buy signal in late August. As this chart makes clear, however, the signal is still valid, subject to a stop-loss at 93.18. The relapse suggests there is more weakness than we should prefer in a ‘mechanical’ trade, but the purpose of this type of trade is to free us from having to make such judgments._______ UPDATE (Sep 20, 10:42 p.m.): The Dollar Index tripped an appealing buy signal on August 28 that is now close to being negated by five weeks of brutal selling. ‘Mechanical’ trades are designed to handle such stress, but this may be a somewhat unusual exception. Gold has mildly benefited from the dollar’s weakness, but not enough that we should be impressed._______ UPDATE (Sep 30): DXY has rallied from the brink of trouble, but this has so far generated a bearish head-and-shoulders pattern on the daily chart that is hard to ignore. A close above the red line (96.09) would mitigate this, but we should otherwise treat this rally with caution.______ UPDATE (Oct 3, 8:03 p.m.): The dollar has popped almost precisely to the red line (96.08) this evening, but it remains to be seen whether this crystal-clear Hidden Pivot resistance stops the rally or eventually becomes support. Stay tuned.