In late February I wrote: “When I compare today with 2008, I see worrisome warning signals developing when I look at commodity and equity prices. In 2008, equity markets crumbled in a spectacular fashion in the face of comparable price pressures. Gold lost somewhere in the region of 30 percent of its value in less than half a year while the dollar staged a robust rally, which matches with much of what happened in 1973.”

Nevertheless, my expectations, specifically the dollar to rally as a safety haven, which, as we all know in the mean time, didn’t happen, but, believe me, isn’t off the table.

I don’t know whether yesterday's low in the dollar index at 72.70 marks the end of the decline, or there will be a "washout" fall to create a low. But, at least in my opinion, investors could do well to watch out, and now with both gold and silver turning down and with “dollar optimism” virtually non-existent, the conditions are more than favorable for a dollar rally of importance. We’ll see what happens.

Now, I must say that the medium term appears once again somewhat similar to 2008 and a rather dark picture is building up. Of course, it still has to be confirmed. Remember, in early 2008, we saw the grains category reversing well before oil peaked in July of that year.

By the time that the oil price, and, more or less a week later, the dollar changed direction course in mid July 2008 the price of wheat was down about 40 percent.

Yes, what happened in the first half of 2008 was important because it signaled a dramatic abatement in global inflationary pressures. As a result of that, investors turned away from the currencies with the most hawkish central banks to, instead, favoring those with the most growth oriented monetary policy stance. In clear English that meant a “retreat from risk” with the dollar the temporary but nevertheless a natural winner over the next nine months. Please don’t misunderstand me; the dollar’s long-term trend remains down.

No doubt, back in that first half of 2008 we saw rising concerns about the outlook for growth then and these concerns could quickly come back now. In June 2008, we saw the start of a precipitous slide in shipping costs as reflected the Baltic Dry Index that fell by 93 percent over the next six months, while the Shanghai Composite Index continued its slide that had started in October of 2007. Today, we have the Baltic Dry Index that has fallen from over 4,000 in May 2010 to around 1,300 today, or a drop of about 70 percent.

Why does it seem that once again there are some yellow blinking lights? No, history doesn’t repeat itself but similar circumstances to 2008, as we have now developing, often provide distinct echoes of past events. To me, it becomes clearer by the day that many indicators have started send warning signals, albeit not all at the same strength, in recent weeks.

Today, and perhaps the most obvious sign of this has been the dramatic reversal seen in silver prices this week that having hit a high of $49.51 last Thursday, this week, at the moment of this writing, it Spot Silver is down at $37.82 or a drop of over 20 percent. Certainly, we don’t have that 50 percent price decline we had over the course of four days in January 1980 that also followed, just like now, the introduction of heavy restrictions to curb the purchase of commodities on margin but that then were imposed to counteract the cornering of the market by the Hunt Brothers. I would also like to add here that The Wall Street Journal has commented that a number of major investors have turned heavy sellers after having built long positions over the past two years. Although rather more modest than silver, gold is also experiencing some kind of a reversal so far this week.

For now at least, I put the dollar back, notwithstanding still lower prices can’t be excluded, on my list along with the Swiss franc that remains on my list. The warnings coming from outside the currency markets are in place.

Now I’m waiting which currency pairs will give us the next set of signals.