A strong U.S. recovery may send the bond market and the dollar spiraling into a tailspin, according to Axel Merk, chief investment officer at Merk Investments and a Moneynews contributor.

Oddly enough, the good news of a strengthening economy can be bad news for certain assets, Merk told CNBC.

That's because accelerating growth means governments will need to pay higher interest on their debt, which would be negative for both the dollar and bonds.

Editor’s Note: New Video Exposes a ‘Great Retirement Heist’

"Bonds are going to fall off the cliff because government deficits are going to be very difficult to sustain," he predicted. Under Merk's growth scenario, if central banks such as the Federal Reserve step in to try to tamp down yields, currencies will suffer.

"The biggest threat we are facing might be economic growth," Merk explained. "Every time we've had good economic indicators in the U.S. pop up, bonds have fallen pretty sharply."

According to Merk, the dollar's status as a reserve currency is weakening in any event.

"When crises have flared up in recent times, the euro has benefited more."

Merk told CNBC he is shifting his investments toward cash and out of the U.S. dollar.

At MarketWatch, columnist Mark Hulbert declared American investors have become "dangerously exuberant."

"Do you really believe the outlook for corporate earnings suddenly became much brighter just because [Larry] Summers is no longer in the running to succeed [Fed Chairman] Ben Bernanke?" Hulbert wrote. "If so, I have a bridge I want to sell you."

The dollar lost ground against some other major currencies Tuesday, Reuters reported, as investors girded for a Fed decision this week as to when – and how much – it will taper its massive bond purchases that have propped up financial markets.

"Once the Fed will announce the first reduction of its quantitative easing program, the debate will quickly shift to the timing of the central bank's first interest rate hike, and this should put pressure on short-term U.S. Treasurys and boost the dollar," predicted Roland Kaloyan, global asset allocation strategist at Societe Generale CIB.

Editor’s Note: New Video Exposes a ‘Great Retirement Heist’