A fourth year of decline in 2005 would give the currency only its second four-year fall since 1973, based on the broad dollar index.

The trade weighted dollar index was introduced in 1998 for two primary reasons.

The confusion about the dollar decline stems from the different methods of constructing a dollar index.

When the indexes are corrected for inflation, it becomes evident that the inclusion of developing countries in the dollar index until recently made little difference.

However, in the last year or two the movement of the two real dollar indexes has begun to diverge.

Indeed, an additional decline of about 15 percent in the broad dollar index is needed in 1987.

Actually the dollar is on a tear at the moment, the dollar index soaring from under 73 in May 2011 to over 81 today:

He expects that it will fall 3 or 4 percent more by the end of the year, based on the Federal Reserve's broad dollar index.

In fact, the chart understates the fall a bit, because it doesn't include the most recent figures, which show the dollar index dropping under seventy.

The dollar index has fallen, which has made gold more expensive in dollar terms.