(Comments on the OP below)
Equalizer, if the ECB buys dollars, it’ll do so to support the dollar, not the euro. European exporters are certainly not happy with the $1.56 exchange rate, and there’s concern about the employment situation across the Atlantic.

Interesting replies from many posters on this thread. The main critique to my OP argument is that as long as nominal incomes don’t rise, housing prices still have a lot to drop (in my example house, if it dropped from $810K at the peak to $710 now, it may drop another $100 or $150K before this is over), and therefore, the effect of oil/silver/gold/euro, etc. is limited.

I agree that prices of gold, oil, etc., are very volatile, that’s why I converted the house price to both of them plus the euro (which is not so volatile). That all three measures told the same story was very informative to me.

I still think that unless the dollar prices of gold, oil, and the Euro fall rapidly this year (which I think it’s unlikely), near-term future inflation in the US will accelerate. Once that happens, nominal incomes will move upwards. High inflation means that $1 has a fraction of its value in, say, 2001. If the family earning $65K in 2001 earns $112K by the end of 2008, mostly because of inflation, then that $700K house price won’t look as ridiculously inflated as it did in 2005 dollars.

In other words, that $700K price won’t have to drop as much to correct the housing imbalance because the Fed has successfully inflated its way out this problem. We were hoping on this blog that the housing price/rent and price/income ratios would be restored by drops in house prices only (the numerator). Unfortunately, a big chunk of the correction will come from inflation: increases in rent and income (the denominator).