Short answer ... I don't know,but nothing is correlated 100: 1:1, so we just have to follow the charts of exactly what we are after.

Long answer ...

1st off, me/myself, I wouldn't call Dodger's article ultra-bearish" - I know what you mean by that, and it's not wrong - just I'd call it "realistic."

Gold and the US$ are not always correlated 1:1 (see '05), but they usually are, yes.

The US$, the Euro, they Yen, and Monopoly money: all 4 are Fiat currencies - that is, paper which is not backed by gold.

The credit crisis (housing mortgages, but also commercial paper, student loans, credit cards, etc. etc. per Dodgers' article) are to many (incl. me) a sign of a recession, and possibly a depression.  But not necessarily inflation.  Recession/expansion (economy) are different from deflation/inflation (money supply).

Inflation is when the growth of the money supply increases faster than the real GDP.  GDP's growth is about the same as the growth of the gold supply, so that's why gold bugs remind us that since the beginning of human time, for many reasons, gold has been the only real money (and silver).  Currencies are just paper I.O.U's/promises of what is supposed to be in the vaults of central banks WW.  A US$20 bill is worth $20 because there is supposed to be $20 of gold in Fort Knox.  But there ain't.  So what's the paper worth?  And if I print 1,000,000,000 more of them, now what are they worth?  Monopoly money.

So again back to your q, I myself see recession due to the credit crisis.  But you asked about the affect of the credit crisis on gold.  The credit crisis (recession) and gold (inflation) are related in one 1 key way (but maybe others as well):  the Fed prints money (in the form of loans) to bail out failing banks, which is inflationary.  If the banks go bust, the Fed is left holding the bag on their balance sheet.  This is the reason for the recent focus on how much the Fed insures deposits (FDIC up to $100K/acct).

But (and this is a minor point, not well known, but is becoming increasingly well known) they jury is still out as to whether the economy will contract (housing down, stocks/IRA's down) faster or slower than the monetary expansion (inflation) caused by the Fed (all Central Banks - not just the US) pumping in money to keep the banks afloat (liquidity).  If it contracts faster, then we will not have inflation.  A few gold bugs are now becoming aware of this idea.  But the majority of the gold bugs think that inflation will overwhelm credit contraction.

1 yr ago, I believed in hyper-inflation; last month, I believed in deflation (caused by credit contraction); this month I realize I don't have a clue, so I decided to just follow the charts, as I realize I'm not smart enough to know which will win out.  The charts never lie, so I'm just going to follow the trend.

Short term, Michael's right that the Euro is weakening relative to the US$ due to the high interest rate in EU.  The US at 2% can't lower much more, but Europe can lower 3% or better.  Their credit situation is the same (or some say worse) as the US.  Many like Marc Faber expect this US$ weakness to last 3-6 months, so that's why he told Bloomberg that he's out of commodities for now (though he didn't specifically say "gold" on the video).

In closing, fundamentally, all currencies are paper not backed by gold (even the Swiss Franc, unfortunately).  So that's a problem whether we have inflation or not.  And there are far more US$'s, Euro's, Yen, etc. on the planet than there is gold.  Also the $USD is in a long term downtrend, as Matt said, so until that changes, the trend is down. 

Maybe Matt can teach us about how to identify long term trends?  Does he look at weekly or monthly, for instance?

Net out, I'd trade XLF/SKF completely separately from DGP/DZZ.  And though I keep an eye on the $USD and the $XEU every day, same as for $WTIC, I also know that these are not 100% coorelated with DGP/GLD, just as XLF is not correlated with DGP, so I keep both eyes and my mouse finger focused on my target.

Hope this helps.

- Zaru