Even $1 Trillion Can't Save the Euro, But Gold Is No Haven, Prechter Says

It looks like it’ll take more than a trillion dollars to bring buyers back to the stock market.  European markets continue to fall Friday despite Germany’s approval of the massive euro zone bailout.  The major European indexes are each falling 2% in intraday trading.

The euro, however, is getting a slight boost.  It's off its recent four-year lows and is now trading for more than $1.25.  Still, sentiment remains negative on the future of the euro.

Usually a contrarian, Robert Prechter of Elliott Wave International isn’t so inclined when it comes to the euro.  Near term, the euro might rebound, but he says it’s entirely possible the European Union will break up in the next 10 years.

Of course, the euro’s recent loss has been the dollar’s gain. Prechter predicted a strong move in the dollar on Tech Ticker over a year ago.  “The dollar appeared to be on the verge of disintegrating last November,” he tells Aaron in the accompanying clip.  “I thought that was one of the best contrary opportunities I’ve ever seen.'

Prechter is less enthusiastic now that everyone is piling into the dollar.  “The dollar is no longer a bargain,” he says.  “I don’t think the bull market is over but I think the best of it for the time being is over.”

Meanwhile, the most popular alternative to currencies, gold, isn’t such a good buy either, according to the veteran market watcher. “It’s losing upside momentum at the same time more people are getting more enamored with it,” he notes. 

Contrary to popular belief, “gold tends to rise when the economy is expanding not when it’s in recession,” according to Prechter’s research.  And, as we’ll discuss in more detail in another clip, Prechter thinks deflation and economic depression are a foregone conclusion.

Earlier: "We Are On Schedule for a Very, Very Long Bear Market," Prechter Says