Red-Hot Resources

"Luck is not chance, it’s toil; fortune’s expensive smile is earned.”

Friday, December 22, 2006

Bullish Outlook for Gold?

Jack Crooks is one of the best currency traders on the planet, and I don't just say that because he's my friend, or because his son, John Ross, works with me on Red-Hot Resources (the trading service, not the blog). Jack approaches the currency markets with emotionless, even merciless logic. You never call Jack up for comfort. You call him up for the truth.

So I was really interested by a chart Jack sent me. Jack is currently long the eur/usd, that is he expects the euro to rise versus the US dollar. So, he's probably heartened by the fact that that the U.S. core PCE price index -- an inflation gauge the Fed watches closely -- was unchanged in November from October, versus economists' forecasts for a rise of 0.2%. Indeed, that has sent the greenback lower this morning.

But even before that news came out. Jack sent me a chart. Here it is...

Using Elliot Wave analysis, Jack is forecasting a potentially strong rally in the euro. Naturally, the US dollar would be on the losing end of that move. And as the US dollar goes down, gold usually goes up.
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