4 Absolutely Spectacular Gold Charts & Commentary

With oil surging and gold and silver rebounding, today top Citi analyst Tom Fitzpatrick sent King World News four incredible charts and commentary covering the gold market.  Fitzpatrick takes KWN readers through a fantastic look at the gold market as only he can, and KWN readers around the world will enjoy this extraordinary piece.

Here is Fitzpatrick’s piece along with 4 tremendous charts:  “(Below is an article covering gold from the) New York Times, 29 August 1976 (3 days after the corrective low had been posted in 1975-1976 before Gold started a 3 year rally into late 1979/early 1980):

 

“Two years ago gold bugs ran wild as the price of gold rose nearly six times.  But since cresting two years ago it has steadily declined, almost by half, putting the gold bugs in flight.  The most recent advisory from a leading Wall Street firm suggests that the price will continue to drift downward, and may ultimately settle 40% below current levels.
The rout says a lot about consumer confidence in the worldwide recovery.  The sharply reduced rates of inflation combined with resurgence of other, more economically productive investments, such as stocks, real estate, and bank savings have combined to eliminate gold‘s allure.
Although the American economy has reduced its rapid rate of recovery, it is still on a firm expansionary course.  The fear that dominated two years ago has largely vanished, replaced by a recovery that has turned the gold speculators’ dreams into a nightmare.”

The above note is probably a close representation of consensus market view at the moment.

We are biased to believe that the low in this correction may have been posted for Gold.  However it is early days and we need to see some more positive price action to support this view.

–  Crude has consolidated but still looks bullish overall

Between 1973 and 1974 the DJIA fell 45%.  As the Equity market then recovered Gold went into a corrective phase within 3 months that saw it fall 445 as the Equity market rallied.

This time around gold has in fact been much more resilient.

–  It did not peak until Sept 2011 (2 1⁄2 years after the Equity market bottomed out).

–  It has so far corrected 39% with an Equity market that has rallied 140% off the March 2009 low (DJIA).  In 1975-1976 it corrected 44% as the equity market rallied 76%.

“In 1976 the Gold correction ended in August and the Equity market began a deep correction in September (27% over 18 months).  During that period Gold rallied by about 78% and over the 1976-1980 period it multiplied in value by a factor of 8 from just over $100 to over $800.  The final part of that rally saw Gold rise from about $470 to $850 over about 4 weeks on the back of the USSR invasion of Afghanistan.  Even without that move it still multiplied by about 4.5 times in just over 3 years.

So what are we looking at to increase the likelihood of the low being in?

In addition, daily momentum is turning up from more oversold levels than those seen before the $270 bounce in 2012.  On a daily chart this is the most oversold we have Been since the turn higher in Gold in 2001.

It has become very stretched to the 55-and-200-day moving averages which now have a big gap between them.

An important thing to note is that Gold broke its support level the same week as the S&P broke above its 2007 high.  As long as the equity market stays resilient (As we saw in 1975-1976) it may be a drag on Gold’s ability to rally substantially.  In the 1980-2000 period when financial assets were aggressively rallying, Gold took a back seat.  We may need the market to be more concerned about the financial/economic backdrop before Gold can get any real traction again.

Source: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/7/3_4_Absolutely_Spectacular_Gold_Charts_%26_Commentary.html

As Gold & Silver Plunge Here Are Two Remarkable Charts

With gold and silver plunging, top Citi analyst Tom Fitzpatrick spoke with King World News about what to expect next, and also sent KWN 2 remarkable charts. Gold has now reached Fitzpatrick’s price objective in the mid-$1,200s, which he called for after gold pierced the key $1,520 area to the downside. What Fitzpatrick had to say about gold and silver will surprise KWN readers, along with the two powerful charts he sent.

Eric King: “Tom, remarkably you called the rally high on gold at $1,791 in October of 2012, you then turned bearish on gold and it proceed to come down significantly in price. After gold recently breached the key $1,520 area you called for a target around the mid-$1,200s, and once again, almost like a magnet, gold has made its way to your target zone. What are your thoughts here Tom?”

Fitzpatrick: “Yes, it looks as though this correction may be nearing the end now that the objective we had been targeting has essentially been satisfied. It’s possible that gold may trade a bit lower because of momentum, but certainly we have now achieved the target I gave to you when we broke the double-top on gold.

This also gave us a high-to-low down-move on gold of approximately 34%….

“We found this interesting because it was virtually identical to the high-to-low down-move that we saw in gold in 2008 (also 34%). While we certainly haven’t seen anything yet to say we are about to head up dramatically, we believe that we may be bottoming here in gold.

We’ve also had a significant move in silver which is virtually identical to what we saw in 2008. The down-move in silver is now at roughly 60%, and, again, that is what the silver market experienced during the 2008 meltdown. This makes us reasonably comfortable that both gold and silver are nearing the end of this corrective phase since they have followed the same path as the 2008 corrections. We are now looking for signs that this is a bottom, despite the weakness, and that we may turn from here.”

Eric King: “As I mentioned earlier, you nailed the top of the counter-trend rally in gold near the $1,800 level in late 2012, after calling the rally off the lows in the $1,500s. Now you have made another nice call with the plunge we have seen here in gold. How did you know we would see another round of weakness in gold?”

Fitzpatrick: “Better to be lucky than brilliant any day of the week. At the end of the day, we originally thought the $1,520 level would hold on gold. But once we broke that support level, it set up a very clear target in the mid $1,200s on gold for us.

Now that we’ve essentially achieved that target, our feeling has always been that a healthy trend gets healthy corrections. This is yet another healthy correction like we saw in 2008. The interesting thing is because of where we’ve come from, if we were to now follow, over the next three years, the move after we put in that 2008 low in gold in terms of magnitude, it actually suggests something in the region of $3,400 to $3,500 for gold (see chart below).

As you know, in our bigger picture that has always been our long-term target in terms of where gold may go. So we haven’t deviated from that way of thinking. If anything this just solidifies our view that a host of markets are following the 1966 to 1982 pattern, which means this cycle will ultimately culminate around 2016. So what’s happening here now is actually pushing us into a target for gold that fits nicely with our big picture view of a host of key markets.”

Source: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/6/26_As_Gold_%26_Silver_Plunge_Here_Are_Two_Remarkable_Charts.html

Gold To Advance A Stunning $2,000+ From Current Levels

Top Citi analyst Tom Fitzpatrick’s team sent King World News three extraordinary gold charts illustrating why gold is headed for a massive $2,000+ gain from current levels. KWN is pleased to share this information with with our global readers. Below is what top Citi analyst Fitzpatrick’s team had to say along with three very powerful charts.

Fitzpatrick’s Team: “On a medium-to-long-term basis we remain very bullish on Gold. However, it remains too early to call this correction lower as over, and we still believe that a lower low close to $1,260 can be seen. If so, we suspect that will be a platform for a much higher move in the months and indeed years ahead. The Equity market may also be instrumental in this story.

That low (in gold) was hit at $682 in October 2008, and within 3 years Gold had rallied to $1,921. A similar fall and rally would see Gold at $1260 near-term and then above $3,500 by 2016. That $3,500 number resonates with us for a number of reasons. When Gold rallied in 1970-1980, it went from $35 to $850 (It multiplied over 24 times).

However, in looking at our long-term target and comparing it to this 1970’s period (Our favorite comparative period to today), we truncated our expectations (A 24 fold rally from the 1999-2001 lows of just over $250 would suggest over $6,000 for Gold)….

“Why did we reduce our expectations? While the reasons for Gold going up are (in our view) as strong if not stronger than that period (hard currency), the final move in that trend was “event driven.” On December 27, 1979 the Soviet Union invaded Afghanistan and the Gold price surged from the pre-Christmas level of $473 to a peak of $850 by January 21, 1980.

If you exclude that move, then Gold had multiplied by a factor of about 13.5 from the start of the uptrend at $35. A 13.5 fold multiplying of Gold from the $254 low in 2001 gives us a price around $3,430 (Very similar to what we would see if Gold first went to $1,260, in a move like 2008, and then saw a move like 2008-2011).

Within this (1970s) bull market, Gold had a severe correction in 1975-1976 as the Equity market recovered back towards the 1973-1974 pre-crash peak. This time we have managed to overcome the 2007 peak but it has taken twice as long and has needed zero interest rates, multiple QEs and trillion $ deficits. Is that a better or worse performance than the 70’s????

Source: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/5/22_Gold_To_Advance_A_Stunning_$2,000+_From_Current_Levels.html