Gold & Silver Continue To Climb “The Stairway To Hell”
Today top Citi analyst Tom Fitzpatrick sent King World News ten absolutely fantastic charts showing that gold and silver continue to climb what Fitzpatrick calls “The Stairway to Hell.” Fitzpatrick also indicated that both markets are set to have massive price surges from current levels. You are about to read one of the greatest reports on exactly where gold and silver are at this point in their bull markets, and where they are headed.
- After a rally where Gold increased seven-fold, it saw a 39% correction over 23 months (2011-13), finally stopping 14% below the 55-month moving average. Will we look back at this point as the bottom?
Is this really a deep correction rather than the end of Gold’s long term rally? – What would we need to see to suggest the correction lower is over? (On a side note, it is worth pointing out another similarity related to the Equity market for that time period:)
The bigger picture dynamics for a higher Gold price in the coming years has not changed (see Gold and the US debt limit chart below).
The
relationship is clear. A chart using the asset side of the balance
sheet for the Fed, ECB or, more recently, the Bank of Japan would look
similar.
Source
Today top Citi analyst Tom Fitzpatrick sent King World News ten absolutely fantastic charts showing that gold and silver continue to climb what Fitzpatrick calls “The Stairway to Hell.” Fitzpatrick also indicated that both markets are set to have massive price surges from current levels. You are about to read one of the greatest reports on exactly where gold and silver are at this point in their bull markets, and where they are headed.
Here is Fitzpatrick’s outstanding gold and silver commentary along with 10 extraordinary charts: “While
calling a bottom in anything is always a danger, it certainly appears
to us that Gold is finally finding a platform off of which the next leg
higher may have already begun. The long term structural dynamics which
suggest a Gold price closer to $3500 by 2016 remain firmly in place and
we do not expect them to change anytime soon.
Before
feeling that Gold has in fact bottomed, though, we would like to see a
(weekly) close through near-term resistance around $1321-$1338, and
beyond (that level) medium-term resistance around $1522-$1532. Such
closes in our view would confirm the next leg higher in Gold has begun.
Should this in fact be the turn in Gold, it is likely Silver will actually outperform as it has done in the past.
We have
been of the bias that the correction in Gold this year was just that – a
deep correction – rather than an end to the long-term rally. As such,
determining when the correction is actually over is paramount as we
continue to expect Gold to move towards our long-term target of
$3400-$3500 by 2016 (more on this later). While calling a bottom in
anything is always a danger, it certainly appears to us that Gold is
finally finding a platform off of which the next leg higher may have
already begun.
The
recent correction actually looks very similar to that which took place
in the middle of the phenomenal Gold rally in the 1970s. (As we have
previously expressed, the current economic and asset market backdrop
that we are going through is very reminiscent of that seen during the
1970s.):
- After
a rally where Gold increased five-fold, it saw a 44% correction over 17
months (1974-76), finally bottoming 14% below the 55-month moving
average.
- After a rally where Gold increased seven-fold, it saw a 39% correction over 23 months (2011-13), finally stopping 14% below the 55-month moving average. Will we look back at this point as the bottom?
As we think through that question, there are two things to consider:
Is this really a deep correction rather than the end of Gold’s long term rally? – What would we need to see to suggest the correction lower is over? (On a side note, it is worth pointing out another similarity related to the Equity market for that time period:)
When
Gold bottomed in August,1976, the Dow Jones Industrial Average rallied
6% over the next 4 weeks before putting in the multi-year high and
correcting over 20% in the flowing 1 1⁄2 years. Since Gold has hit its
recent low, the Dow Jones Industrial Average has rallied 7% over the
last 4 weeks and has put in a new all-time high. We will be keeping a
close eye to see if history once again repeats.
The bigger picture dynamics for a higher Gold price in the coming years has not changed (see Gold and the US debt limit chart below).
Source