It’s no secret that Citi’s top chartist Tom
Fitzpatrick is bullish on Gold. Earlier this week he reiterated his call that
the yellow metal would head to $3,500 in a few years.
Fitzpatrick offered more color in some
follow-up commentary published in King World News.
He employs his analogy of the “stairway to hell”
which tracks the debt ceiling.
The recent “squeeze in Gold” has sent it
significantly below this “stairway to hell” chart (Debt limit) which has
continued higher. As we said earlier, we do not believe that this fall in
Gold will be sustainable and expect new highs in the trend eventually. As
we also said, we have retained a long-term target of about $3,500 for some time
on this Gold price based on a comparison of this period and that seen in the
1970’s….
“As we headed towards the last Presidential
election there was a considered view in the markets that by the end of
President Obama’s 2nd term the debt limit could be as high as $22
trillion. Then we got the sequester, a more rosy economic outlook,
tapering talk and all this has been forgotten. For how long?
The market dynamics above combined with the change
of leadership at the Fed may well be “resurrecting that thought.” If so,
our 2nd favorite Gold chart comes into play.
Fitzpatrick thinks that $22 trillion debt limit
will come within three years, which is when we could see $3,500 gold.
“As we continue to spend more than we earn and
shift that ahead.”liability to the next generation, Gold has shown itself to be
a very effective hedge against that policy,” he said.
“We firmly believe that the Gold correction has
“run its course” and that much higher levels will be seen in the years
ahead.
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