Here is what top Citi analyst Fitzpatrick had to say, along with powerful charts:  “We remain unequivocally bullish on gold.  We are of the view that the present price action that we’ve been seeing is very reminiscent of what we saw going into 2007.  So over the course of 2011/2012, we really believe all we’ve been doing is consolidating following an impulsive up-move.

This consolidation is similar to what we saw in 2006/2007, after which gold broke out and saw a significant push higher.  We think we’re on very much the same path at the moment.

Assuming this is the correct diagnosis, we are not that far from the time frame where we would expect to see the upward momentum develop and the breakout in gold take place.  But we do need to see some of the important levels on the charts we provided taken out on the upside in order to trigger the much higher upside targets we’ve been focused on for the past six to nine months.

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“As you can see from the daily chart (below), gold went almost precisely to our previous $1,791 target.  Also, looking at the daily chart you have the converged highs and the 55 day moving average at $1,695.


More impressively is what we are seeing on the weekly chart (see below).  We had a sharp down-week, followed by three weeks where we chopped around.  We may be following that, depending on how we finish the week, with a relatively sharp up-week. 

This really looks like a turning point.  If you go back to where upward momentum started the last time, which was that move that took us from the $1,500s into the high $1700s beginning around the July/August period, just before that we got that strong up-week in July.  We then had a couple of similar sideways weeks of going nowhere, and then gold saw the impulsive up-week and away it went.

Our sense would be if we get a weekly close above $1,695, there is a good chance that would be the start of this move.  We would expect that to take gold to the next resistance around $1,755.  But if gold breaks that level we are really in the ball game because we would then have to look at the $1,764 to $1,791 zone.

That $1,764 to $1,791 area is still the major breakout we are looking for.  This would then open up the gold market to an initial target of $2,055.  This would also open the way for gold to move to our $2,400 target (a staggering $600+ move).  This has been a very constructive period of sideways consolidation in gold.  The longer the sideways move, that sets up the dynamic which gives gold the momentum in terms of our topside targets.

So when we go back to the period we think this sideways trading reflects, you can see from the charts above that gold peaked in May of 2006, but you would identify the breakout in gold as September of 2007.  So you are talking about a 16 month duration.

If you look at where we are now, we had a peak effectively in September of 2011.  So, 16 months later, amazingly enough, at least for the moment, it takes you to January of 2013.  The bottom line is our time frame dynamics on this are fitting very closely to the point just before we started to see the next surge upwards in 2007 into 2008 (where gold saw a roughly 42% gain).  In that instance, KWN readers have to remember the sharp up-move only took 7 months from that breakout.”

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The interviews with James Turk, Bill Fleckenstein, John Hathaway, Egon von Greyerz, Ben Davies, Kevin Bambrough and Nigel Farage are available now.  Also, be sure to listen to the other recent KWN interviews which include Eric Sprott, Art Cashin, John Mauldin, John Embry and Andrew Maguire by CLICKING HERE.

Eric King

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© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast,

rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

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