Citi Bullish On Gold & Silver "Continue To Expect Further Gains"

Tyler Durden's picture

The technical set up on Gold looks increasingly bullish and Citi's FX Technicals group continues to expect further gains. The picture on Silver also looks constructive and Citi notes, over time it may well outperform Gold. A weekly close above the $1,434, if seen, would suggest extended gains towards $1,685 and beyond. As they warn (gold bears), we may have “seen this movie” before... as late 70s deja-vu happens all over again.

Via Citi FX Technicals,

Gold: Daily chart looking very constructive

Following the hold of support just above $1,180 this chart has gone from strength to strength with a turn higher that took us back above both the 55 day moving average and the downward sloping trend line decisively.

It is now approaching the 200 day moving average which stands at $1,305.50. A close above here would further support our view of a move to test major resistance at $1,434 with interim resistance around the October 2013 high at $1,362

The $1,434 level is a potential neckline for a double bottom formation off the $1,180.50-1,182.50 level. A weekly close above here, if seen, would suggest extended gains towards $1,685+

As the chart below shows, we may have “seen this movie” before

Gold: Weekly chart is setting up like 2012

Between December 2011 and May 2012 we saw Gold form a double bottom and post a bullish weekly reversal 2 weeks after the 2nd low was posted. That ultimately led to a test of the double bottom neckline by October 2012 albeit that it was not able to break above that resistance on a weekly close basis ($1,791)

This time around we have also seen a double bottom (Between June and Dec 2013) with a bullish weekly reversal posted on the same week that the 2nd low was put in.

We fully expect that Gold has the potential to once again test the neckline of a double bottom which stands at $1,434)

A weekly close above here, if seen, would suggest (as noted above) extended gains towards $1,685+

Gold : Monthly chart still looks similar to the 1970’s

In 1974-1976 as the equity market surged Gold corrected sharply in a move that took it 14% below the 55 month moving average.

In 2011-2013 as the equity market surged Gold corrected sharply in a move that took it 14% below the 55 month moving average.

In fact the correction in 1974-1976 was greater in real terms than that seen today (44% versus 29%)

Between 1976 and early 1980 Gold surged higher again in an even stronger uptrend than that seen from 1969-1974

If you ignore the surge seen in Dec 1979-Jan 1980 (prompted by the U.S.S.R. invasion of Afghanistan) both impulsive moves (1969-1974 and 1976-1980) saw Gold multiply by a factor of around 5 times. The rally from 2001 to 2011 (Much longer in time) saw gold multiply by a factor of over 7 times.

A trend from the 2001 low of similar percentage (excluding the USSR invasion pop) as seen in 1969-1980 would suggest we could ultimately see a level of $3,500…maybe as early as late 2016/early 2017.

Why is the move much slower this time? Prior to the sharp move from 1970-1980 Gold was suppressed /controlled in a $15 range for the prior 50 years ($20-$35). When it was allowed to float ‘freely” the pressure “cooker effect” kicked in to compensate for that period. For more than 30 years leading into 2001 Gold has been relatively freely floating (Albeit with elements of Central Bank interference). As a consequence the “pressure cooker effect” to create really sharp moves over a very short timeframe was not in place this time. While this has still led to significant gains in the first leg higher it has been over a much longer time frame. In contrast the 2nd rally in 1976-1980 came after gold had already had its “pressure cooker break” and had been floating for about 6 years. This suggests that a renewed rally in Gold now could well be more similar in time frame to the 1976-1980 move.

Silver: daily chart setting up nicely.

Silver has also broken above the downward sloping trend line and the 55 day moving average and looks to be forming a shorter term double bottom. The neckline stands at $20.60 and a break would suggest a move towards $22 which would take it above the 200 day moving average at $21.07.

Further resistance is met at $23.09 (October 2013 high) and then the most important level is the longer term double bottom neckline at $25.10.

A weekly close above here, if seen, would suggest extended gains towards $31+

If both the Gold and Silver longer term double bottoms were completed and targets reached ($1,685 in Gold and $31 in Silver) that would suggest a Gold versus Silver ratio of about 54 compared to the present level of about 64 (So Silver to outperform Gold by about 50% - A move of about 45% in Silver versus 30% in Gold)

Silver: Weekly chart also setting up in a similar fashion to 2012

In 2012 Silver did rally strongly off its base but just fell short of the neckline around $37.50 before falling again.

A decisive break above the $20.60 level (Weekly close) should yield an acceleration towards the important $25.10 level

However, it is a weekly close above this level, if seen, that would suggest the much bigger move towards $31+

Silver: Monthly chart also shows big resistance in the $26-26.50 area

This is where the downward sloping trend line, the horizontal resistance and the 55 month moving average converge.

Regaining these levels on a monthly close basis would suggest a very constructive outlook and make that $31 area look very achievable.

Gold/Silver ratio daily chart: Set to turn lower?

The bounce in this ratio since August last year has so far peaked at the 76.4% pullback of the July-August fall.

Initial support is met between 61.70-62.60 (Rising trend line and 55/200 day moving averages.

More important support stands between 57.63 and 57.84 (Pivot off which the 76.4% pullback was posted and channel base). A close below here would suggest an acceleration of losses to the downside

Gold/Silver ratio weekly chart: Move to 200 week moving average a danger?

Further support could be seen at the 55 week moving average which stands at 60.62. In addition there is a decent gap to the 22 week moving average at 54.62 (Very similar to the level of 54 mentioned above if our extended targets for Gold and silver were achieved)

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geminiRX's picture

When banks get bullish, I get bearish. Thanks Citi....probably means we test 880-1000 on the bottom of the long range channel. If it does, it'll be the buy of a lifetime

BeanusCountus's picture

+1. I mean, they have been wrong on virtually everything. Thinking of protecting my holdings of miners and bullion soon.

National Blessing's picture

Deflation deflation deflation.  Silver and gold have no future.  Invest in cat food and ammo.  Blockheads.

BeanusCountus's picture

Not sure about the catfood. But gold and silver have no future? Disagree with that one. It will have a value that goes down in currency terms like everything else. But it will have value. Real value. Plus, in the attempt to prevent true deflation by the central banks, it just might be the best store of value of any asset. And the planners that be will not go quietly in the night.

Everyone should own some.

logicalman's picture

When the dollar is worthless, what will the 'price' of Au & Ag?

OC Sure's picture

Lol. Yes, when compared to the current fiat US dollar but what if it no longer remains fiat? Or, some other paper based on the gold standard becomes fungible with the "worthless" dollar? ...Of course, physical protects us against "ifs" and "buts."

GetZeeGold's picture

 

 

 

 

Blockheads

 

Keep in touch butthead.

X_mloclaM's picture

1/2mt silver delivery in HK only, back in 2010?

Http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/4/14_J...

a run on the fractional gold banks? cash settlement means price "would go to the moon"

 

Stuck on Zero's picture

Good for a fine custom fit suit.

 

snr-moment's picture

who cares what the dolllar is worth.  Gold and silver, 2000 years and counting.

i_call_you_my_base's picture

You stock up on cat food for your cats.

satoshi411's picture

High protein, long shelf-life,... very valuable, especially the canned type, that will be worth its weight in gold.

Well that is only in a mad-max like scenario, but who is going stick around for that?

*

Most likely the USA will just do same, put everybody on welfare, keep them on TV at 'home', and anybody that protests is sent to CAMP-FEMA, where you are 'black-bagged' and forgotten.

lasvegaspersona's picture

Nation B

Deflation is not possible with a fiat currency. No society will bear the pain of it for long. Even the Tea Party folks will call for easing if it gets too bad. Why suffer from deflation if you don't have to and you can spread the love (new dollars) to your friends....even if it kills the currency...which is feeling kinda sickly anyway.

superflex's picture

You can create all the accounts you want but your shitty blog remains the same.

Fuck you troll

OC Sure's picture

"I mean, they have been wrong on virtually everything."

It would be interesting and maybe telling to resurect their analysis from the 2011-2012 "double-bottom" that happened near the top. Were they calling for it to fail then or go hyberbolic?

A link to a track record would be value-added and most welcome to accompany the forecasting posts.

QE49er's picture

Yes, we here at ZeroHedge are that smart, ever heard of Plato, Aristotle, Socrates?.....They are Morons compared to us.

Still trying to figure out to be bullish or bearish on this news?  It's so simple. All we have to do is divine from what we know of Citi: Is Citi the sort of trading company that would put a bullish sentiment from these technicals or say the opposite? Now, a clever company would put a bullish call for gold because they would know that only great fools would buy on the news that they were given. We are not great fools, so we can clearly not choose to go bullish on gold. But they must have known we are not great fools, they would have counted on it, so we can clearly not choose to go bearish on gold. 

So do we know now what we can choose?  Not remotely, because banks are full of criminals, and criminals are used to having people not trust them, as they are not trusted by us, so we can clearly not choose to go bullish on gold.  And they must have suspected that we would have known of the Banks original intent so we can clearly not choose to go bearish.  Also, They are TBTF which means they are exceptionally strong so they could have kept quiet about it, trusting on their strength to save them so we can cleary not choose to go bullish on gold.  But, they also bested the 1929 & 2008 collapses, which means they must have studied, and in studying they must have learned that gold is money, so they would have kept the bullish sentiment as far away from anyone as possible so we can clearly not choose to go bearish on gold.

They have given everything away, we know what the answer is, and we choose...

tickhound's picture

Algo-Immunity? Inconceivable!

Mr Pink's picture

And there it is.....the kiss of death.

$18 silver here we come!

DoChenRollingBearing's picture

 

 

Same with gold?

Just buy anyway.  Keep buying (slowly OK, that's what I did) until you have enough.  What is "enough"?  However much you feel comfortable about based on your knowledge about gold and your own circumstances.  That is the first lesson of "FOFOA 101".

satoshi411's picture

The rule of thumb here in Asia seems to be 2-5 Ounces per family,

They do it in TAEL, but Ounces are easier.

SHTF people can just walk away and start over, How much money is that? I'm not sure in Western culture how long $5,000 would last anyone, but in Asia, that would be 3 years salary for most people I know.

*

So to help answer Chen's question, where GOLD is INSURANCE, and you need to have liquid wealth that can be moved on the RUN, it just depends on your BURN-RATE as to how much you need.

I don't think anybody thinks of GOLD as an investment, and certainly not as speculation, its just insurance, a family without 2-5 ounces of GOLD would be just fucking morons or losers.

*

Using the normal USA rule-of-thumb, working backwards, ...say 6 months budget, so say $15k, that's still 15 ounces, but sadly I'm sure most here $15k wouldn't last you a week let alone six months.

The long term was always 5% hold of GOLD in total assets, but given most ameriKKKan's have negative net worth, what the fuck does 5% mean anymore?

Say you got $500k real savings, ... then that's $25k, or about 20 ounces of gold, and you should be able to use that as 'insurance'.

*

Again its really all about burn-rate, and living in a place where you don't need that much money to live, and therefore you don't need that much GOLD INSURANCE.

 

BeanusCountus's picture

Feeling like im "overposting", and dont want to preach, but just want to say you are on my plane. My dad, may he RIP, told me long ago that you need enough "to get out, if you ever have to". And his profession? The managing partner of a stock brokerage firm. Told me: nothing is worth anything if it doesnt pay you something, unless it's gold. And you may need gold someday to get out of where you are and start over. So thats why i buy it, thats why I hold it.

fockewulf190's picture

I buy it because every fiat currency that ever existed always went to zero...and the dollar, sacked with hundreds of trillions in outright debt and future liabilities, is well on it´s way to joining it´s place in fiat history.  The Euro, the Yen, and many others, are all backed by nothing but staggering debt as well.  They will suffer the same fate.  There is only so much a nations tax base can bear before interest payments consume it all.  Not to mention the quadrillion in derivatives now in existance underlying the entire worldwide financial system.  Phyzz and other hard assets will provide fiscal morphine during the Great Reset, paper, in all it´s forms on the other hand, will not.  Make no mistake about it though, when this bitch blows, everyone on Earth will be in pain...and many will not survive.

BeanusCountus's picture

Now that.. qualifies as good advice in my book. Its an asset class. A real one. Personally, i think 25-100 ounces is about right.

philipat's picture

I am in general agreement with the sentiment, BUT Tom Fitzpatrick at Citi is one of the very few analysts who do a reasonable job of analysis. Technicals, however, probably don't mean a great deal in a market which has been so heavily manipulated, except to the extent that the manipulators do use technical levels to their advantage when mustering counter-attacks against a rising trend.

EDIT: Which just happened. They (Probably BIS in HKG) just raided Au as it approached the technically significant 1233 level. The monkeys are still there and still playing, but they don;t have any bananas (Physical) to throw this time around.

satoshi411's picture

Gold is stuck between $800 to $1600 for a long time,

Like I have said, Chinese will dump in mass at about $2300 should it get there,

Black-Swan on horizon, I don't see it,

Personally I think deflation will continue, and that poor nations (USA) will continue to sell their gold to eat.

*

The real issue is 'black swan' on Horizon, I don't think so,... its almost like NOTHING knocked anybody off the couch anymore, ... all news has become so sensational that all have been numbed.

Shit even 911 repeat wouldn't create a real black swan in the USA.

Have to be some kind of viral pandemic, like the black-plague where millions of dead are laying in the streets, will that happen? Probably not, "VECTOR CONTROL", is pretty fucking good.

OC Sure's picture

Deflation probably continues as long at there is a trade deficit. Another post today was a topic on food inflation due to domestic droughts. If the food will need to be imported, then won't the ongoing export of US dollars temper the domestic inflation?

billsbest's picture

During the Soviet grain deal in the 1980s bread prices skyrocketed here as our US grain left our shores. A bidding war prevails.

OC Sure's picture

Remember the images of Russias wheat fields on fire all over the media a couple years ago? Best grain short!!

GetZeeGold's picture

 

 

 

Gold is stuck between $800 to $1600 for a long time,

 

Mercifully.....bitcoins have been spared that fate.

The Mist's picture

What does the chart of Gold matter? Just buy & hold till fiat collapses. It'll be worth infinite euro's and dollars.

lasvegaspersona's picture

s 411

2300 would be the rough, inflation adjusted, level as we saw in 1980. Some of us see gold being transformed in function as the next step. Selling gold at 2300 would be the trap of all time. Get folks to release physical into the market place, buy it up and reprice it higher....kinda like Franky D did in 1933.

overmedicatedundersexed's picture

race car , I am surprised the nyt would print this generic drug scandal ...we have shipped millions of jobs to india and china in the production of generics, it was insane policy, but then what has not been insane in the .gov actions ?? screw the american public's jobs and health...I wait for the true patriots to act, and wait and wait...

Race Car Driver's picture

> I am surprised the nyt would print this generic drug scandal ...

 

In Satan's world, the weird little rules say that the dumb masses have to be told whenever something is (going to be) done to them. Sometimes it's very subtle, like obscure music lyrics and symbols - sometimes it's simply spelled out.

Here, it's spelled out - one only need make the proper inferences.

Droel's picture

This recent up trend is not about gold or silver, but commodities in general.  Look at everything, gold, silver, copper, zinc, etc, it all has the same trend.

OC Sure's picture

Do you mean against the US dollar? Then, look at the DiXeY. Is the bottom about to drop out? 79 or 74, or hold around 80? Commodities going gangbusters now may be telling about the USD.

MeelionDollerBogus's picture

DXY has no mathematical bearing on anything in reality: it is a fixed, inaccurate weighted measure of other currencies, not reflecting any price or supply of any commodity, or bond yields or geopolitical activity, war or annexation, nothing is in there.

It's useless.

rubiconsolutions's picture

Bitcoin bitchez!

Oh, I'm sorry, wrong thread.

Sincerely,

fonestar

Flux's picture

Bitcoin deserves our respect and appreciation. It paved the way.... for Dogecoin!

We now have our own ATM:

http://www.straight.com/life/588421/worlds-first-dogecoin-atm-launches-v...

Much happiness. So currency.

To the moon!

GetZeeGold's picture

 

 

Reap the whirlwind.....with bitcoins.

SAT 800's picture

People with IQ's of 80, including African Natives, frequently chant the same simple slogans over and over again; it seems to bring them some kind of peace, or relaxation. I wish you would do it somewhere else, however.

fonestar's picture

It is also chanted repeatedly chanted by the devotees of Satoshi Nakamoto who wish to achieve Satoshi conciousness.  A state of intelligence and awareness and being most of you could only dream of (if not for your own lack of faith and poor 32 bit AMD single-core processing abilities).  Beyond that, it will be beaten into your subconciousness whether you understand, support it or not (voluntary?  We don't care).

World's premier financial blog is Zerohedge.  World's strongest currency is Bitcoin.  Get it?

RaceToTheBottom's picture

"When banks get bullish, I get bearish. Thanks Citi...."

Correct, lets all help out Citi.  Go long Hanging Rope. It is the least we can to for our Bankster brethren.

The Navigator's picture

Thanks RTTB, reminded me why I clicked on the link here.

FUCK YOU CITI and all you other fuckers on Bank Street - JUMP you Mother Fuckers, JUMP!

heavy.metal's picture

They NEED more weak hands to break into the $1100-$1150 range. Last time there weren't enough suckers holding paper IOUs, so they need to lure them first.

Have you notice the recent GLD increase? About 10 tons worth of sheep coming in, ready to be fleeced.

PLEASE bring it down. I'm preparing my next purchase and I'd like it to be as cheap as possible.

SAT 800's picture

The market doesn't care what you like. If you're going to buy PM's you should do it now. The recent bottom forming formation on the price chart is a reflection of human behaviours and actions; not just a line on a piece of paper. Unless you're against making profits, for some reason, you should consider buying Silver, instead, as it will increase more in percentage terms than Gold.

DavidC's picture

Correct. If these fuckwit analysts were any good, they'd have been recommending Gold at sub 1200 instead of waiting for over $100 increase to start recommending it. What a bunch of idiots.

DavidC

SAT 800's picture

Apparently you don't know what a long range channel is. It's something you draw with a ruler and a pencil on a chart; it consists of two lines; one along the tops of a price curve and the other along the bottom.  The market is in a well-defined upward channel; the bottom of the present channel is still very close to where we are now; $1000/oz. has nothing to do with any "channels". It's just a left over from a previous time.