9 March 2009

CitiFX Technicals Gold bullish

Technicals - Bulletin

Technical Developments in the Foreign Exchange and Asset Markets

06 March 2009
This is crazy right?

Can we really see a Gold price at $2,000 and the S&P 500 at 360?

Gold and the S&P 500 long term charts We have articulated in detail that Gold is in a long term bull market and is likely to be a significant out performer
in this environment. If the rally in Gold in the late 1970’s was replicated, we would see it $2,000+

The S&P 500 has posted a monthly close below the 768 double top neckline. The pattern suggests a move towards 360 is possible

Not convinced?

See the relative charts overleaf which go back to the 1920’s

Market Commentary

CitiFX Technicals

06 March 2009

S&P 500 / Gold Ratio since the 1920’s

Gold at $2,000 and the S&P 500 at 360 would take this ratio to 0.18 which is just below the levels seen in the 1930’s depression.

Dow Industrials / Gold Ratio since the 1920’s

The S&P 500 at 360 is approximately 45% below current levels. A fall of 45% on the Dow Jones would take it to approximately 3,500. The Dow at 3,500 and
Gold at $2,000 would take this ratio to 1.75 which is effectively the average of the last two major lows in 1933 and 1980.

Is this really the end of the world as we know it? Both major assets (stocks and houses) are in a MAJOR bear market for the first time in over a generation

Market Commentary

2

CitiFX Technicals

06 March 2009

Dow Industrials and Home builders index in gold terms

Housing has been in a bull market since the early – mid 1990’s and accelerated higher still at the turn of the century when stocks started to move lower.
Now both asset markets are falling significantly with little signs of recovery in houses and plenty of signs for weakness in stocks.

U.S. Housing Starts and Dow Industrials Mid 1970’s Early 1980’s Now The world has been through cyclical bears within structural bull markets in Fixed
Income and Assets markets (stocks and houses) for too long. It has effectively been on steroids for 25+ years and now we are seeing both major asset
markets falling together for the first time since the early 1980’s (arguably as the Dow ONLY fell 24%) if not the mid 1970’s. We believe a structural turn
has taken place in

• Fixed Income with yields heading higher • Houses which remain depressed at best, and • Stocks which look very weak on the multi decade charts Credit
remains unavailable and chaos resumes. The only currency that is being used as a real safe haven is gold which we believe can continue to shine both in a
deflationary and inflationary environment. We firmly stick with our long term view that Gold can rally as far as $2,000+ We also reiterate that there is a
significant risk of the S&P 500 falling to 360.

The world over the centuries has gone through difficult periods and while that does not change, the world over the last 20 – 30 years is looking like a
very different place.

This is crazy right? Go back and look at those charts

Market Commentary

3

CitiFX Technicals

06 March 2009

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