On the heels of some wild trading in global markets, and the Chinese downgrading the US, today top Citi analyst Tom Fitzpatrick sent King World News the scary chart that has everyone in Washington terrified. Fitzpatrick also discusses an incredible price target for gold, along with 3 incredible gold and silver charts he sent KWN.
Here is what Fitzpatrick had to say, along with his incredible charts:
Looks to be breaking out of the uptrend in a similar fashion to the summer of 2007 (see chart below).
King World News note: If you look at the break in the center of the chart, you will notice that US Job Openings collapsed after breaking through the trendline. The frightening implications of the break of the uptrend line on the right hand side of the chart is that if it follows a similar pattern, US Job Openings are set to collapse below the level seen in 2009. This indicates incredible turmoil ahead for the United States, and this is why this chart has everyone in Washington so terrified. The question is, exactly what lies ahead that would cause this kind of massive job destruction?
Fitzpatrick continues: “Initial claims have been falling sharply … At the same time there has been a huge surge in claimants for disability and food stamps over the last 3-6 years.
A lot of jobs that are being created are in service and leisure/hospitality industry (Generally low paying) and part time jobs. So overall there is a very strong argument that the qualitative nature of job creation is very poor … If we then add to this the fact that the dysfunctional environment in Washington is likely to continue to be a drag on confidence and the economy as we likely re-live the recent debacle again in 3-4 months’ time, at which point can we expect that Senator Schumer be telling “Madam Chair” to “get to work?”
In addition to the above we have seen an aggressive surge in yields and in particular mortgage rates this year over the summer months in particular which history suggests will have a negative feedback loop.
Our favorite currency is regaining its shine
– Gold is beginning to break through initial resistance levels and we continue to expect it to move towards $3,500 over the next few years.
– Current monetary and fiscal policy in the US (and the rest of the world for that matter) further support our view of preferring hard currencies to paper ones.
– Should Gold rally as we expect, Silver may actually outperform.