Buy Gold till May then go away: Citi Research

UNITED STATES February 17 2016 11:12 AM

NEW YORK (Scrap Register): Citi Research looks for gold to give up its recent gains before a longer-term bull market begins. 

“After past gold bear markets, gold rallied by 60% (Q2 1982) and by 30% (Q4 1999) and then subsequently retraced the entire rally to return to its starting point in order to begin a proper longer-term bull market,” Citi added. 

“This is the reason for our title ‘Buy Till May Then Go Away?’ In truth, we cannot know for sure whether the retracement we expect will begin in March, April or May, or perhaps later, but we feel that it is advisable to assume that this rally, in response to nervous equity markets, is not the start of a long-term bull market,” analysts at Citi added.

This means that in the months ahead, analysts will have to be on the lookout for an exit point, Citi said. 

“That exit point will likely come when equity market panic subsides. The old adage ‘sell in May and go away,’ for the Dow, could be reversed in 2016 if panic subsides by May and investors move back into equities and dump their gold insurance,” Citi concluded.