Gold Trader: “Big Money Is Now Trying To Get In—On A Violent Regression To The Mean”

Precious metals and mining shares have finally confirmed a 1-2-3 reversalpattern, suggesting a violent regression to the mean is now underway in goldto be further angered as capital flees a collapsing bond market.
“Big money is now trying to get in on the long side and I think this move up out of this bear market bottom probably isn’t going to behave like a normal rally…it’s going to have a violent regression to the meanmy theory was that we were going to see a pretty strong V-shaped rally out of this bottom…that appears to be what’s going on…we could see gold retesting those September 2011 highs in the next three or four months depending on how hard the dollar falls.” -Gold Trader Gary Savage

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From Tekoa Da Silva, Bull Market Thinking:

I had the chance to reconnect with technical gold trader Gary Savage, publisher of the Smart Money Tracker daily gold market commentary and trading service, which has outperformed most of the world’s hedge funds in 2011 and 2012.
It was a powerful conversation as Gary indicated that precious metals and mining shares have finally confirmed a 1-2-3 reversalpattern, suggesting a violent regression to the mean is now underway in goldto be further angered as capital flees a collapsing bond market.

Speaking to the occurrence and meaning of a confirmed 1-2-3 reversal in the metals and miners, Gary indicated that, A 1-2-3 reversal (some people call it an A-B-C reversal) is just a change from a pattern of lower lows and lower highs, to a pattern of higher highs and higher lows…silver, platinum, palladium and the miners have all completed that 1-2-3 reversal within the last week. We were just waiting on gold to do the same thing and confirm that the cyclical driver of the sector was also in line with the rest of the metals—and gold did that Friday.”

As a consequence of that confirmation according to Gary, “Big money is now trying to get in on the long side and I think this move up out of this bear market bottom probably isn’t going to behave like a normal rally…it’s going to have a violent regression to the mean…my theory was that we were going to see a pretty strong V-shaped rally out of this bottom…that appears to be what’s going on…we could see gold retesting those September 2011 highs in the next three or four months depending on how hard the dollar falls.”

What will further anger this violent regression to the mean according to Gary, will be the bond market, in that, “We’ve got a big problem in the bond market. The bond market is starting to come unraveled…and the Fed in my opinion is going to have to increase QE to try and reclaim control. [So] the big trending moves from here until late 2014 or late 2015 are no longer going to be in stocks, bonds or real estate…it’s going to be in the commodity markets. Specifically…in the precious metals markets. It’s where the really big gains are going to be.”

Capturing this historic move in metals and miners will be challenging Gary noted, for the reason that, “When you have a bear market like we did, people are very nervous and as we come up off that bottom, they’re afraid to [buy]…and so they wait until we start going up again, exactly like what has happened this time—we go up very aggressively, get overbought very quickly—and then they ‘can’t’ buy because it’s overbought…[then] as soon as the dip comes, it looks like the bear market is [returning]. So they ‘can’t’ buy again, and they continually miss this move.” 

“So [that's how] the bull continues to knock people off even as it goes up“, Gary added, “and that’s what produces these very aggressive moves.” 

As a final comment towards strategy over the next few months, Gary suggested that, “We need to get in, not worry about daily wiggles and just sit tight until later this fall.”

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This was another powerful interview with one of the top traders in the gold market, and is required listening for investors looking to profitably trade this gold bull market.

To listen to the interview, click the following link and/or save to to your desktop:

>>Interview with Gary Savage (MP3)

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Comments

  1. CBOE Interest Rate 10-Year T-No (^TNX)
    -Chicago Options

    2.87 0.04(1.41%) 11:56AM EDT

  2. I will believe it when I see it.

    Till then I will keep on stacking the phyzz.

  3. Big money may go back into the bond market, a 3.90% on the 30 year could be an attractive investment for pension funds, ect.
    As far as money pouring into commodity markets, the global economy may be too weak for that to happen.

  4. US 10yrs bond 2.89%……………………… and….
     
    This from ZH Is Obama About To Crash The Gold Market Again?

    We will see I guess, but I doubt it. Throwing petrol on a fire is not clever.
     
    http://www.youtube.com/watch?feature=player_detailpage&v=f8q_gSJ5n_A&t=2
     

  5.  I see the gold and silver markets heading into uncontrolled chaos trading, which will infect other markets.  If the dollar is spoken negatively at the G20 meetings, a free for all may ensue.  The debt ceiling will be raised, but the talk on both sides of the aisle will be nothing more than patting each other on the back.  (See how good the economy is doing…)  
     And to think the Fed thinks that tapering is going to make a difference.  What would RIP wake up to 20 years from now?
    I thought I got my last chance at decent prices on Friday morning.  But Monday afternoon looks like they gave us another chance to buy below $1400 and $23.50. 

    • “What would RIP wake up to 20 years from now?”
       
      My guess is that Rip would not wake up 20 years from now because some government health care bureaucrat decided that he was in an irreversible coma and aborted him to save the tax-payers the cost of his maintenance.
       

  6. Violent aggression–blunt objects (SRS Rocco)—tremendous pain.  It sounds like an episode of Lady Torquemada’s house of Torture
    Crikey let’s get this over with and move on, Mr Market.  Crash already
     

    • Come on, AG.  You’re a man of the world.  You know as well as anyone does that there’s no such thing as a simple crash… especially when it is a slow-motion train-wreck like this.  
       
      First, we build up some speed, then we hit a few bumps and curves.  This gets all the cars to leaning side and side.  The couplings between the cars get banged around and stretched.  They become loose as the cars continue to bang on each other and lean farther from the track center-line.  Eventually, a car leans so far that the others cannot pull it back.  It tears loose from its couplings at either end and begins a slow-motion move towards the ground next to the track, turning in mid-air as it goes, landing on its side with a tremendous crash of smashing sheet metal and the screech of heavier metal tearing.
       
      The engine is still on the tracks and so are most of the other cars but the violence of its leaving has affected the cars most that were nearest to it.  They too begin to gyrate more wildly, affecting the cars closest to them, and eventually suffering the same fate.  While all this is happening, the train is now hurtling down the tracks, faster and faster.  We see curves up ahead and a drop into a deep gorge.  We are traveling too fast for our puny brakes to stop us or even slow us down in any meaningful way.  Some effort is made on the brakes anyway but they soon over-heat and fail completely.  
       
      As we approach the gorge and the curves, we note that a few of the passengers have climbed up to the roof of the train and appear to have strapped on gold and silver colored para-sails.  Just as the train arrives at the gorge, these people take running leaps into the abyss but are soon seen floating high above it, while the train and everyone else on board screams as the entire mess drops thousands of feet to their complete doom.  We look down from our position high above them with a look of grim pity on our faces.  Well, we say, we tried to tell them that riding on this train was unsustainable and that gold and silver would save them but they would not listen.  Called us conspiracy theorists, nuts, and many other names.  No doubt, their last thoughts were of damning us to Hell for not forcing them to listen. Oh, well.
       

  7. 1) that bull is friggin ripped.
     
    2) I can’t see them jumping the market again, since the morgue is so long, but who knows. They are already playing with fire. GOFO went MORE negative and if they set more of a fire to physical buying we could have the great default somewhere we have been hoping for – especially with the fact that the mining sector is running on fumes.
     
    3) what do you call a gay midget? A low blow.

    d) the mint updated eagle sales today, 2,446,000 so far. So we should see 3.5 million total by month end I would think.

  8. I see Silver still going up with just a little few hiccups and I believe it will be more active than gold and the ratio gap closing. So Keep Stacking if you can afford it.

    • So Keep Stacking if you can afford it.”
       
      If you’re right, Charlie, it may well become more expensive not to own silver than to own it!  ;-)

  9. “I had the chance to reconnect with technical gold trader Gary Savage, publisher of the Smart Money Tracker daily gold market commentary and trading service, which has outperformed most of the world’s hedge funds in 2011 and 2012.”
     
    LOL!  Yeah?  Well so have most of the stock indexes out there.  :-D

  10.  Edb  I prefer to drive my own car.  Trains are a bit too European for me. 

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