Gary Savage – Fri 18 Oct, 2013

We start Friday with Gary Savage

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Featuring:
Al KorelinCory FleckGary Savage

Comments:
  1. On October 18, 2013 at 9:13 am,
    gary says:

    Gold/dollar divergence. It’s a concern that gold hasn’t continued higher for the entire time the dollar has been falling. You can see what happened the other three times this happened when the dollar bottomed and began to rally.

    http://stockcharts.com/h-sc/ui?s=$GOLD&p=D&yr=1&mn=6&dy=0&id=p06479257392&a=319878983&listNum=1

  2. On October 18, 2013 at 9:27 am,
    ndmaster says:

    Al- by definition, a black swan is NOT predictable. It is something that is not understood by anyone, and therefore, no one sees it coming.

    • On October 18, 2013 at 10:02 am,
      Listener says:

      How about gray swans then? 🙂

      • On October 18, 2013 at 10:22 am,
        irishtony says:

        How about PRETTY PINK swans !!!…HMMMM I like pink.

        • On October 18, 2013 at 10:47 am,
          Big Al says:

          Great to have your comments Mr. Irish!

          Everything okay?

          • On October 18, 2013 at 11:14 am,
            irishtony says:

            HI Al …..Just thought I would add a little humour , after reading the comments ! & yes everything is fine……I hope You & Yours are keeping well…….I note some of your politicians !!!!!!!!!!…lost their backbone…..shame.

          • On October 18, 2013 at 11:24 am,
            Big Al says:

            Politicians? How about charlatans?

        • On October 18, 2013 at 5:21 pm,
          Bobby says:

          Maybe a flamingo will strtike.

          • On October 19, 2013 at 11:09 am,
            Big Al says:

            Pink Bobby?

      • On October 18, 2013 at 10:46 am,
        Big Al says:

        I stand corrected Listener. Yours is a much better and more accurate term!

    • On October 18, 2013 at 10:43 am,
      Big Al says:

      I realize that ndmaster. I used the term in perhaps much too loose a sense!

    • On October 18, 2013 at 3:49 pm,
      Wayne says:

      A black swan is not an act of God (like a tornado, earthquake, etc.), but an act of man, THEREFORE, it will be understood by someone and, in fact, it will be (is being) planned. The purpose of a black swan is to misdirect the people or scare them, that is, to set them up for a sucker punch, like shutting down their bank accounts or credit cards.

      • On October 18, 2013 at 5:22 pm,
        Bobby says:

        Isn’t that a false flag?

      • On October 18, 2013 at 11:02 pm,
        Bird Man says:

        Or we could get a huge Coronal Mass Ejection (solar flare) of unexpected intensity which creates both geomegnetic and X-ray storms wiping out virtually all our sattelite communications systems and creating global havoc.

        Or maybe the long overdue human pandemic strikes the heart of our urbanized societies wiping out as many as 25% of the world’s inhabitants in just a few short years. Anything could happen Wayne. Most of it is not easily predictable even though the events are inevitable and expected. Those are what I call Black Swans.

        Remember that volcano that erupted in Iceland back in 2010? Nobody can even write or pronounce the name of the damn thing but it created haoc. It covered most of Northern Europe in a layer of ash while spewing dust and gasses into the atmosphere and closed most European airspace for weeks.

        That was hardly even the real worry such an event could bring on though. Past eruptions in centuries gone by had actually resulted in “The Little Ice Age” that began in the mid 1600’s as the sun was blocked for years due to heightened volcanic activity thus causing widespread failures in agricultural production and famines in Europe and elsewhere.

        Keep in mind this is not really ancient history.

        Then there are the obvious technological Black Swans that are also somewhat predictable if not even probable given enough time. The accidental triggering of an ICBM and detonation of a nuclear warhead on an adversaries capital for example. Now that is a scary thought and yet we have come quite close to that Armageddon scenario several times as we have learned over the years from released documents. A most recent story was the case of how the US Air Force came within and inch of incinerating the entire Eastern Seaboard when it accidentally dropped an armed nuke from one of its bombers on a training run.

        Speaking of which, did the Russians not lose control of some nuclear weapons in the past as their fleet of nuke submarines and their weaponry was being dismantled or had fallen into a bad state of rust and disrepair in the Northern and Baltic ports? We never heard much about that story since but I do recall there was a legitimate worry that terrorists were potentially able to take possession of warheads that some worried could come to the black market.

        Cripes, how much more dangerous does it get than that?

        On the nuclear front we can never forget Chernobyl either. That incident was so serious that had drastic interventions involving the loss of a significant number of Russian lives not been undertaken, that most of Europe was within days of becoming entirely uninhabitable. The words “epic disaster” were written all over that one.

        And then along came Fukushima to teach us how one single Nuclear plant in Japan had the potential to destroy an entire ocean for generations as radioactive contamination swirled across the Pacific carried by normal ocean currents and making all life there potentially unsuitable for human consumption while creating conditions for the extinction of some species in localized waters.

        Harks back to past events like the Exxon Valdez and the Gulf Spill as to how serious a single marine accident can be and the major repercussions that evolve from mistakes and accidents that should probably never have happened in the first place.

        Between the risks we face by the natural environment (such as earthquakes that can create massive trunami’s and drown whole cities) and those posed by our technologies we cannot ever know when our numbers will come up but one thing has become very clear…..the consequencs are becoming increasingly global events crossing all boundaries and borders and often involving countries where the citizens are no different than innocent bystanders to events they cannot control.

        So those are what I consider Black Swans Wayne. Maybe the tragedy will come in the form of an electronic or digital virus that shuts down banking systems everywhere. It could be an attack or an accident. I really don’t know. What is obvious to me though that as we have become more and more dependant on complex technological systems that the odds of an adverse event are increasing.

        Where Sovereign debts are concerned I am actually far less concerned. The fact is that at the end of the day anyone can simply repudiate thier obligations and wipe the slate clean. That will not end the world. At this time their is widespread cooperation amongst countries and work is in progress to keep both balance and the status quo intact. That may not last forever though as we see Japan, England and parts of Europe most deeply in debt teetering on the edge of potentially devastating outcomes as insolvency seems to loom in thier futures.

        It is likely this century will be as “interesting” as the last. Only this time there are far more people and far more moing parts that complicate all the scenarios imaginable. Perhaps the biggest worry we face is how any one of the potential disastrous events (known and unknown) may result in a serious disruption to the global supply chain that we have all become so dependent upon.

        It is our interdependancies on global trade, electronic systems and financial connections that span the four corners of the planet and reliance upon the production of others from such far flung places that creates one of the greatest vulnerabilities for all the worlds most developed societies.

        We simply cannot afford another large war that might disrupt the flow of goods and services around the world as one example of the predictable that must not happen again. But we may not even need a war to trigger a massive disruption in any case.

        Honestly, I don’t know if it is even possible to prepare for the future and what may come our way in the years ahead. We only know that all complex systems fail in the end and especially so in the case where they are artificial constructs made and operated by people just like ourselves.

        • On October 19, 2013 at 11:17 am,
          Big Al says:

          I have a pretty good idea, Bird, why you are living in Africa!

          • On October 19, 2013 at 12:49 pm,
            Bird Man says:

            I’m only here for some sunshine Al!

          • On October 19, 2013 at 1:41 pm,
            Big Al says:

            Played 18 yesterday with Cory and Bruce Bragagnolo. We had 75 – 100 yard visibility. You don’t like that weather?

          • On October 19, 2013 at 2:01 pm,
            Bird Man says:

            Sounds good to me. We just came out of the rainy season here actually. It just gushes like nothing I ever saw in the Pacific Northwest and there is rolling thunder that goes on and on endlessly. The rains in Africa as they say. Not a golf course as far as the eye can see. I have never seen even one yet.

          • On October 19, 2013 at 10:51 pm,
            Bird Man says:

            And appropos of nothing at all and not connected to this thread….I bought a turtle this morning. He looks to be about a 40 kilo giant that is near a half century old. I saw him in a beer parlour where the owner tells me the poor thing has been living for the past decade next to a public toilet on a tiny plot of rocks no bigger than a condo balcony. It drove me nuts. “How much do you want”? I asked. “Twenty Bucks and he’s yours” the guy answers…….Told him I would be back with the truck in the morning. I am going to let him free in my garden where he should have a chance at a decent life for a change. My wife will kill me when she sees him munching the daffodils and chewing up the lawns but what the hell….. that’s life!

      • On October 19, 2013 at 10:49 am,
        Big Al says:

        Thanks Wayne!

  3. On October 18, 2013 at 9:33 am,
    JERRY the Long..................O^OTB says:

    GOLD AND DOLLAR………..the big news was reported yesterday by Andrew the Rev.
    China and the UK are trading ……AND NOT IN DOLLARS……..

    • On October 18, 2013 at 9:47 am,
      JERRY the Long..................O^OTB says:

      I agree with BIG AL…on the outlook for gold.

  4. On October 18, 2013 at 9:35 am,
    James (the lesser) says:

    As usual GS has missed the mark.
    First there is no follow through buying today because gold is still in a bear market. That’s how bear markets behave. Gold had a huge up day and now there is no follow through buying to build momentum. It has been this way for two years. It has nothing to do with half cycle lows or intermediate cycles lows in the $ or anything else you want to call your “system”
    Second the one key level I’ve been saying for weeks now is the one level you never mentioned.
    Gold needs to take out and close above $1340 for three consecutive days. Until it can do that it is more of the same.

    • On October 18, 2013 at 9:53 am,
      gary says:

      Duh that’s what I’ve been saying for almost two months now. Gold is in an intermediate decline and it looks like the manipulation is trying to take gold back down to $1000.

      • On October 18, 2013 at 10:17 am,
        NYC says:

        blah blah blah!
        all due respect of course

        • On October 18, 2013 at 12:19 pm,
          Bird Man says:

          Funny guy!

  5. On October 18, 2013 at 9:37 am,
    PF says:

    Gary, instead of bottoming around 79-80, could you see the dollar dropping all the way to 74-75 before it bottoms?

    • On October 18, 2013 at 9:57 am,
      gary says:

      I doubt it. The next two triggers to put in the dollars intermediate cycle low will come on the FOMC meeting on the 30th and the employment report on the 1st. That probably doesn’t give the dollar enough time to drop that far, barring some kind of fundamental change (like an increase in QE).

      If not that then there is major support between 78.60-78.90. I doubt the dollar is going to slice through that level without at least an intermediate rally to work off the extreme bearish sentiment right now.

      • On October 18, 2013 at 10:18 am,
        NYC says:

        intermediate cycle low???? please stop

  6. On October 18, 2013 at 9:38 am,
    Ryan says:

    Hey Gary. Just wondering your thoughts of Bo Polny & his TA. You have to admit he has been spot on with his predictions. He is charging a lot for his services, but here is his latest…
    “We have before us a Gold Bull Market. Do not listen to people who are calling for $1000 Gold; it will never happen again! The Gold Bull rides!” -Bo Polny

    • On October 18, 2013 at 9:59 am,
      gary says:

      I know he’s been trying to call a bottom since May. The problem I have with technical analysis is that it doesn’t work in a manipulated market. The only thing that works in that environment is inside information.

      Unfortunately success in the markets now boils down to ones ability to anticipate the next intervention.

      • On October 18, 2013 at 10:02 am,
        Pibe3 says:

        Bo Polny & his TA has a very good record. Gary does not. Who do you listen to? The answer is clear.

      • On October 18, 2013 at 12:30 pm,
        Bird Man says:

        I have to disagree Gary. Rick Ackerman has been very successful at calling the ups and downs in gold despite any shenanigans that might be happening behind the scenes. Actually he has been exceptionally good and I say that without reservation as I have been following his work for some years now. The guy is one of the best. My view is that any so-called manipulation is not really changing the overarching trend that plays out day in and day out but rather results in periodic aberrations that can still be picked up with technical analysis. If anything, unusual buying or selling only magnify trends that were already in play.

        • On October 19, 2013 at 6:44 am,
          gary says:

          I was asked my thoughts on Bo Polny not Rick. No one I know of picked the bottom in gold correctly. Not Polny, not Rick, not me. Why? Because it was a manufactured bear market and a planned stop run. Technicals became worthless in that environment. I remember at the time Polny was calling a guaranteed bottom on May 13. Well we all know that didn’t happen. I believe Rick’s target to buy was $1487. Nenner was looking for the bottom in late March or early April. My yearly cycle low was due in February or March. I could go on and on. The only ones who got it exactly right are the analysts analyzing in hindsight. But then again hindsight is 20/20.

          I’ll say it again. In a manipulated market the only thing that works is inside information.

          Everyone knows that bonds are manipulated. The Fed has publicly stated on numerous occasions that they are trying to create a wealth effect by inflating the stock market. Check mark in the manipulation column for stocks.

          Currencies are the most manipulated markets in the world.

          I have some beach front property in Las Vegas for anyone who thinks the oil market isn’t manipulated.

          With virtually every other market on the planet being controlled to a greater or lesser extent does anyone really think the precious metals are the only freely traded market in the world?

          • On October 19, 2013 at 12:24 pm,
            Bird Man says:

            Um….so how can you (Gary) be selling gold analysis unless you have an “inside edge” on the manipulation? You do realize you are admitting you have no idea what is happening and that only “insiders” get a real crack at the trophy.

            But I have news for you. There ARE people who been consistently calling the market moves with accuracy even if the time frames were sometimes short. They have been doing it for YEARS too. Not just gold calls either. I only mentioned Rick because he has been really outstanding on so many occasions (I have no idea who Polny is by the way so I cannot comment on him).

            Let me give you just one recent example of a terrific call he made back on October 8th (that is not gold related by the way) to give you an idea of why I have confidence in this guy. He wrote to his subscribers to buy Google of all damn things when it looked hellishly overpriced and even a little overbought to most mortal human beings.

            The folowing is what transpired..(and here I will quote the entire text for your edification)…

            —– From Rick’s Pick’s – October 19 2013 —-
            “Google’s stunning, $120 breakaway gap this morning has allowed subscribers to complete the butterfly spreads for a credit of as much as 3.00 per spread. Those who did would have locked in a guaranteed profit of at least $2400 for the eight spreads (on initial risk of about $400), but that amount could grow by a further $8000, to $10400, if Google is trading at exactly 1010 come November expiration. In practice, it will be difficult to extract the full $10 of value per butterfly, since the 1010 calls we are short would have ‘juice’ in them on expiration day that significantly exceeds whatever time premium is still in the 1000s we’d be long. For tracking purposes, I’m going to assume the short Nov 1010-1020 spreads filled for $3.00. In practice, subscribers reported that they had not done the butterfly, but that they had simply been long the original eight November 1000-1010 call spreads when the stock exploded this morning. Their instant, realized gains ranged from $3200 to $5600, based on an initial risk of less than $400.”
            ————————

            And THAT, Gary, is how a professional works and makes his people money. This is not even an exception. Just a run of the mill monthly call that has been doing kick ass work for the people who tune in and pay attention to a guy who usually knows what he is talking about.

            So is that an inside egde? Does Rick have Bernanke on speed dial? Tell me how he keeps pulling rabbits out of hats day in and day out without the benefit of connected friends in high places?

            Oh yeah….technicals don’t matter to you……..

          • On October 19, 2013 at 1:37 pm,
            Big Al says:

            Good point Bird!

        • On October 19, 2013 at 10:42 am,
          Big Al says:

          I gotta agree with you Bird!

          • On October 19, 2013 at 12:28 pm,
            Bird Man says:

            We will have a funeral the day Rick retires Al. His departure will be a great loss.

  7. On October 18, 2013 at 10:05 am,
    Doro says:

    Funny Gary’s crystal ball didn’t see the 60 plus dollar up move.

  8. On October 18, 2013 at 10:15 am,
    Doro says:

    He also said gold would drop and the USD would rally after the debt ceiling debate.

    Wrong on both counts.

    • On October 18, 2013 at 10:27 am,
      gary says:

      The debt ceiling was a trigger for a trend change.

      The dollar rallied well ahead of the debt ceiling resolution. As the trend was already up at that time the debt ceiling couldn’t be the trigger to make the dolalr rally as it was already rallying. It became the trigger to reverse the trend back down.

      In order for the dollar to rally on the debt ceiling resolution we would have needed to see it continue to fall. Then the event would have triggered a trend reversal higher instead of lower.

      These special events are cyclical triggers to reverse current trends. Now that the dollar is in decline we start looking for the next event that will again reverse the trend. In the case of the dollar we want to look for something that will trigger a major intermediate bottom in the next 5-10 days.

      The two most likely candidates are the FOMC meeting on the 30th and the employment report on the 1st.

  9. On October 18, 2013 at 10:18 am,
    gary says:

    No crystal ball. I just follow my cyclical timing tools and combine them with sentiment levels to give me a timing band when to expect short and medium term trend changes.

    . Like I said yesterday gold has formed a daily cycle low. One can take a long position, but do so with a short term mentality and be prepared to take profits quickly if gold shows any signs of topping. Place a hard stop right under $1250. A move below that level confirms that the intermediate cycle is still in decline.

    As of today there is no indication that this is anything other than another minor rally to ease oversold conditions and will top and roll over soon and continue down.

    Gold would have to at the very least rally back above $1375 before I would be prepared to hold positions longer term.

    At the moment gold needs to show some strong follow through after yesterday’s rally. That would be a first step before entertaining the idea that this is more than just a dead cat bounce.

    • On October 18, 2013 at 1:40 pm,
      Jay says:

      The wheels fell off your cycles a long time ago! 😉

  10. On October 18, 2013 at 10:41 am,
    Irwin says:

    What’s that saying – “save a bull, ride a cowboy”?

    – oh no ; that was horses.

    – never mind

    • On October 18, 2013 at 10:48 am,
      Big Al says:

      Great to have Liberal Irwin on our site!

      Oh darn, bit my tongue again!

  11. On October 18, 2013 at 11:05 am,
    Doro says:

    This guy loves to hide bad calls behind cyclical doublespeak. The supreme hedger.

    What a great tool. With cyclical timing what you’ve said is never wrong.
    Your mistakes get buried in a cyclical wonderland of spin.

  12. On October 18, 2013 at 11:20 am,
    irishtony says:

    Doro…….”cyclical wonderland of spin “….great title for a song……now if I can just find a word to rhyme with cyclical.

    • On October 18, 2013 at 11:24 am,
      Big Al says:

      Biblical. Whoops!

      • On October 18, 2013 at 12:36 pm,
        irishtony says:

        Thanks Al…….Whoops ups sidiaye its a cyclical biblical world……..im getting there folks..bear with me……………..no sorry ive lost the plot…….

      • On October 18, 2013 at 12:38 pm,
        Bird Man says:

        Nice. How about icicle, Tony?

  13. On October 18, 2013 at 11:48 am,
    Doro says:

    Golden Ball
    Written and Performed by Gary Glitters

    Today is gonna be the day
    That we’re gonna throw it back to you

    By now you should’ve somehow
    Realized what you gotta do

    Because maybe
    You’re gonna be the one that saves me
    And after all
    You’re my GoldenBall

    I’m sure you’ve seen it all before
    But you never really had a doubt
    I don’t believe that anybody feels
    The way you do about you now

    Climbing rocks
    Never takin’ knocks

    Spinnin’ in your cyclical wonderland of spin
    Never without a win

    Now the word is out
    You got the up
    and the down
    Sideways, always

    Because maybe
    You’re gonna be the one that saves me
    And after all
    You’re my GoldenBall

    • On October 18, 2013 at 12:30 pm,
      irishtony says:

      DAMN……..That HORRID little man , beat me to it…….notice I paid him a compliment by calling him a man…(sarc)

    • On October 18, 2013 at 7:24 pm,
      Pibe33 says:

      Doro,

      I was really touched by your poem. Amazing. You are good!!!

    • On October 19, 2013 at 10:39 am,
      Big Al says:

      Are you, in reality, Oliver Wendel Holmes?

      • On October 21, 2013 at 6:22 am,
        Doro says:

        More Dylan with a new wave edge.

  14. On October 18, 2013 at 12:58 pm,
    Helter Smelter says:

    Gary, why did you not let your regular subs in on that Gold Quest play? 300$ bet would have been nothing compared to all the money they lost in the past 18 months or so, plus it would have made them feel better to see some green in their accounts…

    • On October 18, 2013 at 1:45 pm,
      Jay says:

      It may make them feel better for a while, until he gives it all back and more. That’s my prediction.

  15. On October 18, 2013 at 6:31 pm,
    Paul L says:

    CNBC headline on gold says: gold settles lower on renewed Fed taper jitters. Such nonsense from the talking heads. Gold has had a big move and there is some profit taking and it just needs a rest. The dollar I think would be defended by the gov’t as it is ready for a major breakdown and hanging by a thread at a critical level.

    • On October 18, 2013 at 11:18 pm,
      Bird Man says:

      Well Paul, you may be right. If the dollar falls below 79 we could be headed all the way back to 74 and gold will no doubt get its lift. That is certainly a possibility. We will have to watch and see as this plays out as we are nearing major dowward resistance already. Certainly I will change my views on golds prognosis if the dollar takes a turn for the worse in the coming months. Given that the debt cieling will be revisited again soon the suggestion must remain open that the buck will suffer a steep fall. Recent ratings downgrades by Fitch and Dagong combined with a lack of cooperation on debt amongst those in power on the capital can easily propel more negativity on USD so I will be watching it closely.

  16. On October 19, 2013 at 8:13 am,
    Tom says:

    How the heck will the US dollar rally? Only one way for it to go…down baby down!

    • On October 19, 2013 at 10:56 pm,
      Bird Man says:

      And then after that it will go up again Tom!

      • On October 20, 2013 at 8:33 pm,
        Matthew says:

        Guys, notice that gold, silver, and the dollar are up this evening? Since gold and silver are priced in dollars, how is this possible? Simple, the USD index does not measure purchasing power (value), it measures only how the dollar is doing when compared to other currencies (mostly the euro). The single best way to measure what the VALUE of the dollar is, is to look at the gold price –for it is really the dollar price! The dollar has already soared more than 40% since it bottomed against gold two years ago at $1923 per ounce (dollar-holders got a big raise!). At the end of June, 2013, the dollar became massively overbought against gold achieving a weekly RSI of about 80. The last time it achieved such a reading was in January, 1997. Who wouldn’t sell dollars and buy (at least some) gold in light of this 15 year extreme? I have to agree with Franky when he says “buy sissies!”