Gary Savage – Tue 3 Jun, 2014

The Fed refuses to let the markets correct naturally

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Gary SavageCory Fleck

  1. On June 3, 2014 at 1:54 pm,
    silverbearformerlybugdave says:

    Are you sure it is the Fed? Why would it always be the Fed? Or maybe it’s just a bubble and in a bubble the markets don’t correct. Or maybe it is just a breakout from a 15 year trading range that went form 7,000-14,000. After the 1982 breakout from a 16 year trading range the Dow went from just over 1,000 to more than 11,000. So this time maybe it will go from 10,000 to 100,000. Who knows? Who cares, really?

  2. On June 3, 2014 at 2:01 pm,
    Bob UK says:

    Very interesting. Is it possible that the Fed simply has a 2000 target for the S&P by the time QE ends and will not allow the markets to correct until that 2000 target is reached?

  3. On June 3, 2014 at 2:06 pm,
    Gary says:

    I doubt the Fed has an upside target. They just don’t want a repeat of 2010 & 2011 so they are terminating the normal corrective action of the market prematurely. If the market becomes convinced there is no risk then human nature will do the rest until stocks get so stretched above the mean that they form a parabola and crash.

    • On June 3, 2014 at 2:33 pm,
      Dick Tracy says:

      You must remember that the system needs to crash that is the cleansing process, when it is bypassed for a bigger crash too many people suffer needlessly. It is much more amenable to allow the system to regulate itself, intervention although maybe well meaning is not good as it cannot possibly understand the true market forces.

      • On June 3, 2014 at 8:59 pm,
        Marc, San Diego says:

        Again, very well said and quite a judicious and accurate assessment….IMO

    • On June 3, 2014 at 3:35 pm,
      subaham1 says:

      Haven’t we just about reached that now?

  4. On June 3, 2014 at 2:18 pm,
    Bob UK says:

    Surely when these markets do eventually go down the correction will be so big that both gold and silver will suffer as well as margins are called in and there is a dash for cash?

    I am more focussed now on trying to figure out how to benefit from the eventual stock crash – trying to figure out the timing to get into PMs. I think many of us are trying to figure out the answer to this.

    • On June 3, 2014 at 2:22 pm,
      Cory says:

      I agree with you Bob that the PMs would be pulled down in a crash. Gary and I chatted about that yesterday. He had a solid argument for the other side.

      • On June 3, 2014 at 3:13 pm,
        Bob UK says:

        Yes. I enjoyed that chat also Cory.

  5. On June 3, 2014 at 2:31 pm,
    Gary says:

    Metals tend to get pulled down when we see a sustained move down in stocks that finally enters a panic selling phase. Those typically take 4-6 weeks to develop then you get the panic stage during the last few days. That’s when the margin calls start coming hot and heavy and everything gets sold.

    A crash scenario is a different animal. It tends to come suddenly out of the blue and is over quickly. There isn’t enough time to develop a panic phase so there isn’t the huge margin calls that occur during a more normal move into an intermediate cycle low.$SPX&p=D&st=2010-03-03&en=2010-08-01&id=p22614288388&a=353763209&listNum=1

    • On June 3, 2014 at 2:46 pm,
      Dick Tracy says:

      This time when we have the next market takedown the recovery won’t be a matter of manipulation, we must start over with an honest system that is gold backed. It will be hard for people who rely on government subsidies but it is the only way.

  6. On June 3, 2014 at 2:32 pm,
    Gary says:
    • On June 3, 2014 at 2:53 pm,
      original jj says:

      Come’On’Man….Gary the reason why the hard sell off in the equities (when is 16% a crash?!?!) unfolded and gold rose (to all time highs) was Standard & Poors downgraded the US long term debt from AAA to AA+ that and the debt ceiling issue.

      • On June 3, 2014 at 3:06 pm,
        Gary says:

        I don’t care what the reason is.

        And it’s a crash when it occurs in only 11 days. And it was 19.7%. That’s bear market territory.

        • On June 3, 2014 at 3:23 pm,
          original jj says:

          More important imo Gary is that was a fantastic buying opp in the SPY as its up 90% since and a great selling opp in gold being down 35% since


          • On June 3, 2014 at 4:35 pm,
            Gary says:

            Sure. But then none of us had a working crystal ball at the time… just like we don’t have one now. But if I had to guess I would say the odds are much better for gold being up 90% in the next couple of years than the stock market.

            The goal is to find the next big run and buy at the beginning rather than chase something that has already made a huge move. Wouldn’t you agree?

          • On June 3, 2014 at 5:12 pm,
            original jj says:

            Oh I agree 110% as I’m a momentum trader, long or short.

            Gold will need a real reason to replace the Trillions that will no doubt run from the equity markets if your crash becomes reality, I’m just not sure the crash just won’t create yet another fantastic buying opp in us equities vs gold being the golden investment.

            Imo its what creates your crash and how it plays out that will hopefully tell us where the next major market trend will be, the Central banks measure their own success by the equity markets and that’s where they will inject their efforts, again!

          • On June 3, 2014 at 5:17 pm,
            franky says:
          • On June 3, 2014 at 5:38 pm,
            franky says:

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          • On June 3, 2014 at 5:44 pm,
            franky says:

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          • On June 3, 2014 at 5:46 pm,
            franky says:

            YOU YOU YOU THE MAN THE MAN !!!!!!!

  7. On June 3, 2014 at 2:46 pm,
    CFS says:

    So Bergdahl is going to be put up on desertion charges.

    We swapped 5 top taliban terrorists for a deserter.
    How smart is that?

    Obama aised the terrorists.

    Impeach the illegally incompetent.

    • On June 3, 2014 at 3:04 pm,
      Dick Tracy says:

      CFS, you are a smart guy but do you know who the terrorists are?

      • On June 3, 2014 at 3:24 pm,
        CFS says:

        According to a 2008 Pentagon dossier on Guantanamo Bay inmates, all five men released were considered to be a high risk to launch attacks against the United States and its allies if they were liberated. The exchange shows that the Obama administration was willing to pay a steep price, indeed, for Bergdahl’s freedom. The administration says they will be transferred to Qatar, which played a key role in the negotiations.

        In the initial statements released about the deal, the White House declined to name the detainees who would be leaving the Cuba based prison.

        A senior U.S. defense official confirmed Saturday that the prisoners to be released include Mullah Mohammad Fazl, Mullah Norullah Noori, Abdul Haq Wasiq, Khairullah Khairkhwa and Mohammed Nabi Omari.

        • On June 3, 2014 at 3:30 pm,
          CFS says:

          I expect you wanted to make some point or other, DT, if so go ahead. I can’t read minds, so I answer questions as asked.

          I supposed you heard Bergdahl’s platoon were forced to sign non-disclosure agreements, just like the Benghazi folk. ?”Most open administration ever”? What a joke.

          • On June 3, 2014 at 4:28 pm,
            Dick Tracy says:

            No, that’s it thanks!

  8. On June 3, 2014 at 2:46 pm,
    Bob UK says:

    Thanks Gary. That is very useful information. So it is not just a stock ‘crash’ that we need to focus on but actually the way in which the market falls – short & swift or protracted over several weeks.

    So the ‘long’ stock crash in late 2008 to early 2009 also took down PMs but the swift 2011 one didn’t.

  9. On June 3, 2014 at 2:50 pm,
    CFS says:

    The market is manipulated
    Watching it only tells something about manipulation.

  10. On June 3, 2014 at 3:07 pm,
    Steven says:

    Since the banks and governments are the market manipulators sanity can not be restored until both are put out of business. That means the end of the world and civilization as we know it.

  11. On June 3, 2014 at 5:23 pm,
    CFS says:
  12. On June 3, 2014 at 5:54 pm,
    CFS says:

    The plot thickens:

    Guess whose law firm represented the Guantanamo terrorists who were released?

    Culture of corruption: Holder, terrorists, Covington & Burling
    By Michelle Malkin • November 18, 2009 02:00 PM
    Update: 11/19 9am…Holder hedges on GOP request for disclosure/recusal information…

    Attorney General Eric Holder, Team Obama’s Dirty Dozen (get your trading cards here)
    If you’ve been paying attention, you already know all about AG Eric Holder and his DOJ staff’s national security conflict of interest as senior partner with Covington & Burling — the prestigious Washington, D.C. law firm, which represents 17 Yemenis currently held at Gitmo.
    I first mentioned it here in January and spotlighted the problem in chapter 4 of Culture of Corruption.
    In fact, Holder and Covington & Burling have a lucrative niche in terrorist representation.
    I’m reprinting the relevant section from Culture of Corruption so you have it at your fingertips. All of this was known before Holder was confirmed as AG, which, as I’ve pointed out before, makes it all the more inexplicable that 19 Republican senators — Alexander (R-TN); Bennett (R-UT); Bond (R-MO); Chambliss (R-Ga); Collins (R-ME); Corker (R-TN); Graham (R-SC); Grassley (R-IA); Gregg (R-NH); Hatch (R-UT); Isakson (R-GA;) Kyl (R-AZ); Lugar (R-IN) McCain (R-AZ); Murkowski (R-AK); Sessions (R-AL); Snowe (R-ME); Specter (R-PA); and Voinovich (R-OH) — cast their votes for him. Now, they are reaping what they helped sow.
    Excerpted from Chapter 4: Meet the Mess – Inside the Crooked Cabinet, Culture of Corruption, by Michelle Malkin (see book for footnotes)
    “Don’t go into corporate America,” First Lady Michelle Obama admonished supporters on the campaign trail. Remember? She extolled the rewards of public service over the material perks of life at a high-powered law firm. She certainly didn’t take her own advice—and neither did her husband’s own attorney general. If he hadn’t pulled out all the stops campaigning for the president, raising money at lavish celebrity events, and offering his strategic and legal advice—and if Eric Holder had an “R” by his name instead of a “D”—he might have served as the perfect poster boy for Mrs. O’s caustic campaign against white-shoe corporate law.
    After a quarter-century as a government lawyer, Holder joined the prestigious Covington & Burling business and corporate law firm. He represented a gallery of the Left’s fattest targets in Big Pharma and Big Business, defending them in fraud and discrimination cases that drove progressives mad. Holder has served both his corporate and government masters well—and he has the bank account and stock portfolio to prove it.

    • On June 3, 2014 at 7:08 pm,
      J........the Long.............ootb says:

      thanks for the post ,,,,and hard work you contribute ……respectfully…………j

  13. On June 3, 2014 at 7:25 pm,
    Scott says:

    I do not believe the conventional and PM markets will be switching at the same time. ANY two markets can have any correlation coefficient in the short run. Positive or negative
    This time the gold market should very well be the leader. If gold moves out of the box first, regardless of the conventional markets then we can write off the true deflationary scenario for another time. If that happens who knows the fed could induce a conventional market rally which would eventually fail while gold continues up unabated much to the belief of Ed Yardeni and all his hilariously pathetic market calls of the last 15 years

  14. On June 3, 2014 at 7:32 pm,
    Scott says:

    Oops make that DIsbelief of Ed Yardeni lol

  15. On June 3, 2014 at 7:57 pm,
    CFS says:

    There are stories coming out of UK Daily mail, unconfirmed anywhere else so far.
    (Note. I do not have two independent sources for this.)

    The reason Bergdahl survived with the Taliban for five years, (In contrast to other captured soldiers who were shot, or even beheaded on film), was that he taught the Taliban new recruits how to use explosives. In other words, he was not just a deserter but essentially joined the enemy.
    There is also an indication that US troops on the ground in Afghanistan knew where he was held and refused to perform a rescue mission. (This has several sources from people that cannot become public because they were forced to sign a non-disclosure document.

  16. On June 3, 2014 at 10:16 pm,
    Birdman says:

    I am beginning to wonder if it is not the bond market we need to watch to know when equities have peaked in both Europe and the US. Rates are still in decline here and there and it does look to me they will fall to almost nothing before this is done. By that time anyone with a lick of common sense will have moved into debt markets in advance of an actual crash in stocks and a long period of negative growth. Just a theory of course. But once bond yield hits absolute bottom there is nowhere else to go.

  17. On June 3, 2014 at 10:23 pm,
    CFS says:

    Birdman. What’s wrong with cash.

    Seems to me it is hard for bonds to stay at zero interest in high inflation.

    And if there is not high inflation, cash does not seem too bad.

    • On June 4, 2014 at 8:07 am,
      Birdman says:

      No problem at all with cash, CFS. It is the contrary bet so I have taken it for an allocation. Just in case. Far to many are fully deployed in markets already and some are fully leveraged. That creates a risk all its own. What do those people think they will do if equities start eroding? They will have no firepower available.

  18. On June 3, 2014 at 11:15 pm,
    Mark says:

    Gary does nothing but guess, like the rest of us. He just charges suckers for his guesses.

  19. On June 4, 2014 at 6:11 am,
    glenfidish says:

    Ive followed gary for two months now and he has been nothing but consistent on his approach. I really don’t know what you are listening to. In fact he has laid it all on the line with his calls and continues to do so. Give it a week and lets see if gary’s calls work out. He stressed patience.