Gold Trader: “Expect Margin Calls Monday Morning As Big Players Do Whatever It Takes To Get Physical Metal”

Following Friday’s panic sell-off in gold, one of the world’s top gold traders and recent interview guest, Gary Savage, shared some powerful commentary on what the smart money is doing in the market right now.

Gary said, ”Let me be clear. Just because we got a max ‘Blees’ rating and a large ‘Buying On Weakness’ (BoW) number Friday doesn’t mean the bottom [actually] occurred [on] Friday. It almost certainly didn’t. Margin calls are going out Monday morning [which] is probably going to continue the selling at least into the first hour or two, and it could continue until options expiration, although I doubt we have anything like what we saw on Friday ahead of us. That was a stop-run, and there were obviously a whole lot of stops [hit] below $1523.

That being said I think the [large] BoW number is a clue that this was a manufactured event, and as such it means there are big players that want into the market. They want in because they know [where] the market is going. Of course there’s no way to know for sure unless you are the party or parties that created the [selling] event, [but] only they know for sure if the support was breached intentionally.

Because of the BoW, COT levels and duration of the intermediate and yearly cycle I believe this was a staged event. I’ve been through dozens of these yearly cycle lows in my career, I know how they go. I said weeks and months ago that almost no one would make it through [this bottom]. That [comment] wasn’t meant to be snide, I’ve just seen enough of these to know that technicals get broken during yearly cycle lows and [it] almost always knocks out the majority of traders.

This is just what happens during a yearly cycle low. This one in gold is exceptionally frustrating because it’s been manufactured and artificial. A normal rising intermediate cycle that should have tested $1900 was aborted and turned into a failed cycle. In my opinion [it was] probably [staged] by central banks in Germany, China, Russia, etc. to create a selling panic and bring physical into the market.

When Bernanke fired his next shot into the currency wars…with QE3 & QE4, it forced other countries to take action also to maintain currency crosses. Unlike our clueless Federal Reserve, there are plenty of people in the world that understand how this is going to end, and the role gold is going to play in the end game. Those players don’t care about the current price of gold in US dollars. All they care about is getting their hands on the actual physical metal, and they will do whatever necessary to accomplish that goal [in] preparation for the end game.

So if you are holding, don’t freak out on Monday morning if gold is down again. It almost certainly will be. But if this was an artificial event, and I’m confident it was, then once it’s finished gold is going much, much higher. The big players that created the event don’t do so to sit in a stagnate market. They do so because they know the manipulation has ended and there are big gains ahead as the secular trends resume with a vengeance.”
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Special thanks to Gary Savage for his comments here. To learn more about Gary’s daily gold commentary visit: SmartMoneyTracker.