I had the great opportunity once again to speak with technical gold trader Gary Savage. Gary publishes the “Smart Money Tracker,” which is a daily market commentary and trading service which has outperformed most of the world’s hedge funds in 2011.

Gary announced major news today regarding a breakdown in the U.S. dollar, a resumption of the inflation trade, as well as the potential for a 300% move in the mining shares starting right at about these levels.

During the interview I asked Gary to explain the significance of this change in the dollar trend, and he replied by saying, “In my opinion we are at a very important juncture—yesterday the dollar penetrated below 78.65. The reason that’s important is that was the level of the last daily cycle low. So what happened yesterday was we made a marginally lower low, so the dollar has reversed the pattern of higher highs and higher lows…the reason that’s important for gold or commodity investors is the dollar should generally head lower from now until the intermediate bottom which isn’t due until late June or early July, about the time that operation twist is scheduled to end. “

Commenting further on the implications of a failed dollar rally here, Gary said, “If we start to get intermediate highs and lows that reverse so that the intermediate cycle starts to stair step down, that’s a pretty strong signal that the three year cycle may have already topped…What that would indicate if that does turn out to be the case, would be that at the next three year cycle low, due probably around the fall of 2014, there’s a very good chance we could be embroiled in a severe currency crisis in the U.S. dollar—which could very possibly drive the bubble phase of the gold bull market.”

With respect to the likelihood of another 2008-style market collapse, Gary reasoned that, “The central banks around the world have made it clear that they’re not going to allow another debt implosion. They’re going to print. Europe did it in order to save Greece and Portugal–they’ve made it pretty clear that they’re just not going to let another debt implosion hit the world, so that is off the table. You see people freaking out about Spain and Italy, it’s just not going to be allowed to happen. They’re going to print money to halt those debt implosions, and the next crisis isn’t going to be the same thing that happened in 2008, we’ve know what the cure for that is, and the cure is to print money. The crisis is going to be from printing too much money. So in 2014 is when the next major, major dollar low is due, and I expect that’s the point where we’re going to get served the consequences of our actions and we’re gonna have a currency crisis.”

Concluding on the mining shares Gary added, “In my opinion the place you want to invest is the mining stocks. They are the area that has gotten the most beat up, nobody believes in them anymore, they consolidated for a year and half and then broke down instead of rallying higher, and the stocks themselves, the HUI index has just generated a tremendous, downward momentum spike that has pushed valuations in the mining sector to pretty close to the extremes that were seen in the fall of 2008. That extreme oversold level and undervaluation generated a 300% move over the next two years. I’m pretty sure this one’s going to do something very similar.”   

This was another outstanding interview with one of the world’s most successful gold traders, and is required listening for investors looking to profitably trade the gold bull market.

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Interview with Gary Savage

Interview also posted on our YouTube Channel

To learn more about Gary and The Smart Money Tracker visit: Smart Money Tracker

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