I had the chance yesterday to speak 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 commented on the panic selling we’ve seen over the last few days, sharing his view that “once this bottom is formed, we may never see gold at these levels ever again.”

Despite continued and relentless selling, Gary commented that, “Gold isn’t in a bear market, it’s [just] been in a consolidation since the top of September 2011. If you pull up a 13-year chart, it shows that gold is not in a bear market, not even close. The miners however, are in bear market, and they have been for 19 months now, and they’ve lost 50%. That’s about an average cyclical bear market…[So] I think the miners are [primed] to bottom along with gold at this yearly cycle low, which I don’t think occurred today, but I think we’re within a day or two of that final bottom.“

When asked about valuations on mining stocks at these levels, Gary said that, “The valuations in the miners are absurd. The gold XAU ratio is higher than it’s ever been before in history. This is coming at a time where the miners have gotten the hint…management is cleaning up their act…[and] the sector is doing what it needs to do to turn itself around. [But] since the trend is down, people just invent reasons for why the miners should continue to go down. Eventually rationality is going to return, people will recognize that mining stocks are not going bankrupt, and they’re just too insanely cheap.”

In terms of the big picture following this grueling correction, Gary said, “We definitely started a [panic selling climax] today in my opinion. The volume on GDX and NUGT was just through the roof, [but] we’re close [to a bottom]…If you have the emotional ability to buy at those bear market bottoms, that’s where the really big money is made…[and] once this [bottom] is formed…we will probably never ever see gold back below this level again.”

As a final call, Gary concluded by saying, “The gold bull cannot end until the fundamentals change, and they have not changed, they’ve only gotten better…[So] I think we’re about to leave these levels behind forever.”