Since our exceptionally bullish call on the markets back in early August identifying "A New Bull Market in the Making", a number of strong monthly closes that could manifest across a range of markets are conspiring to generate a potentially very bullish setup going into September that could actually stretch right into the end of the year and would imply as we have proffered on several occasions, that the lows could already be in for the year and moreover, already our highlighted S&P 100 appears poised to set new near five year highs today as the Dow Jones Industrials continues to work higher towards its all time record highs and even the Russell 2000 is turning higher. The general consensus remains that we will see a decline into October, but stranger things have happened and these markets now have all the appearances of a potential gigantic short squeeze in the making, wherein Hedge Funds may be caught heavily short across the board.

At the same time Gold and Silver are acting remarkably well, especially Silver, implying as we have already outlined in our Special Report: "Can Metals Go Parabolic?" wherein a breakout in Silver over $12.70 or so, could lead to a dramatic upswing, taking down a number of the recent significant milestones in the process in rapid succession, ie: $13, $14 and $15 for starters, with a potential extension to $18 ~ $25.

Such a move could have an enormous impact on junior mining companies with proven reserves that are close to starting production as it would effectively double their cashflows in the case of Silver and in the event of Gold heading to new all time record highs beyond $875 or so it would bring our 12 month objectives for Gold to reach our new range somewhere between $925 and $1,050, much more realistic and very possible. As we explained in "Everything Points to Gold" a few days ago, Gold and Silver habitually tend to accelerate dramatically higher, often without notice, just as they did earlier this year and of course as they did most spectacularly back in 1980. With the exposition of the idea the Gold and Silver could in fact double their previous highs in this cycle, it brings the possibility of $100 Silver and $1750 Gold sharply into focus and since our target has been for Gold to reach $1,785 by 2009 now for some time, it begins to look increasingly possible with everything going on in the World and a major cyclical for the US Dollar more likely than not due to come in sometime in late 2009 or so...

As stated, our expectations for the S&P to overcome the 1,300 level which we suggested might occur and this week were re-fulfilled with some extra vigor yesterday late in the afternoon and as we said, the resolution of the next directional move from here could be profound and as we brought to light last week, the S&P 100 almost reached post 9/11 new five year highs yesterday and the Dow itself close to a record.

Trade Well

From the Desk of Savant