Just as we were contemplating another title yesterday, Gold surged higher in what appeared to be some earlier confirmative action, that began to further vindicate our call for Gold to come bursting out of the starting gates for 2007... But not for long, an hour later Silver was being taken down and Gold succumbed along with it most probably dragged down by a 5% plunge in Oil prices and renewed New Year downer in Copper prices.

The Copper was not such a surprise other than we feel that a rebound could ensue from around these levels as could Gold and Silver in due course. In a way, with the exception of the early surge fakeout, the markets pretty much did an almost carbon copy repeat of 2005 and idea we did air might be a possibility, however, the market always seems to manage to change its behavior just enough to fool everyone into believing this time its different and we won't really know how different it will be until markets steady up some from this sudden intense volatility that has set in over the past few days. Back in 2005 markets bottomed out around the third week in January and both stocks and Gold and Silver have gone on to make significant and substantially higher highs and often that is the way the markets erase increasing levels of over-bullishness that was creeping in over recent days and even in the case of Gold and Silver, perhaps there was a tad over-enthusiasm for 2007, that was already being quite considerably dampened by Silver's sharp pullback after setting new 6 month highs in early December. Actually it should have been pretty obvious there might be another leg down before Silver cements in place a good basing action and sturdy enough bottom to mount another assault on the $15 area, that we think could derive it to $18 and by that time the bullishness may return to skepticism, which will be an environment in which metals can rally.

Following our continued very bullish stance on stock markets right into the waning days of December, many were shocked and surprised at our caution regarding the Equity outlook going into 2007. For what its worth and for the benefit of our extensive Mexican subscriber base we would sell all Mexican issues on any break of 26,500 on the Mexican Bolsa IPC and would only re-enter thereafter on a rebound above that level going on new record all time highs. Our nickname or alias for the Mexican Bolsa has become Mount Everest, because of its strong Everest like profile, that was looking increasingly like it could run right up to Everest's awesomely high peak of 29,035 ft.

The uninformed in the US complain that Mexico is not doing enough to grow its economy and stockmarket in an effort to stem the flow of immigration... They don't know what they're talking about, in one of the most dazzling stockmarket performances of all time, the Mexican Bolsa has risen five fold since 2002 and the economic growth is about twice that of the US and could be three or four times in 2007 and even over the past year of 2006, the Mexican Bolsa outperformed the US markets 3 fold: They could hardly be doing any better than they are already doing to boost growth, but by any measure, especially given previous problems, Mexico's growth has been very impressive and is one reason we believe Carlos Slim could overtake Warren Buffet, as the greatest stockmarket investor of all time, if his net worth rose enough over the past year, to catapult him substantially higher than the $30 Billion net worth Forbes Inc awarded him last year. It's going to be interesting to see how well he performed.

In regards to our caution, we did air these ideas fairly extensively, but as subscribers have learned in the past, what we write here in the morning might not be worth a hill of beans by the afternoon and that's why we have MODAR, which can react instantly to market breaking developments and even though, due to some extenuating circumstances, we were only able to initiate a few long and short positions in the early going we did manage to sell short a decent number of stocks yesterday, around 15 in all with a combined value of over $1 Million, all of which were substantial percentage winners for the day and hopefully will become a welcome omen for MODAR's continued strong performance throughout all of 2007, as we strive to maintain our Buffet-beating performance.

In summary, the next few days could be super important in determining the next major market trends to unfold...

Trade Well
From the Desk of Savant