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0920 EST Monday

Good Morning: Even though our bullish outlook on the year ahead was temporarily thwarted by the end of year selloff, we did recount many ways in which an even more bullish market than 2005 might unfold for stocks in 2006 and over the past quarter, we many times posed the idea that the liftoff to the rally started in late October was potentially more powerful than the April 2005 liftoff which caused the S&P and S&P 400 MidCap and Russell 2000 indices all to rally more than 100 points, the latter two setting multiple new all time record highs in the process. We've just about done it again with all three of these indices and then some including the Dow Jones Composite and Transportation Indices setting multiple new all time records also along with the S&P 600 IJS and these indices have been joined by numerous indices around the World rocketing to new multi-year highs or all time record highs as the Global Boom continues unabated.

The start to the new year we did allude might be a positive upward surprise, simply because last year the market tanked from the open and even though lightning can sometimes strike twice in the same spot, it is an exceedingly rare occurrence. As it turns out, the end of year lightning struck early and thus set the stage for a blistering start to 2006, that has been equally breathtaking for stocks and Gold.

Even though we were plagued by some technical problems going into years end which limited our trading ability for several days, our MODAR performance over the past week reflects our extreme bullishness for both Stocks, Gold and Precious Metals in general. As we have said before, even if turn short term negative for a day or two, it will not prevent us from turning massively bullish, should conditions warrant and since the last few minutes of 2005, that has been our stand and MODAR has had one of its most active weeks ever, with over 60 recommendations on Friday alone as we continue to add to 2005's already impressive record of performance indicated below.

It is interesting that when we published our bullish year ahead outlook, we saluted President George W. Bush's appraisal of the US economy as he finally went on the offensive with glowing remarks on the unprecedentedly strong state of the US Economy, following the news that 215,000 more jobs were created in November and more than 4 Million jobs over the past few years. And we recounted how unfortunate it was that he did not come right out and call a 'spade a spade' and truly declare what we already know is unquestionably: "The Best Economy Ever" as evidenced by 10 straight quarters 4% average growth, which has been our mantra since January 2004.

What was more interesting Friday, was that GW finally let loose with no holds barred in Chicago, telling traders at the World's largest exchanges how strong the economy was and how American workers were 17% more productive that just four years ago in 2001. That in of itself is an astonishing statistic and a United States all time record in productivity growth, as is the fact that more Americans are working today than ever in history, with probably the absolute best continuous near full employment, since record low unemployment levels were first recorded in the early 1950's. Suffice to say that so many breathtaking new elements constitute today's economy, that it is hard to compare it with any time past and for that the President deserves full credit for all of his groundbreaking economic initiatives that have ultimately delivered so many record economic results, that are now the hallmarks of today's economy and stockmarket, which incidentally is one of the greatest stockmarket advances ever and unquestionably the absolute best of the very best in Global terms.

Remember, the essence of what you are about to read (again) was first published here on Dec 05 2005 and a lot has happened since...

The Coming Boom in Gold - Along with our Groundbreaking Analysis on Gold Theory factor incorporating the emulation of the Dow Jones of 20 ~ 25 years ago, the 7 fold factor on Oil emulating Gold in 76~80 and the 7 fold repeat factor of 1979 ~ 1980 with that today.

"On this theme we have some ideas about what might lie ahead for the coming year based on the very strong performance going into this final month of 2005. Firstly: Whether someone comes up with a $1,000 price for Gold as in the case of the stunningly accurate Louise Yamada, former Citibank ace chartist or Christopher Wood's seemingly outlandish $3,700 call, we examine all of these such distinct possibilities, because in the last Gold Boom, smart analysts were often subject to ridicule for predicting such off the chart numbers as $850 Gold and even more explosive upmoves in Silver were ultimately proven correct. In fact, today the more lethargic reaction by investors to these sorts of numbers recurring anytime soon, just makes the probability of something extraordinary, even more likely. However, it is our view that, in just the same way as most investors cannot see beyond the climactic highs of 25 years ago, those same highs could look like a dress rehearsal or more minor version of what might seriously lie ahead over coming years.

Our fundamental view of the World is that a few years ago Precious and Base Metals and Commodities in general commenced what is more likely to be a 20 ~ 25 year secular Bull Market of Epic Proportions and in just the same way that in 1982 the Dow Jones Industrials and US Stockmarkets kicked off a 20 year run, so too Gold and Silver are now emulating what happened to the DJIA over those first few years with stunning similarities, both in terms of price appreciation and overall micro-wave to mega-wave structuring.

From this we have drawn the conclusions that just as from 1980 and 1982~1985 saw a doubling of the DJIA from its lows of 758 and 770 respectively that following a strong surge in September 1985 though the end of the year in an uncanny resemblance to Gold, to 1550 by year's end, over the first half of 1986, the Dow Jones Industrial Average surged past 1900 in about a 25% move. Such a move in Gold from say $525 would put Gold at $656 or so 7 months from now except that a move of that magnitude and momentum in Gold to that extent, under extraordinary circumstances might well actually have Gold gunning for its all time highs and might even go all the way thru its old highs, in some kind of blow-off surge and potentially exceed those highs some to a $950 peak, or similar levels that Ms Yamada is calling for. Following her deadly accurate call for $67 Oil, if would be a mistake to rule out $1000 Gold. Remember, as we've already pointed out, the Dow rose 76% in only 20 months from its 1,550 level in early 1986, which we foresee as being reminiscent with whatever level as to where Gold might start out from early in 2006 could project to $925 in truncated time.

(Part 2 will be posted later today)

Trade Well
From the Desk of Savant

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