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0920 EST Thursday February 02 2006

Good Morning:
As you know we are value investors. We like to find low priced issues that have had the value pounded out of them for whatever reason and then investigate and estimate what kind of potential such issues might have and more importantly how much they are really worth and at what kind of discount they are selling at. Although this may sound like fantasy, there are thousands of undervalued companies out there and we have proven that, because over the last two years we have recommended almost 5,000 of them at one point or another and our best performers have been some 900 percenters and even the odd 2,000 percenter plus, and when they get up towards these levels tend to get recognition as 1 performers in their respective categories. That tends to draw a lot of attention to them and if they continue to rise and maintain these record breaking ratings, investors develop a certain comfort level from their ability to maintain such 1 ratings.

This is very important, because as we have emphasized many times in regards to US stocks and indices, there is nothing more powerful than stocks making new multi-year highs or all time highs. They are telegraphing investors a strong message, these stocks or indices are undervalued and getting more valuable as the economy continues to grow or assets they contain continue to become more valuable...

In the early 1950's the Dow Jones Industrial Average was trading at 254. Less than 50 years later it was trading almost 50 times or 5,000 percent higher and we have been expounding on this theme all year, counseling investors that the similarities been 1906 and 1956 are palpable and so far, since October, increasing numbers of US indices including the Dow Jones Transportation and Composite indices have been setting new all time record highs and we do truly believe that perhaps the biggest surprises in years ahead will be how astonishingly high these indices will go in due time. You only have to cast your mind back to Mexican crisis of 1995 or the Russian crisis of 1998 wherein situations looked hopeless at those times of despair and yet within 10 years and just over 6 years respectively, Mexico's stockmarket has risen almost 1,000% and Russia 10,000 percent, making Moscow the Billionaire capital of the World and Mexico City a runner up, with Carlos Slim closing in on the 3 spot Worldwide. The phenomenon of Google is another case in point where, in one of the fastest rises to stardom and Billionairedom ever the phenomenal accelerating hypergrowth and revenue growth of Google in some measure makes it potentially more undervalued today than it may have been when it briefly traded under $100. Value plus Growth = Higher prices.

We have been bullish on Gold since its first rumblings in October 1999, when the Central Banks began to review their policies in regards to selling bullion like it was going to last forever. We declared back then, that heads would roll for those who sold Gold at giveaway prices and that has happened since it became known that by their ineptitude, they cost the British Treasury more than 1 Billion pounds in Gold equity that in the future could amount to Billions more in lost assets. It's all a matter of people's perception of value. The real price of Gold today according to famed analyst James Turk, should be around $2,200 per ounce. Will it get there? Absolutely. It's only a matter of time and the clock is ticking and the pace of Gold is accelerating higher at around what should be its true rate of catchup, for example the fact that Good Year tires are 25% more expensive today than a year ago. This is what inflation is all about and it is already raging right now: The Reuters CRB Inflation index made new all time highs again yesterday at $351. In 1980 this index hit 280 if memory serves and Gold soared to $875 and Silver to $50. This time there is a lot of cushion built into the range between $280 and $351, therefore its seems likely that the current disconnect of still lower Gold prices is such that if this index continues in this range, Gold will exceed $875 in due time...
Trade Well
From the Desk of Savant


Greetings,
A perfect example of the "VALUE", in Undervalued, can be found in our Gold strategy which has been ranked the 1 Performing Mining Stock by Ameritrade Research as well as others.

Here is the conundrum - until the company moves to a senior exchange or reaches a share price of $5.00, whichever comes first, brokers can't call their clients, nor can institutions step up to the plate.

For details, vist CFRN. A report is available in PDF Format. We will also continue to update you via - "Trading Markets" - the one stop shop for savvy investors.





Trade Safe


From the Desk of CT

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