If you’ve followed my analysis for the past few months you’re probably already familiar with this stock as i recently traded it for a solid 26% gain. Since then WDGFF endured some damage as the markets tumbled globally and hit a recent low of 1.69(yesterday) off of its recent high near $3/share less than a month ago. As of yesterday this stock looked dirt cheap for its future fair value though i was hesitant and was waiting for confirmation of a rebound before i did anything. Todays strong rally in the markets sparked by the FEDs decision to cut the discount rates which traders and investors have been dying for leads me to believe this is the spot where the markets will likely rebound and buying opportunities are in place. Not only from an economic market situation, but from a technical standpoint as i analyzed yesterday.

WGDFF.OB is some big plans going forward as i’ve stated previously they are expecting full production in early 08′ and expecting  160k-170k ouncs of gold annually with a cost basis of $355/ounce through 2015.

With these  #’s the estimated fair value of WGDFF based on gold prices are as follows: Gold & Silver industry trading at 28x earnings

Current Share Price at todays close: 2.31 

Gold Price: $550 - $6.50
Average annual EPS: .19
Fair Value: 5.32
Potential Gain: 130%

Gold Price: $700
Average annual EPS: .27
Fair Value: 7.56
Potential Gain: 227%

Gold Price: $800
Average annual EPS: .33
Fair Value: 9.24
Potential Gain: 300%
Western Goldfields Announces Second Quarter Results
Wednesday August 1, 9:30 am ET

- All second-quarter milestones achieved to bring Mesquite Mine into full production

- Term loan facility and related gold forward sales contracts in place

- Mine fleet deliveries and construction program on schedule

- Pre-strip mining commenced June 2007

- Full production expected January 2008

TORONTO, Aug. 1 /PRNewswire-FirstCall/ - Western Goldfields Inc. (TSX:WGI, OTC BB:WGDFF.OB) today announced financial results for the six-month and three-month periods ended June 30, 2007. The Company’s financial statements were prepared in accordance with accounting principles generally accepted in the United States (US GAAP). Dollar amounts are expressed in U.S. dollars unless otherwise stated.”Western Goldfields made significant progress in the first six months of 2007 toward bringing the Mesquite Mine into full production,” reported Mr. Randall Oliphant, Chairman. “We have met all of our second-quarter milestones and we have brought forward anticipated full production by three months. Everything is now in place to make Mesquite a successful producing mine and to establish a platform for the growth of Western Goldfields.”

“With the completion of the term loan facility for $105 million, the project is fully financed,” continued Mr. Oliphant. “To secure the terms of the loan facility, we have executed flat forward gold sales contracts for approximately 40% of our expected gold production during the life of the loan at $801 per ounce.”

“We have taken delivery of and commissioned six haul trucks and two shovels as part of our mine fleet,” said Mr. Raymond Threlkeld, President and Chief Executive Officer. “Pre-stripping commenced in June, and we are planning for full production of 160,000-170,000 ounces of gold annually commencing in January 2008.”

WGDFF looks attractive with its growth prospects and the recent sell it sustained i think provided us with an opportunity to hop back on the band wagon. Looking forward on a longer term basis i think you could expect to see potential gains of 100% +. Though for short term trading anything above 20% will suffice in my book. I bought at 2.25 today

To read more analysis on this stock from when i first purchased view the WGDFF topic on the message boards here:  http://thetechnicaltrader.net/forum/index.php?topic=637.0

Wednesday i was quick to sell most of my positions as the Dow had finally broken down its horizontal trading channel while concerns of Credit continued to spark volatility and fear across the global markets. Its really hard to make accurate calls in such a volatile market when the dow is moving triple digits daily like its no biggy, especially when the underlying fundamentals of a stock are proving to be worthless. Most analysts called for an average joe 10% re-tracement and we’re sitting around 8% down as of todays close. This market is nuts ! intraday i was saying to myself man i’m glad i decided to sell most of my positions yesterday as the down began to slide over 300 points! I wasn’t in the mood to watch anymore bleeding so me and some buddies hopped in the car and went and played 9 holes of golf and threw back a “couple” cold ones . To my amazement when i got back the market had made such a strong rebound managing to close only down 15 points when earlier that day the Dow was down almost 350 points!

From a technical analysis standpoint we are looking in pretty good shape for a rebound after todays move. Price is sitting on a spot where support is looking strong in 3 places as well as forming a bullish hammer candle to indicate that the stock market probably will rebound from this area. Too early to make any assumptions, but technically after Thursdays session we are seeing signs of a rebound in progress.

Asian Markets tumbling Friday:

Japan’s Nikkei 225 index was down 3.5 percent in early afternoon trading on the Tokyo Stock Exchange. Hong Kong’s blue chip Hang Seng Index was down 3.0 percent at midday, and the Korea Composite Stock Price Index was down 2.2 percent after dropping 6.9 percent in the previous session.

Commentary of the market from Yahoo! finance

Wall Street Rebounds; Investors Eye Fed
Friday August 17, 12:51 am ET
By Joe Bel Bruno, AP Business Writer

Investors Eye Fed for Momentum After Dow Reverses From 343 Point Loss NEW YORK (AP) — In what’s becoming a familiar story on Wall Street, stocks have had a dramatic late-session turnaround as buyers streamed back into the market. The question of course is whether Thursday’s surge, which pulled the Dow Jones industrials up from a more than 300 point loss to close only narrowly lower, will be the one that sticks.

The market, which has had several such comebacks this month, has been giving back all its gains of late and then some amid unrelenting volatility. And many analysts believe the answer lies with the Federal Reserve.

Bargain hunting rather than a belief that the bad times are over was partly behind this latest last-hour advance — stocks have fallen so far amid worries about the availability of credit that investors were willing to place some bets. The market pretty much ignored the Fed’s latest injection of cash into the banking system, a move designed to alleviate the fears about credit that have sent stocks plunging for weeks.

What investors really want is an interest rate cut, and one that comes before the Fed’s Sept. 18 meeting.

“I think there is more confidence of a lasting rally in equities if the Fed cuts rates, and that makes it easier on days like this to do bargain hunting,” said John Lonski, chief economist for credit-rating agency Moody’s Investors Service. “And, the more investors sense that the U.S. economy can shoulder losses arising from subprime mortgages, the closer we are to stabilization in equities.”

So far, though, the Fed shows no signs of acquiescing. It has relied on adding money into the banking system to try to soothe the markets. Central banks around the world have been supplying billions of funds to banks in the past week to make cash available for lending and keep interest rates from rising amid signs that credit was drying up.

The New York Fed — which carries out the central bank’s market operation — announced Thursday an overnight repurchase agreement worth $12 billion. This was on top of a 14-day “repo” worth $5 billion announced before the market opened. The Fed uses a repo to buy securities from dealers, who then deposit the money into commercial banks.

It’s not what the market wanted. The Dow was down as much as 343 points Thursday.

But the Fed has its reasons for not giving in — for instance, moving too soon could send a message that policymakers are being too reactive. Also, lower rates risk sending inflation higher, and keeping inflation in check has been the Fed’s primary concern.

“Speculation about what their move will be is what is going to control equities for the time being,” Lonski said.

The turnaround Thursday was driven by buying of blue chip stocks, specifically among beleaguered banks and brokerages. Before the buyers returned, the major indexes had reached the levels of a correction, defined as a 10 percent drop from the market’s highs.

The Dow, which closed just above 14,000 on July 19, was down about 1,150 points, or 8.2 percent, by Thursday’s close.

Some analysts were hopeful that the market will be able to build on Thursday’s momentum.

“The fundamental buyers are coming back into the market, and typically trading in the last half hour of the day is where the smart institutional money is going,” said Jack Ablin, chief investment officer at Harris Private Bank. “There’s a feeling that maybe we’ve pushed it too far, and this gives us a running start for positive markets worldwide on Friday.”

Still, the market is quite fragile. Thursday’s buying also came from traders or hedge funds trying to cover losses from what’s known as short trading. In short trading, an investor sells borrowed stock on a bet that the market will fall; when the market rises, the investor must buy stock to pay back the debt.

Moreover, analysts contend each trading day seems to bring about new worries about credit — needed to fuel corporate profits and takeovers — is drying up. The latest catalyst for selling was bad news from Countrywide Financial Corp., the nation’s largest mortgage lender, which had to draw on a billion-dollar credit line to fund its operations.