Steve Christ - Angel Publishing

Goldman Sachs Never Loses

I'll be the first to admit that this story isn't exactly news.

But with all of the negative press Goldman Sachs has received lately I suspect it is a story that most people are probably unaware of.

You see, from its permanent place in the catbird's seat, Goldman actually cleaned up as the housing market crashed.

So I have included a snippet of the story here, but if you're interested in how the vampire squid always manages to come out on top you should probably read the whole thing.

From McClathy by Greg Gordon entitled: How Goldman secretly bet on the U.S. housing crash

"In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.

Goldman's sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation's premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies.

Only later did investors discover that what Goldman had promoted as triple-A rated investments were closer to junk.

Now, pension funds, insurance companies, labor unions and foreign financial institutions that bought those dicey mortgage securities are facing large losses, and a five-month McClatchy investigation has found that Goldman's failure to disclose that it made secret, exotic bets on an imminent housing crash may have violated securities laws.

"The Securities and Exchange Commission should be very interested in any financial company that secretly decides a financial product is a loser and then goes out and actively markets that product or very similar products to unsuspecting customers without disclosing its true opinion," said Laurence Kotlikoff, a Boston University economics professor who's proposed a massive overhaul of the nation's banks. "This is fraud and should be prosecuted."

McClatchy's inquiry found that Goldman Sachs:

Bought and converted into high-yield bonds tens of thousands of mortgages from subprime lenders that became the subjects of FBI investigations into whether they'd misled borrowers or exaggerated applicants' incomes to justify making hefty loans.
Used offshore tax havens to shuffle its mortgage-backed securities to institutions worldwide, including European and Asian banks, often in secret deals run through the Cayman Islands, a British territory in the Caribbean that companies use to bypass U.S. disclosure requirements.
Has dispatched lawyers across the country to repossess homes from bankrupt or financially struggling individuals, many of whom lacked sufficient credit or income but got subprime mortgages anyway because Wall Street made it easy for them to qualify.
Was buoyed last fall by key federal bailout decisions, at least two of which involved then-Treasury Secretary Henry Paulson, a former Goldman chief executive whose staff at Treasury included several other Goldman alumni."

The game is rigged and we are the stooges.

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3 Reasons This Wind Energy Stock Could

Deliver Gains In Excess Of 112% Within The Next 6 To 8 Months

Click here

Top Biotech Stocks

Editor's Note: Today's Wealth Daily focuses on a topic I've been writing about a lot in recent issues: the biotech sector. I recently had lunch with a CEO of a small — yet promising — biotech company, over which we chatted about the intensive process his company undergoes just to attempt to bring a drug to market. Find out what I learned below.

Today's issue also features Wealth Daily Editor Christian DeHaemer's piece on India and Mongolia gold. Chris is planning a trip soon to Asia to report on gold from this part of the world. Stay tuned for more news from his travels.

— Steve

———————————————————————————

Aside from a few failed characters in the auto industry and banking, it goes without saying that the average CEO is a pretty sharp business person.

Like most entrepreneurs, these overachievers see and do things that most people simply cannot fathom. They take risks, they work hard, and they drive their visions down roads that, in many cases, have not yet been paved — without sure answers.

Where it all ends, they can never be sure; but win or lose, they are ready to find out. That is why they make the big bucks.

The average biotech CEO is something of an even bigger outlier. Armed with a Ph.D. and advanced degrees from institutions like MIT, these guys are geniuses on top of being sharp-witted executives.

As a result, they're not just concerned with new business models, but with advancing medicine and curing disease — like cancer and AIDS.

Unfortunately, for all of their brain power, delivering a life-saving drug to the public is one of the toughest tasks out there. . . as is finding the market's top biotech stocks.

"COP-15"

It's shaping up to be the most critical energy summit of the century.

At stake: a global market worth $45 trillion.

This unprecedented meeting kicks off on December 7 in Copenhagan. You can learn exactly how it's all going to go down -- and how our first COP-15 trade could deliver you a tidy 112% -- in our new report.

Click here.

Uncovering Top Biotech Stocks

In fact, it's just as one of these super-smart guys told me two weeks ago, as he patiently explained a promising new therapy to me over lunch. . .

"Steve," he said, "if all of these new drugs worked the same way in people that they do in mice, we would all be rich."

The reality is it takes an average of 12 years and over $350 million to get a new drug from the laboratory onto the pharmacy shelf. And of, say, 5,000 cures discovered in the pre-clinical stage, only about five will make it through the entire FDA approval process.

Therefore, companies have to cover not only the cost of successful development of a single drug, but of many drugs that never even make it to market.

Even still, the research-based portion of the industry currently invests some $12.6 billion a year in new drug development. That is a figure that historically doubles every five years, since developing blockbuster drugs is a risk/reward game.

The Biotech Roadmap

The gatekeeper in this case is the U.S. Food and Drug Administration (FDA), charged with making sure that drugs and biologics are safe and effective before they become available to consumers.

The process begins with the pre-clinical phase in which researchers identify and refine compounds that can be tested in animals and living tissue. Roughly three and a half years later, qualified candidates emerge and are granted Investigational New Drug (IND) status.

Once the FDA gives the green light, the "investigative" drug will then enter three phases of clinical trials:

Phase 1 uses 20-80 healthy volunteers to establish a drug's safety and profile. (timeframe: about 1 year)
Phase 2 employs 100-300 patient volunteers to assess the drug's effectiveness. (about 2 years)
Phase 3 involves 1000-3000 patients in clinics and hospitals who are monitored carefully to determine effectiveness and identify adverse reactions. (about 3 years)

The company then submits an application (usually about 100,000 pages), to the FDA for approval — a process that can take up to two and a half years. Once approved, the drug becomes available for physicians to prescribe.

Before hitting the shelves, each and every drug must clear every single hurdle, which makes investing in biotech stocks highly speculative in every sense of the word. . . no matter how promising a company may look on paper.

After all, as my friend the biotech CEO told me, curing a mouse is one thing. . . curing a human being is something else entirely. As a result, the share price of these companies moves accordingly, making these stocks highly volatile.

Even still, since 80% of growth for the 10 biggest drug makers came from the blockbuster drugs that debuted in 1990s, the "next great cure" is always on the top of the list for big pharmaceutical companies.

As a result, investors in the right companies stand to make the biggest gains.

That's because all of these big companies know that it will likely take three or four $300 million - $500 million drugs to replace the revenues they will lose when their blockbuster drugs go generic. What's more, many of them simply don't have the R&D capacity anymore to keep their pipelines full.

That's why tiny biotech research companies can be bought out in an instant these days, since they currently contribute 67% of all drugs currently in clinical trials.

Of the 320 currently publicly-traded biotech companies, a full 41% have market caps below $100 million. For investors, that means there are serious gains to be had when one of these super-smart CEOs delivers on his or her promises. . .

And despite the lengthy, involved, and expensive process behind pharmaceutical companies' making drugs available to those who need them most. . . they continue their research and work. In fact, we've just published a report about the company that might finally hand us a cure for cancer.

Biotech guys aren't your average CEOs — and neither are their companies, or the dreams they are chasing.

Your bargain-hunting analyst,

Steve Christ, Investment Director
The Wealth Advisory

Warren Buffett Has Increased His Stake

Some of the world's top investors are swooning over one company. Warren Buffett... T.Rowe Price... even the Obama Administration.

They've all increased their stakes. And you can get in just like they did!

Click here to learn what they're so excited about and how you can profit from it.

Mongolian Gold Rush Could Make Your Fortune
— Christian DeHaemer

The price of gold hit an all-time high yesterday with the announcement that India has recently bought 6.7 billion dollars worth of the heavy metal from the International Monetary Fund (IMF). As I write this, gold is a few dollars short of $1,100 an ounce.

Now, $6.7 billion is equal to a month's worth of U.S. military operations in Iraq, and doesn't even come close to any of the bailout packages awarded to U.S. financial institutions. . . but it was enough to purchase half of the total amount the IMF is selling this year. And $6.7bil is more than pocket change for India. . .

According to Yahoo Finance:

The sale to India was nearly half the 403.3 tonnes of gold that the IMF has targeted for sale over the coming years. . . The Washington-based IMF, which currently holds 3,217 tonnes of gold, is the third-largest official holder of the precious metal after the United States and Germany. India is the world's biggest consumer of gold, importing between 700 and 800 tonnes of the metal every year or 20 percent of global demand.

India's Initiative: A Bellwether for Government Gold Buying?

The amount of money that India's central bank spent on gold is not as significant as the fact that they bought gold at all.

For the past fifteen years, major governments like France, Russia, and Germany have been selling gold on the open market. This has obviously had a bearish effect on the price of gold.

This year, not only are none of the major holders of gold selling the metal, but up-and-coming countries like India and China are buying it. China recently reported that it was doubling its gold reserves to 1,054 tonnes.

Both of these countries are selling U.S. Dollars and buying hard assets. They simply believe that the dollar will continue to fall. The fact that the Fed announced today that they would hold the Fed Rate to 0.25% for the foreseeable future backs their argument.

Last week, I told you about a "double top" in the Russell 2000 and that you should buy puts on the corresponding iShare (NYSE: IWM). Those puts surged 59% the next day.

Today I'd like to take a look at the ten-year gold chart. . .

Pent-up Energy in Gold

I've circled patterns on the ten-year gold chart above. These patterns are called "coiled springs." The thinking is this: markets tend to go from trading for long periods of time in tight ranges. This is interrupted by massive breakouts. Sideways markets build energy like a weight on a coiled spring; when the weight is removed, the spring leaps forward.

The chart shows that after each sideways period (lasting roughly two years), the price of gold jumped an amount equal to that which it went sideways. This would suggest that this rally is going to push gold to $1,450 to $1500 an ounce.

And that's just for starters. . . I personally believe that the next liquidity-fueled bubble market will be in gold and other hard assets.

One of the most obvious ways to play this surge in gold prices is to buy junior gold miners — and I've been recommending those all year, to my readers' good fortune.

Go Down Stream

Another way to play the new gold boom is to buy companies that help miners mine the yellow metal.

You may not be aware of it, but there is a new gold mine in Mongolia. In fact, it is the world's largest — a mine bigger than the state of Ohio!

The spending on this mine will double the GDP of Mongolia. That's right — double. . . which means Mongolia will become to Central Asian minerals what Dubai is to Middle Eastern oil.

This boom all stems from a recent government corporate tax cut from a draconian 68% to a more modest 30% of profits.
And this is just the first deal. Mongolia is rich in mineral wealth. The floodgates have been thrown open.

This coming gold rush in Mongolia will flood the country with cash. Early investors will literally make their fortunes.

That's why I'm getting on a 26-hour flight this coming Monday — and braving the cold (the high on Sunday was 13°F), to find out the best way to play it. I've arranged to meet with the largest broker in Ulaanbaator and some well-connected ministers and politicians.

Believe me. . . my date book is stuffed with tours and meetings. I will be doing my due diligence with my boots on the ground. Look for my report in your inbox on January 1, 2010.

Stay tuned for more next week,

Christian DeHaemer
Editor, Wealth Daily
(and soon-to-be-launched Crisis and Opportunity)

Strategic Defaults: 588,000 Borrowers Say "Ciao Baby"

According to the National Association of Realtors (NAR), pending home sales rose again, marking eight consecutive monthly gain - the longest streak since measurement began in 2001.

That led NAR chief economist, Lawrence Yun, to confidently predict his fifth or sixth bottom in housing—but who's counting... besides me.

"Home values will stabilize sooner rather than over-correcting," Yun said, "That, in turn, will mean wealth stabilization for the vast number of middle-class families and lay the foundation for a durable economic recovery."

Of course, how solid that bottom may be depends largely on the mess the housing bubble left behind. Because for many of those that bought at its peaks, the dream of home ownership has ended in the road to ruin.

So much so that it makes more sense to turn in the keys these days , than it does to keep making the payments.

From USA Today by Stephanie Armour entitled: More walk away from homes, mortgages

"When Sharon Sakson was laid off recently from her job as a television writer and producer, she burned through her savings to pay the $2,400 monthly mortgage on her home. But she soon decided it didn't make sense: Her home was worth thousands less than the mortgage she carried on it.

The home had been appraised at $390,000 when she refinanced in 2006, but she estimates it's not worth the $320,000 it initially cost in 2004. So Sakson did what a growing number of homeowners are doing today: She stopped paying and decided to let the bank take her home.

"I'm walking away from my house," says Sakson, 57, who stopped making payments about six months ago on her home in Pennington, N.J. "The bank can have it."

What Sakson did is called a strategic default, or a voluntary foreclosure, and it's fast becoming a major challenge to the government's $75 billion effort to keep distressed borrowers in their homes. Walking away from a mortgage is serious business - it can knock 100 points off your credit score and make you ineligible for a new mortgage for seven years. Yet, about 588,000 borrowers walked away from homes last year, double the number in 2007, according to a recent study by credit-scoring firm Experian and management consultants Oliver Wyman. While home prices are rising, the increases pale compared with overall drops in home prices since 2005 that threaten to push millions more homeowners into Sakson's predicament, owing more than their homes are worth and seeing little chance of rebuilding equity soon.

More will walk away, which will hamper the housing recovery, reinforce lenders' tight credit policies and drag on the economy's recovery, economists say.

‘It's increasingly a more important factor driving the foreclosure crisis,' says Mark Zandi, of Moody's Economy.com. ‘As we move forward, the job market will stabilize, and the big thing will be strategic defaults. People are going to determine it doesn't make financial sense to hold on to their homes. That's going to be a significant problem. Strategic defaults mean foreclosures could be high for a long time.'"

By the way, according to Ivy Zelman, CEO of Zelman & Associates, the foreclosure wave could reach as high as 3 to 4 million distressed homes this year, since 3.7 million homes are either already in the foreclosure process or are at least 90 days past due.

That's an important distinction, since a recent analysis of foreclosure rates by the Amherst Group showed cure rates for these loans are practically non-existent. The Amherst data noted a near 0% cure rate of all loans in foreclosure, while loans 90 plus days past due were cured only 0.8% of the time.

As for loan modifications, you can practically forget them - 70% of all loans re-default within 12 months. You can add them to the total pushing the number even higher.

As for walk-aways, it's a business decision plain and simple.

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Buffett Buys Burlington Northern

A mere few weeks after Burlington Northern reported a 30 percent drop in third-quarter revenue, Warren Buffett decided that was a sign to jump in.

This morning the famed investor decided to buy the shares he didn't already own for $34 billion. If approved, it would be the biggest bet ever for Buffett's Berkshire Hathaway.

From the AP by Samantha Bomkamp entitled: Buffett's Berkshire buying Burlington Northern RR

"Warren Buffett's Berkshire Hathaway Inc. on Tuesday agreed to buy Burlington Northern Santa Fe Corp., making a $34 billion bet on the future of the U.S. economy.

Burlington Northern, the nation's second-largest railroad, is the biggest hauler of food products like corn and coal for electricity, making it an indicator of the country's economic health. The railroad also ships a large amount of goods — including everyday items such as refrigerators, clothing and TVs— from Western ports like Los Angeles, Long Beach, Calif. and Seattle.

Analysts say Buffett is planting both feet in an industry that is poised to grow as the economy gets back on solid ground. If approved, it would be the biggest acquisition ever for Berkshire Hathaway Inc.

Berkshire Hathaway already owns about 22 percent of Burlington Northern, and said it will pay $100 a share in cash and stock for the rest of the company, a 31.5 percent premium on Burlington Northern's Monday closing price. Shareholders have the option to convert their stock for a cash payment of $100 per share or receive Berkshire Class A or Class B common stock. Up to 60 percent of the deal is cash and 40 percent is in stock.

"Berkshire's $34 billion investment in BNSF is a huge bet on that company, CEO Matt Rose and his team, and the railroad industry," Buffett said in a statement.

"Most important of all, however, it's an all-in wager on the economic future of the United States. I love these bets," he said"

Love him or hate him, you would have to admit the guy is pretty sharp.

That being said, a 30% premium seems pretty high on this one. Since when does a railroad merit a 20 P/E?

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Jim Rogers vs. Warren Buffett

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"The # 1 Oil Play in the Country"

With the rest of the nation in recession, one state is enjoying a real live oil boom.

It's all happening in North Dakota, where the Bakken -- a massive oil formation -- has already become a major force in our domestic energy picture.

And now, geologists tell us, we may be looking at a "second Bakken"... one that could easily double the Bakken's 4.3 billion barrels of recoverable oil.

Read on to learn more about what's being called "the #1 oil play in the country"... and the profit-making stocks behind it.

Stiglitz: Recession "Nowhere Near" Over

Fresh off a decent GDP number, the bulls have had tough time gaining traction in the markets lately.

It may just be because the markets realize that the +3.5% gain in the third quarter was achieved primarily with assistance of smoke and mirrors.

After all, without a healthy push from Uncle Sam, the gains practically would have been non existent.

So while some cheerleaders have used the numbers to make the case that the recession is over, a closer look at the figures leaves them riddled with doubt.

That's the opinion of Joseph Stiglitz who recently said that we have much farther to go before we can claim victory over the downturn,

Here are the details...

From Bloomberg by Bob Willis entitled: Stiglitz Says U.S. Recession ‘Nowhere Near' End After GDP Jump

"Nobel Prize-winning economist Joseph E. Stiglitz said the U.S. recession is "nowhere near" an end and the economy's third-quarter growth rate of 3.5 percent, the first expansion in more than a year, won't carry into 2010.

While this week's figures on gross domestic product are "very good," the numbers would be "miserable" without stimulus measures enacted by the Obama administration, Stiglitz said today at a forum in Shanghai. He urged the U.S. and other countries not to pull back on efforts to shore up economies.

"When we look at if workers can get jobs, if they can work full time, if businesses are able to sell goods they produce, in those terms, we are nowhere near the end of recession" in the U.S., said Stiglitz, 66, the former chief economist at the World Bank. The U.S. job market is still "in very bad shape."

The U.S. unemployment rate reached a 26-year high of 9.8 percent in September and economists project it will exceed 10 percent by early 2010.

"The unemployment rate is likely to go up," Stiglitz told reporters two days earlier in Beijing. "Growth won't be fast enough to bring down the unemployment rate."

Stiglitz, a professor of economics at Columbia University in New York, said the growth rate of 3 percent to 3.5 percent needed to create enough jobs for new U.S. labor market entrants was unlikely to be sustained into next year.

It is too early for the U.S. and other countries to begin easing stimulus measures put in place a year ago to avert a financial market meltdown, Stiglitz said.

"For the world as a whole, it's premature to think about exiting stimulus," he said today in Shanghai. Stiglitz became a Nobel laureate in 2001, sharing the prize with George A. Akerlof and A. Michael Spence, both of the U.S., for their analysis of how markets function when buyers and sellers have different information about a product or service."

It will be interesting to see how the market reacts this week if we do get a 10% unemployment figure from the BLS on Friday.

By the way, while everyone was busy yucking it up at happy hour on Friday the FDIC was busy seizing banks. In all, nine failed banks were shut down potentially costing the FDIC some $2.5 billion in the process.

The failure of the nine banks brings the nation's total number this year to 115.

The bad news is there are about 500 more banks on the troubled list.

Related Articles:

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To learn more about Wealth Daily click here

Stake Your Claim in the Stimulus Goldmine

With $787 billion in pork now sloshing around Washington D.C., one industry in particular stands to grab the lion's share.

And for the investors that get there first, this moneymaking opportunity is one that may just turn out to be the mother lode.

To learn more about the Stimulus Goldmine that could easily double when all of that pork gets spent click here.

Moody's: No Housing Bottom Until Q3 2010

Despite the obvious problems associated with the homebuyer tax credit, the Federal government will apparently do anything to keep the housing ponzi scheme from collapsing any further.

That's why the program is set to be extended soon to cover the spring selling season. What's more, their proposal would also be expanded to allow higher-income Americans and some who already own homes to qualify for the tax break. Yippee more "free" money!!!

That's true even though the existing program has turned out to be exactly what you would expect from Uncle Sam: All smoke and dubious results.

In fact, according to estimates by Ted Gayer at the Brookings Institution, each additional home sale generated by the $8,000 first-time homebuyers' tax credit actually costs the government $43,000 for each additional sale.

It's madness I tell you.

Besides, according to Moody's this is one collapse that can't be stopped....

From Bloomberg by Jody Shenn entitled: Moody's May Downgrade Mortgage Bonds With New Outlook

"Moody's Investors Service said it's planning a review of U.S. home-loan securities that will likely lead to another round of rating changes based on a new view that property prices won't bottom until next year's third quarter.

The firm will boost its loss projections by "significant" amounts for prime-jumbo, Alt-A, option adjustable-rate and subprime mortgages backing bonds issued between 2005 and 2008, also after seeing higher losses per foreclosure than expected, Moody's said today in a statement. Recent data showing rising home prices doesn't prove the slump is over, the company said.

"The overhang of impending foreclosures and the continued rise in unemployment rates will impact home prices negatively in the coming months," New York-based Moody's said. Since the first quarter, the company has assumed in its mortgage-bond ratings that housing prices would bottom at the end of this year.

Ratings reductions typically boost the capital needs of bondholders such as banks and insurers and force some investors to sell debt. Moody's and Standard & Poor's, criticized by lawmakers for assigning top grades to mortgage debt proven too high by later defaults, have already cut ratings on hundreds of billions of dollars of notes in the $1.7 trillion market for so- called non-agency mortgage bonds, which lack government backing, lowering many securities multiple times."

Here's a bet home prices fall another 10%—-no matter how hard they try to prop them up.

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The Madness of Extending the Home Buyer Tax Credit

Home Buyer Tax Credit Gives Way to Fraud

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35 Recommendations... 1,293% Cumulative Gains... Just nine months...

Pure Asset Trader continues to rack up impressive gains. Since February 2009, they helped readers realize:

62%, 65%, 31%, 24%, 19% and 13% gains on PowerShares DB Crude
84% and 60% on Petroquest
152%, 155% and 40% on Brigham
53% and 18% on Continental Resources
45% and 22% gains on Petrobank

And while we could easily go on, we think you get the point. Isn't it time you made similar gains?

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Third Quarter GDP Surprises To The Upside

According to the Bureau of Economic Analysis (BEA), the U.S. economy expanded at a 3.5% pace during the third quarter, delivering some faint hope to the idea the recession may be ending.

However, within the report we also learned that without the cash for clunkers program and the homebuyer tax credit, real GDP growth for the quarter likely would have been something closer to 1.9%.

That's less than the estimated 2% growth rate that is necessary to otherwise be left standing still.

Even still, it's hard to argue with the fact that +3.5% is much better than -6.4%.

Also from the BEA release:

• Real gross domestic purchases - those made by U.S. residents of goods and services produced anywhere - increased 4 percent in the third quarter, compared with a 2.3 percent decrease in the second quarter.

• Current-dollar personal income decreased $15.5 billion, or 0.5 percent, in the third quarter, compared with an increase of $19.1 billion, or 0.6 percent, in the second quarter.

• Personal current taxes increased $4.8 billion in the third quarter, compared with a decrease of $119.1 billion in the second quarter.

• Disposable personal income decreased $20.4 billion, or 0.7 percent, in the third quarter, compared with an increase of $138.2 billion, or 5.2 percent, in the second quarter.

• Personal outlays increased $148.2 billion, or 5.8 percent, in the third quarter, compared with an increase of $8.2 billion, or 0.3 percent, in the second quarter.

• Personal saving - disposable personal income less personal outlays - was $364.6 billion in the third quarter, compared with $533.1 billion in the second.

• Current-dollar GDP - the market value of the nation's output of goods and services - increased 4.3 percent, or $150.3 billion, in the third quarter to $14.3 trillion. In the second quarter, current-dollar GDP decreased 0.8 percent, or $26.8 billion.

You do have to wonder though how the economy will respond once all of these government programs come to an end.

After all, beneath today's numbers, the underlying problems still remain.

As for the much hyped Cash for Clunkers program, here's a post mortem on that fiasco.

From CNNMoney by Peter Valdes-Dapena entitled: Clunkers: Taxpayers paid $24,000 per car

A total of 690,000 new vehicles were sold under the Cash for Clunkers program last summer, but only 125,000 of those were vehicles that would not have been sold anyway, according to an analysis released Wednesday by the automotive Web site Edmunds.com.

The Cash for Clunkers program gave car buyers rebates of up to $4,500 if they traded in less fuel-efficient vehicles for new vehicles that met certain fuel economy requirements. A total of $3 billion was allotted for those rebates.

The average rebate was $4,000. But the overwhelming majority of sales would have taken place anyway at some time in the last half of 2009, according to Edmunds.com. That means the government ended up spending about $24,000 each for those 125,000 additional vehicle sales. (emphasis mine)

In order to determine whether these sales would have happened anyway, Edmunds.com analysts looked at sales of luxury cars and other vehicles not included under the Clunkers program.

Using traditional relationships between sales volumes of those vehicles and the types of vehicles sold under Cash for Clunkers, Edmunds.com projected what sales would normally have been during the Cash for Clunkers period and in the weeks after.

Edmunds.com's estimate of the ultimate sales increase generally matches what industry experts had thought, said George Pipas, a sales analyst with Ford Motor Co."

By the way, according to the forecasts, the economy will likely grow at a 2.4 percent annual rate from October through December. GDP will also grow 2.4 percent next year and 2.8 percent in 2011, the surveys have showed, compared with an average of 3.4 percent growth over the past six decades.

The difference is significant.

Related Articles:

The Madness of Extending the Home Buyer Tax Credit

The Cash-for-Clunkers Hangover

"Shadow Inventory" Looms Large in Housing

Home Buyer Tax Credit Gives Way to Fraud -

To learn more about Wealth Daily click here

Jim Cramer Said "Sell" this Stock...

Ian Cooper said "Buy!"

Of course, Cramer's mistake is Cooper's gain. In fact, Ian's readers have already cashed in for 150% and 40% gains on the Bakken oil stock that Cramer blew. (The Mad Money "genius" thought the stock was a natural gas play!)

Of course, Cooper's run doesn't end there. His other Bakken stocks have readers taking profits of 84%, 62% and 65%... with even more on the table.

Learn more on how you can join Ian's profit-hungry group of readers -- before his next winning pick is released. Click here to get his new report.

Dollar Up, Dow Down

Dollar up.....Dow down. It's not much more complicated that that these days.

In fact, here's a look at the recent correlation between stocks and the greenback using the PowerShares DB US Dollar Index Bullish (NYSE:UUP) as a proxy for the dollar

First, in the long term....

....then over the last 5 days.

Any questions?

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Roubini Predicts a Dollar Reversal

Dollar Vs. Euro: An Eye on the Euro and the Hottest Indicator on Wall Street

Warren Buffett on Investing in Gold

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North Dakota's Recession-Proof Secret

It has the country's lowest unemployment rate, a budget surplus of $1.2 billion, and more than 9,000 unfilled jobs.

Yet something even bigger is brewing in the suddenly booming state of North Dakota...

And it's handing investors the easiest gains of their lives -- to the tune of 115%, 128%, 96% and 55%.

Learn how to get in on N.D.'s best-kept secret -- starting today -- in our just-published report.

Roubini Predicts a Dollar Reversal

Here's another great interview from Nouriel Roubini. He appeared on CNBC this morning explaining how the dollar carry trade has helped to inflate the markets —from stocks to commodities—to bubbly valuations.

The famed bearish economist told CNBC,"Now we are in the mother of all carry trades" noting that cheap dollars are pushing asset prices higher across the board.

The danger, he said, is when this trade reverses and the dollar inevitably heads higher. At that point, Roubini warned , there could be "a market crash all over the world"

Here are the cheery details.....

As for the dollar, the correlation with the rest of the market remains as strong as ever. In fact, when the dollar (UUP) rallied this morning the Dow (DJI)fell 200 points off the high.

Take a look:

Dollar up, Dow down....it is as simple as that.

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Home Buyer Tax Credit Gives Way to Fraud

If you needed any more proof that the homebuyer tax credit is nothing more than a government boondoggle here it is.

Not only is the program off the charts in terms of cost, but like most government plans it has been overrun by fraud.

From Bloomberg by Dawn Kopecki entitled: Four-Year-Olds Got Homebuyer Tax Credits, U.S. Says

"Children as young as 4 years old received first-time homebuyer tax credits as the U.S. failed to adequately screen filings, a Treasury inspector general told lawmakers today.

"Some key controls were missing to prevent an individual from erroneously or fraudulently claiming the credit and receiving an erroneous refund of up to $8,000," Treasury's J. Russell George told the House Ways and Means Committee's oversight panel.

More than 1.2 million borrowers through Oct. 9 have claimed almost $8.5 billion of the $13.6 billion set aside for "first- time" homebuyer tax credits this year, George said. The program is aimed at easing the worst housing slump since the Great Depression.

"Every time Congress creates a new refundable credit, meaning that individuals can get a check from the government whether or not they have actual tax liability, the incentive for fraud is magnified," Louisiana Representative Charles Boustany, the subcommittee's top-ranking Republican, said during the hearing.

The Internal Revenue Service has identified 73,799 claims totaling almost $504 million that may not be from first-time homebuyers. They also found that 582 taxpayers under 18 years old and ineligible to buy a home claimed almost $4 million in credits. More than one 4-year-old received the credit, according to George.

Linda Stiff, the Internal Revenue Service's deputy commissioner for enforcement, said her staff has identified 160 potential criminal cases, and 115 are now under investigation. In total, 8,000 claims have been flagged for potential criminal fraud, she said. "We are and will continue to vigorously pursue those who filed fraudulent claims for the credit," Stiff said.

Auditors found 19,351 taxpayers claimed more than $139 million in credits on homes they had not yet purchased. More than $20.8 million of the credits additionally went to 3,238 homebuyers who filed their taxes with individual tax identification numbers instead of Social Security numbers.

Such numbers are generally used by nonresident aliens and may indicate the borrower is illegally living in the country and not eligible for the credit, George said."

It is madness I tell you.

Government in action is not for the squeamish.

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Sen. Isakson Goes Off the Deep End

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Sorry Charlie, But Housing has Further to Fall

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The Madness of Extending the Home Buyer Tax Credit

I'm angry as I sit here poking at the keys. From where I sit, the world has gone mad.

You see, I work all day in an office full of 20-somethings. They are a diverse bunch. They're smart and they work hard.

But the one thing they all have in common is they are stuck on a ladder with no where to go. Buried in debt from student loans and various other sources, they are trapped in time unable grab the next rung.

Among them the most common refrain is: "I can't"

They would like to further their education...but they can't.

They would like to buy a house.....but they can't.

They would like to buy a car....but they can't.

They would like to have children....but they can't.

There's more to the list...but you get the picture.

Of course, when you look at their list of wants you realize that what they want is no different than what everyone else has wanted at one time or another.

The difference is in their world it's a lot harder to attain—if not impossible in some cases.

The reason for this is pretty simple: The cost of their dreams can't be met with their incomes and adding more debt for them is not much of an option. Everything single thing on their list and then some simply costs too much. As a result, they go without.

So there is steam is coming out of my ears today as I contemplate a what vanishing middle class means for the future.

Then, I came across this great story in Barron's about the federal housing credits that made me even more angry. Because I know the government will only make things worse.

You can decide for yourself why this one is wrong....

From Barron's by Randall W. Forsyth entitled: Homebuyers' Handout-Worse Than Cash For Clunkers

THE FEDS SEEM INTENT UPON REFLATING the housing bubble. Not the Federal Reserve, as you may have read elsewhere, but the federal government.

Following the cash-for-clunkers idiocy, the federal government may extend its subsidy for homebuyers. The $8,000 tax credit for first-time homebuyers is due to expire Nov. 30, but our solons in the Senate are looking to push back that deadline and possibly expand the credit to $15,000 to most homebuyers, not just newbies.

As with the clunker cash, Uncle Sam is giving money to folks to do what they would have done anyway. Cash for clunkers temporarily juiced auto sales in August, but they fell back to their previous, depressed pace in September. And some 85% of the subsidy was pocketed by the dealers, not car buyers, according to one estimate ("Clunker Cash: No Boost for Consumers," Sept. 29.).

As an inefficient use of taxpayer money, clunker cash pales besides the homebuyer handout. With housing affordability currently the best it's been in most of our lifetimes, with marked-down home prices and mortgage money in the 5% range, you wouldn't think homebuyers would need a subsidy.

But there it is, and it's a lot more expensive than you think.

According to estimates by Ted Gayer at the Brookings Institution, each additional home sale generated by the $8,000 first-time homebuyers' tax credit actually costs the government $43,000.

How's that possible? Gayer figures that of the 1.9 million homebuyers that will get the $8,000 tax credit, 85% would have bought a house anyway. The price tag of $15 billion — about twice what Congress had intended — he reckons will result in approximately 350,000 additional home sales, at a price tag of $43,000 for each additional sale.

That's nothing compared to the tab for a possible one-year, $15,000 tax credit for all home buyers (except those with high incomes.) Gayer figured that would cost the Treasury $73.9 billion, which he estimated would increase house sales by a total of 253,000. Each of those extra home sales would cost the Treasury $292,000 ($73.9 billion divided by 253,000.)

The National Association of Home Builders, not exactly a disinterested bunch, figures the subsidy would boost house sales considerably more, by 700,000 homes. That implies each of those additional sales would cost American taxpayers only $133,000 — still "a very expensive and poorly targeted subsidy," writes Gayer.

Now think about this for a minute since affordable housing is one of the hallmarks of the middle class. This program is nothing more than an attempt to prop up prices at a level that is clearly unsustainable.

I mean who exactly is the government helping here? Shouldn't home prices be allowed to fall to more affordable levels?

And is it okay to bury future generations with debt to help bailout realtors, bankers and homebuilders? This is their bright idea you know.

It is madness I tell you. And if I was 20-something I would be ready to take the streets.

Someday I imagine they will. After all, when you mortgage the future eventually the bill comes due.

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Biotech Company Buyouts

When it comes to the millions of sites on the internet, I think eBay is one of the coolest.

It's the only place I know of in the world — physical and cyber — where you can buy a 1957 Johnny Unitas football card, a Florida vacation home, and a lucky tube of air. . . all in the same visit. In miles of digital aisles, eBay sells everything.

But one of the best things about the site is the lesson eBay provides on the free market. Because when buyers and sellers meet, the price of everything from bobble heads to engagement rings can be discovered.

And you need not spend much time online before you realize that everything you learned in school about markets is true: the laws of supply and demand are what determine the price of every single item.

Learn How to Cheat the System...

Fair or not, it is the buyers who set the market. And when there aren't many of them, the price of everything drops.

What happens on Wall Street everyday isn't really that different. On the Street, there are many more buyers and sellers, and a whole lot more money is involved.

When the day is done, your shares finish either in the red or in the green. As on eBay, it is Mr. Market who makes the call.

And in the end, you find out that Mr. Market doesn't care about PE ratios, book values, or patterns on a chart. Instead, all he needed to know to determine what you owe was the price someone else was willing to pay for the same thing.

The bell rings and the next day, the cycle starts all over again.

Occasionally, however, there are times when the pool of buyers completely misses the boat, failing to understand what a company's true value is. When that happens, mergers and acquisitions are close behind as the big fish move in to swallow the small.

You see, more often than not, it is the competition that can see the gold at the end of the rainbow. When they do, they are more than willing to pay a premium to get a piece of it first.

Buyouts Push Biotech Stocks Higher

Nowhere is this more apparent than in the pharmaceutical sector these days, where the big fish — Merck, Johnson & Johnson, and Wyeth, to name a few — have been on a virtual spending spree.

As a result, they've been able to find value in small biotech stocks that the rest of the market didn't see. . . or simply didn't know enough about. Along the way, they have created a steady stream of biotech buyouts, earning some lucky shareholders triple-digit gains in the blink of an eye.

Take Sirtus Pharmaceuticals, for instance: in many ways, the biotech bull market gathered steam with them 18 months ago.

Their share price doubled overnight when GlaxoSmithKline (GSK) stepped in and bought the budding biotech for $720 million. Sirtus's market cap was half that amount before this occurred, as investors failed to see the same promise that Big Pharma did.

In short, GSK wanted access to Sirtus's research on Sirtuins, a class of enzymes thought to be involved in the aging process — a blockbuster story if there ever was one. In fact, the Sirtus story was so big that 60 Minutes reported on it, referring to the discovery as akin to the fountain of youth.

Not too long after, GSK jumped to the head of the line, setting the price in the process.

Since then the rest of Big Pharma has followed them — not out of envy, mind you. . . but out of necessity.

That's because the big pharmaceutical companies are staring down shrinking pipelines and a flood of generic competition. As a result, they have had to use biotech buyouts to jump-start their own research and development.

It's either that. . . or these companies suffer via sagging sales, as we learned last week when Johnson & Johnson (JNJ) reported.

Sales in its drug business dropped in part when generic competition hammered two of JNJ's biggest drugs. Specifically, sales of Topamax and Risperal fell 88 percent and 71 percent respectively, as their patents expired.

That may be why JNJ bought an 18 percent stake in Crucell last month for $444 million, and why they picked up Cougar Biotech in May for $1 billion.

For their part, JNJ and GSK are only the tip of the iceberg. In their wake, this is a story that seems to play out at least twice a month these days, as biotech buyouts add more fuel the growing bull market.

After all, everything has a price — even lucky tubes of air on eBay.

In future issues, we will be helping you to separate the contenders from the pretenders in this sector.

In fact, I had lunch on Tuesday with the CEO of a company who says he could completely change the way we think about vaccines. And as impressive as that may sound, that was just a small slice of the story.

So stay tuned. . . this is one story we hope to bring you in the weeks to come.

By the way, aside from individual stocks, one way to play this trend is to buy the SPDR S&P Biotech ETF (NYSE:XBI). It's an exchange-traded fund tied to S&P Biotech Index.

Its holdings include stakes in Amgen Inc. (NASDAQ: AMGN), Celegene Corp. (NASDAQ: CELG), and Cubist Pharmaceuticals Inc. (NASDAQ: CBST), to name just a few. That allows you to spread out your risk across the entire sector.

Your bargain-hunting analyst,

Steve Christ, Investment Director

The Wealth Advisory

P.S. The biotech bull market is a story that we've been following for nearly two years now. Needless to say, this is one sector we still think has plenty of room to run. To learn more about The Wealth Advisory and how to play this rising tide, click here.

Apple Crushes the Fourth Quarter

When it comes the digital world, it's hard to imagine what the tech sector would look like without Apple CEO, Steve Jobs.

That's how good Jobs has been over the course of his career, a rock star CEO if there ever was one.

And the cold hard truth is that what Jobs brings to the table can't be bottled up or reproduced, proving that even in giant companies individuals matter.

But as good as Jobs has been, there is an entire cutting edge company that stands behind him. And with the economy now trying to climb out of a deep recession, Apple's future goes well beyond the talents of just one man.

Fortunately for Apple's shareholders, there is lot more to this company than its CEO. With or without the daily supervision of Jobs, Apple is one of the best run companies in the business.

After the close yesterday, we were reminded of why exactly that is.

Apple crushed it again.

From Bloomberg by Rochelle Garner and Connie Guglielmo entitled: Apple Soars After Mac and iPhone Sales Top Estimates

"Apple Inc. rose to its highest level in almost two years in Nasdaq trading after fourth-quarter profit and revenue topped analysts' estimates, fueled by back- to-school orders for the iPhone, iPod and Macintosh computer.

Apple's shares are trading at a level not seen since the iPhone first emerged as a hit product two years ago, when the device opened up a third major business for the company. While Apple's growth slowed during the recession, earnings have continued to top analysts' estimates. A faster iPhone called the 3GS debuted this year, reigniting sales.

Fourth-quarter net income rose 47 percent to $1.67 billion, or $1.82 a share, Apple said yesterday. Sales advanced 25 percent to $9.87 billion in the period, which ended Sept. 26. Analysts surveyed by Bloomberg estimated revenue of $9.22 billion and profit of $1.43 a share.

First-quarter revenue will be between $11.3 billion and $11.6 billion, Chief Financial Officer Peter Oppenheimer said. Profit will be $1.70 to $1.78 a share in the quarter, which is one of Apple's biggest sales periods. Analysts had anticipated revenue of $11.5 billion and profit of $1.92 a share.

"Apple is traditionally conservative with their expectations," Ryan Jacob, portfolio manager of Jacob Internet Fund, said in an interview from Los Angeles. Apple is his firm's largest holding. "The fact that their revenue guidance is in line with estimates suggests analysts' estimates are low, and will be revised higher."

Chief Executive Officer Steve Jobs cut iPod prices, added new models and ran a back-to-school Mac promotion to fuel sales. That helped Apple sell 7.4 million iPhones, 3.1 million Macs and 10.2 million iPods last quarter. Brian Marshall, an analyst with Broadpoint AmTech Inc. in San Francisco, had predicted shipments of 7 million iPhones, 2.8 million Macs and 10 million iPods.

‘I'm glad I didn't sell,' Hakim Kriout, portfolio manager for Grigsby & Associates, said in an interview from New York. ‘I'm sitting back and looking at what Apple has done, and I think Apple is the new Sony. An entire generation is growing up demanding Apple's products, and nothing but Apple's products.'"

After a strong back-to-school season, it will be interesting to see how Apple performs over the holidays. Here's a bet they just keep chugging along.

Apple's share price, by the way, is now trading at an all time high.

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$1.76 Million Per Megawatt

That's the going rate for wind energy.

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Ratigan on Goldman Sachs: "Legalized Theft"

Here's a video from Dylan Ratigan that speaks for itself. It's about how Goldman Sachs has taken all of us to the cleaners.

Roll the tape....

Visit msnbc.com for Breaking News, World News, and News about the Economy

The great vampire squid strikes again.

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Jim Cramer Said "Sell" this Stock...

Investing in Gold Index Funds

It seems like everywhere I go these days, I'm bombarded with questions about investing in gold index funds. And I can't say that I'm surprised by it—not by a long shot.

After all, considering all of the bad press the dollar has gotten lately, everyone is down on the greenback. Gold as a result has broken out to new highs.

And while I explained in this article last week why I'm not a big fan of physical gold, I do believe gold index funds are a much safer way to invest in the trend.

First though you need to understand how exchange-traded (ETF) and index funds function.

Developed in the 1990's, exchange-traded funds are in many ways the best of both worlds. That's because they combine they ability to make a broad sector bet as you would in a mutual fund, with an instrument that performs on a day-to-day basis much more like an individual stock.

Let me explain.

In short, what an ETF represents is a security that tracks an index, a commodity, or a basket of assets. That makes them quite similar to what you would find in any mutual fund.

However, what makes ETF's different, and in some cases more effective than mutual funds is that they can be bought and sold throughout the day just like stocks on an exchange.

As such, these exchange traded funds allow individual investors the ease and safety of diversification while still allowing for all of the ordinary features of an equity, such as limit orders, short selling, and options.

Moreover, unlike shares of a mutual fund, whose price can only be determined by its Net Asset Value (NAV) at the close of the day, the value of a share in an ETF can go far beyond its underlying value as investors bid up the shares.

Smart traders, of course, love this fact and use it to their advantage as the make their broad sector bets.

So while mutual funds are relatively passive investments whose true worth is based solely on the actual share price of the stocks owned by the fund, an ETF investor needs to be more active in managing those shares.

Of course, keep in mind that those same laws of supply and demand that govern the price of an ETF, can also work in reverse. ETF's can and do trade below their NAV.

That's why investors in these funds need to keep a very close eye them. Passive mutual funds they are not. That perhaps is the single most misunderstood aspect of these funds.

Nonetheless, ETF's do offer other advantages beyond mutual funds. They include:

Lower Fees: ETFs are no-load funds. That means that you won't be slapped with a redemption fee when you decide to close your position. Moreover, ETFs typically have lower annual fees than traditional Mutual Funds.

Liquidity: The exchange-traded structure of ETF gives them much greater liquidity in the markets. That allows ETF investors to close their positions much faster than a mutual fund, which must be liquidated at end of day.

No Minimum Investment: Diversification can be tough for new investors-especially if you're using a mutual fund. That's because traditional mutual funds frequently have a minimum investment of $2,500 or more. ETF's, on the other hand, carry no minimums making for easier asset allocation.

As for a gold index fund, I prefer the miners in this case since they likely have more upside at this point.

My favorite is the Market Vectors Gold Miners ETF (NYSE:GDX).

It's a fund whose top ten holdings include: Agnico Eagle Mines (AEM), Anglogold Ashanti (AU), Barrick Gold (ABX), Gold Fields (GFI), Goldcorp (GG), IAMGOLD Corp. (IAG), Kindross Gold (KCG), Lihir Gold (LIHR), Newmont Mining (NEM) and Yahmana Gold (AUY).

Buying the GDX gets every investor a piece of each one them. What's more the fund is highly liquid trading an average of almost 9 million shares a day.

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Foreclosure Picture Worsens...Up 23%

According to a report today from RealtyTrac, foreclosure filings — which include default notices, scheduled auctions and bank repossessions — were reported on 937,840 properties in September.

That marked a 5% increase from the second quarter and a 23% rise compared to the same quarter in 2008.

In fact, all told one in every 136 U.S. housing units received a foreclosure filing during the quarter - the highest quarterly foreclosure rate since RealtyTrac began issuing its report in the first quarter of 2005.

Of course, that is only half of the story since the dirty little secret in all of this is that there is a "shadow inventory" of foreclosed homes about to hit the market this spring.

In fact, the banks have kicked this little can so far down the road now that there is a tidal wave of homes out there that will need to be dealt with, either through short sales or foreclosures.

According to Ivy Zelman, CEO of Zelman & Associates, that wave could reach as high as 3 to 4 million distressed homes hitting the market, since 3.7 million homes are either already in the foreclosure process or are at least 90 days past due.

As for loan modifications, you can practically forget them - 70% of all loans re-default within 12 months. You can add them to the total pushing the number even higher.

In that regard, Amherst actually believes the real shadow inventory of distressed properties will be closer to 7 million, equivalent to 135% of the average number of homes sold in a year.

So when you add it all up, the picture you get is lot less rosy than the one the housing bulls are trying to paint.

And I haven't even mentioned what soaring unemployment, exploding option ARMS, and the collapse of the FHA will do the market.

At this point, talk of a housing bottom is greatly exaggerated.

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Underwater Mortgages Drive the Next Foreclosure Wave

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Dollar Vs. Euro

I must admit. . . when it comes to the U.S. of A., I consider myself a passionate homer.

Maybe it started years ago with all those World War II movies I watched as a kid with my great uncle. He was an old sailor who was big on Admiral "Bull" Halsey — and by extension, so was I.

Or maybe it's just because I'm much older now, and I realize just how dark the world would be without this great nation of ours. Of that much, I am sure.

So when I read last week in The Independent about a secret cabal to bring down the U.S. Dollar, my enthusiasm for the stars and stripes sagged a little. And I'm sorry to say, thanks to the dollar's recent performance, this isn't the first time I've been let down lately. . .

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That's because stories like this one pop up often these days. After all, when you run deficits the way Uncle Sam does, and you continue to watch the price of gold scream higher, the doubts begin to creep in. . . both here on U.S. soil and abroad.

When that happens, other players sell dollars instead of buying them.

From there, down it goes. . . where she stops, nobody knows.

What's more, the Reserve Bank of Australia raised interest rates 0.25% last week, leaving everybody else in the world wondering if the dollar would ever be defended.

"Kinda sorta" was the answer we heard from the Fed.

The Dollar Index Shows the Way

As a result, the U.S. Dollar Index resumed its downtrend. This is critical to the broader markets, since the price of everything else these days (stocks, commodities, even bonds), tightly correlates to the greenback.

As it goes, so goes everything else — but in the opposite direction. A move lower, then, likely means a move higher for all the rest.

Now you can understand why the Dollar Index is the hottest indicator on Wall Street these days. It is also why it's important to understand what the index is and how it works.

Simply put, the U.S. Dollar Index is a measure of the value of the greenback, relative to a basket of the six most tradable global currencies. These currencies float freely in direct contrast to one another.

It is important to note that within the index, not all currencies are "equal." Instead, the index is weighted, much like the Dow Jones Industrial Average.

The breakdown of the index is as follows:

Euro (EUR), 57.6% weight
Japanese yen (JPY), 13.6% weight
Pound sterling (GBP), 11.9% weight
Canadian dollar (CAD), 9.1% weight
Swedish krona (SEK), 4.2% weight
Swiss franc (CHF), 3.6% weight

That gives the index a much greater weight towards the Euro, meaning even small movements in the European currency tend to have a broad impact on the dollar.

Not surprisingly, it is the Euro's big move higher that is responsible for the bulk of the greenback's decline.

Dollar Vs. Euro: Keep an Eye on the Euro

As the Euro rises, European exports decline. In short, as the Euro rises, European products become more expensive.

However, a higher Euro is the last thing the Union needs right now due to their dependency on exports. Even still, the Euro has risen about 15% against the dollar since the March lows. . . and is not far from its record high of $1.60 reached in July 2008.

How long that can last is another matter entirely, especially since the EU has bore the brunt of the global rebalancing. In fact, there is already speculation that the EU would greatly prefer a much lower Euro, just to spur an increase in exports.

Besides, being short the dollar is one of the most crowded trades on the market. That's usually a sign that a reversal is at hand.

As a result, the Euro is as much watched as the U.S. Dollar these days. This fact also leaves us with a couple of big questions, namely:

What happens when the Euro tops and U.S. Dollar Index turns higher?
Will the rally in stocks and everything else have reached its peak?

The short answer, in my opinion, is yes.

That's why it's important to keep an eye on the dollar-Euro relationship, since it seems to hold the key to everything else.

When the Dollar Index turns and moves higher, everything else will likely turn with it. Unfortunately, though, things will be moving in opposite directions — especially in the commodities world.

As for the true value of the dollar itself, I wouldn't be so quick to shovel dirt on it, since holding currency is a bit like owing a share of stock. The difference is that you are buying the sum total of the country that backs it, which is one of the reasons a panicky world has always sought the safety of the dollar.

When push comes to shove, the rest of the world knows what I do about America: the United States were founded on principles that also have [economic] consequences. Among these are life, liberty, and the pursuit of happiness.

From these concepts, everything else just naturally flows. And this should be considered a monumental strength for a country — not a weakness.

Besides, if you really think that we are the only country in the world printing money and running huge deficits, then you simply haven't been paying attention. The truth is everybody else is in exactly the same boat.

After all, the debt bubble wasn't something that just happened to the U.S. Excess, in all of its forms, is a worldwide phenomenon.

That being said, here's a bet we are the first ones to dig out from under it. And here's to hoping that my optimistic sentiment isn't just a reflection of my patriotism.

Your bargain hunting analyst,

Steve Christ, Investment Director

The Wealth Advisory

By the way, if you are as bullish about the dollar as I am, one way to play it is to go long the PowerShares DB U.S. Dollar Index Bullish ETF (NYSE:UUP). When the "short the dollar" trade reverses, a bounce here is guaranteed.

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DOW 10,000!

I must admit I wasn't expecting this so soon, but it does have a nice ring to it.

Thanks to upbeat earnings the Dow has finally closed above the 10,000 mark.

From Bloomberg by Sapna Maheshwari entitled: U.S. Stocks Rally as Dow Hits 10,000 for First Time in Year

"U.S. stocks rallied, sending the Dow Jones Industrial Average above 10,000 for the first time in a year, on better-than-estimated earnings at JPMorgan Chase & Co. and Intel Corp. Oil climbed, while the Dollar Index slid to the lowest level since August 2008 and Treasuries fell.

JPMorgan added 3.3 percent as a surge in fixed-income revenue helped the bank increase profit almost sevenfold. Intel, the world's largest chipmaker, rose 1.7 percent after its sales forecast topped estimates by as much as $1 billion. Macy's Inc. and Nordstrom Inc. gained on a government report that showed retail sales fell less than economists forecast last month.

The Dow jumped 144.8 points, or 1.5 percent, to 10,015.86 at 4:08 p.m. in New York. The Standard & Poor's 500 Index increased 1.8 percent to a one-year high of 1,092.02, with financial and technology shares leading gains. The MSCI World Index of 23 developed countries added 1.8 percent.

"Intel and JPMorgan are two major bellwethers, so if the most significant semiconductor company and the most significant bank are blowing out their numbers and guiding higher, that has a positive implication for the entire economy," said Philip Orlando, who helps oversee $400 billion as chief equity market strategist at Federated Investors Inc. in New York.

The Dow's rally above 10,000 was led by banks and erases about half the damage done since the gauge soared to a record two years ago. More gains may depend on meeting profit estimates that call for per-share earnings among the 30 companies in the average to rise 22 percent next year and 18 percent in 2011, according to data compiled by Bloomberg.

Benchmark equity indexes extended gains in the final two hours of the session as minutes from the Federal Reserve's September meeting showed central bankers raised economic projections based on improved housing markets, stabilizing consumer spending and a recovery in growth outside the U.S.

"We've really moved in nine months from the threat of another Great Depression to a really powerful recovery," said Burt White, chief investment officer at LPL Financial in Boston, which oversees $234 billion. "We've done that all in just a few months and that's pretty astounding. That's what happens when companies are lean and focused."

Now, how long we can keep this up is another matter entirely.....

Even still, it sure is pretty to see. Green is my favorite color.

By the way, I wonder if Old Art kept that hat. It's from the first time the Dow cracked 10K in the spring of 1999. It's been a long strange trip since then.

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Jim Rogers on Gold, the Dollar, and Inflation

It has been awhile since we last heard from Jim Rogers. But with the dollar on the run and gold screaming higher, the investment guru is never at a loss for words these days.

In fact, here's what he told Bloomberg last week as he predicted the rise in gold has only just begun.

Roll the tape...

Great stuff, Mr. Rogers.

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Carl Icahn Crushes REITs

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Roll the tape.

Great stuff, Mr. Icahn.

Have a great weekend.

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