Needless to say, when Mark Zandi said earlier this year that housing would find a bottom in 2009, I didn't count myself as one of the believers.

After all, as I had written time and time again, the bottom in housing was nowhere in sight.

In fact, in this article, I suggested why his forecast was on the optimistic side explaining why a bottom in 2010 would be much more likely.

Now as it turns out, even Zandi now admits he may have jumped the gun on this one.

Here's the story on that score from Bloomberg.

It's in an article by Kathleen M. Howley and John Gittelsohn entitled: U.S. Housing Recovery Delayed to 2010 as Market Wanes

"A recovery in U.S. housing will have to wait at least until next year.

The outlook for the home market dimmed this week as residential construction and mortgage applications fell and loan delinquencies reached a record.

"I don't think the housing crisis is over," Mark Zandi, chief economist with Moody's Economy.com, said in a telephone interview. "I think we're going to see another leg down."

Mortgage applications for home purchases fell to a 12-year low last week and foreclosures rose to record highs in the third quarter, according to reports from the Mortgage Bankers Association.

An index measuring November homebuilder confidence came in lower than the median forecast of 45 economists this week. The Commerce Department on Nov. 18 said residential building dropped 11 percent in October to the lowest level since April's all-time bottom.

The $8,000 federal tax credit for first-time buyers, extended by President Barack Obama on Nov. 6, drove existing home sales to a two-year high in September. At the same time, a 26-year high in unemployment is keeping many buyers out of the market and pushing existing owners into foreclosure.

"The thing that drives our business the most is job creation," Donald Tomnitz, chief executive officer of D.R. Horton Inc., said today on an earnings call. "If we look at the macro economic environment, it's not good for us."

U.S. companies have shed 7.3 million jobs since December 2007, the biggest contraction since the Great Depression, and the unemployment rate jumped to 10.2 percent in October, the highest since 1983, according to the Bureau of Labor Statistics.

The jobless rate probably will peak at 10.4 percent in 2010's first quarter, even as the U.S. economy continues an expansion that began in the third quarter, said Douglas Duncan, chief economist of Fannie Mae, the largest mortgage financier.

"You don't pay a mortgage with economic output — you pay a mortgage with a paycheck," Jay Brinkmann, MBA's chief economist, said yesterday.

Existing home prices probably will fall 12 percent this year to a median of $173,800, while the new-home median likely will tumble 8.7 percent to $212,000, according to a forecast on Fannie Mae's Web site."

Now I wonder if Jim Cramer will come clean on his bottom call...I'm not going to hold my breath on that one.

Related Articles:

Mortgage Delinquencies a Set New Record

The Brewing Trouble at the FHA

Pinto: The FHA Needs a $54 Billion Bailout

Catastrophe averted, personal bankruptcies skyrocket

Underwater Mortgages Drive the Next Foreclosure Wave

To learn more about Wealth Daily click here

——— 

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)

Today, a growing faction of gold bugs has recently been discussing their own "peak" theory for the future:

Peak Gold.

They believe the world's total production of gold may have already peaked. And now gold production will fall drastically, helping push gold prices over the inflation-adjusted high of $2,500 an ounce.

Some are even making predictions of over $5,000/oz.

And I think they may be right — but for the wrong reason.

Peak Oil vs. Peak Gold

Peak oil is simply the maximum rate of global oil extraction.

According to their models, peak oil theorists maintain the total rate of world oil production will grow exponentially over time until reaching a pinnacle, and then fall into a terminal decline. That pinnacle is peak oil.

The resulting timeline of global petroleum output would follow a basic bell curve shape. Something like this...

The concept of a peak in world oil extraction is based on production rates over the lifetime of individual oil wells, fields, regions, and countries. A prime example is the production life of the Cantarell Oil Complex.

Located just 50 miles offshore, Cantarell is the largest oil field in Mexico and was once one of the top five largest producing petroleum fields in the world.

Cantarell more than doubled oil output between 1995 and 2005, topping out at 2.1 million barrels per day. But in the four years that have followed, oil production from Cantarell has plunged almost 75%. A 15-year chart of petroleum extraction from Cantarell mimics the classic model of peak oil theory. Take a look...

Production rates at other major oil fields around the world are starting to look similar. In fact, as many as 6 out of the world's top 10 largest oil fields may have already peaked like Cantarell.

The exact date when oil will peak is debated. Experts estimate the date of the global production peak to range between the years 1990 and 2020 — after which oil becomes less available and more expensive.

So it's suiting that speculators are tailoring their portfolios to take advantage of a rapid increase in prices. My colleague Ian Cooper is one such speculator, and he knows commodities can translate into big dollars in this market...

Other investors have noticed a recent decline is gold mine production and have applied ideas from peak oil theory to create a new paradigm for the future, aptly called "peak gold."

What is Peak Gold?

Peak gold is basically the gold mining equivalent of the peak oil theory, as I explained it above.

Proponents of peak gold point to the fact that global gold production reached an all-time high of about 83 million ounces per year in 2000 and has since fallen to about 72 million ounces. This accounts for a 13% decline in 9 years.

They also contend that rising demand will send gold prices mushrooming higher due to sharp supply/demand imbalance.

But there are a few important factors to consider when comparing peak oil to peak gold.

First (and maybe most important), is that oil is a perishable commodity. Its energy can only be used once.

Gold, on the other hand, is virtually indestructible. And its use as a store of value is everlasting.

Gold can be recycled and reused. And unlike barrels of oil, every ounce of gold that has ever been mined is still around.

Therefore, the demand for gold will forever be able to be met.

Moreover, gold production has been gradually rising and falling for over 6,000 years.

During the 20^th century, there were three decade-long periods when world gold production fell by an average of 30%. Nevertheless, global gold production reached another record high in by the end of the century. Take a look...

I believe the real reason for the drop in world gold production since 2000 was the commodity bear market of the 1980s and 1990s.

During this period, companies lacked the financial incentive to explore for gold, resulting in limited capital for exploration and development of new mines that would go on to produce gold today.

Peak Gold Conclusion

There is simply less evidence to support the case for peak gold right now. And I don't think it should have any serious impact on the gold market in the near-term.

However, perception is everything...

And if a broad enough audience of investors begins to believe that the world's capacity to produce gold really has peaked, speculative mania buying could rapidly drive up gold prices well past their inflation-adjusted highs.

I remain, of course, bullish on gold over the long-term due to rising investment demand. Members of my Hard Money Millionaire have already had the opportunity to make almost 60% in three physical gold investments listed in our portfolio. (You can take a look at my portfolio here.) But I expect even bigger gains over the next several months, as gold continues to surpass record prices.

In the meantime, we just need to hang on for the ride.

Good Investing,

Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire

That's how backwards things must appear as the unemployment rate goes higher and the markets jump right along with it. It makes no logical sense.

In fact if you compared the rise in the unemployment rate with the rise in the DOW. . . you would be hard-pressed to either explain it or believe it.

Yet as Rick Santelli pointed out last week, the correlation between the two is nearly 1:1. Amazingly, even as the unemployment rate hit 10.2% earlier this month, the Dow closed above 10,200. The strange part: the same thing also happened at 8% and 9% unemployment.

And while this seems like nothing more than an odd coincidence. . . you have to admit it is something of a head-scratcher.

But you don't exactly need to be Winston Churchill to figure out what the game is here. The thread of logic in this case is simpler than it appears: Bad news, as it turns out, is good for the market.

With a constant stream of bad news washing ashore, the Fed won't even begin to think of raising rates anytime soon. In fact, the worse the waters become, the longer it will take Ben Bernanke & Co. to act.

You see, as bizarre as it may sound, the market is actually rooting for bad news to extend the Fed's zero interest rate policy (ZIRP). And if it manages to send the dollar even lower — that's something of an added bonus.

That is the twisted logic the U.S. dollar carry trade has now given us. Because when it costs you virtually nothing to borrow in dollars, you can plough them into other assets in a game with little risk.

The U.S. Dollar Carry Trade Explained

That's why the trade of the moment is still: short the dollar and long everything else.

All of which should work like a charm for Wall Street. Until the Fed decides to change its bias and raise the cost of money, it's game on.

You see, the carry trade is a strategy that enables investors to sell a currency with a low interest rate to buy a different currency yielding higher interest rates. In doing so, they automatically bank a profit by nothing more than earning the spread between the two.

I'll give you an example. In today's world, you could borrow one million dollars at very low interest rate (say 1%), featuring a carrying cost of just $10,000. You could then decide to invest that capital into an asset class with a higher yield (say 5%), earning yourself a quick $50,000. As a result of the interest rate spread between the two, you would earn a tidy $40,000 without moving a muscle.

What's more: If you pulled the same deal at 10 to 1 leverage, you could earn $400,000 for your troubles.

And the best part is that the lower the value of the dollar goes, the more you stand to make.

It's this wager — known as the dollar carry trade — that is undoubtedly one of the reasons the dollar continues to fall.

However, since the Fed has absolutely no control over where all of this liquidity will slosh, it usually flows into new asset bubbles. . . Which is why every other asset class has risen as the greenback takes a dive.

That's how we end up with charts like the one below; the DOW is inversely correlated to the U.S. Dollar (UUP) on nearly every single move. Take a look:

I don't mean to beat a dead horse here. But there is a method to this madness, as we have been pointing out for some time now.

The Risks to the Dollar Carry Trade

However, while the dollar carry trade seems like something you would find in a market Utopia, these wagers are as risky as it gets — especially when there is leverage involved.

The risk, naturally, is that the logic behind the entire trade will collapse once the dollar begins to rally.

When that change occurs, a market collapse won't be far behind. In fact, it will all happen very rapidly as everyone heads for the exits at exactly the same time.

Which is exactly what Nouriel Roubini correctly pointed out last month when he said, "There is eventually going to be an unraveling of this carry trade, When the snapback of the dollar occurs, it is not going to be 2% or 3%, it's going to be more like 15-20%. Then, everybody would be left to close their shorts on the dollar. You will have to sell these risky assets across the world and then you could have a huge asset bubble going into an asset bust. The crash will be as big as this bubble builds up to."

Of course, where it stops. . . nobody knows. Even Roubini admits the dollar carry trade could on for some time before the Fed decides to act. After all, creating asset bubbles is the one thing the Fed is actually quite good at.

In a way, it's the Fed's specialty. Think of it as lather, rinse, repeat.

The problem is that the current side show bears very little resemblance to what is actually going on all around us.

That's because our collective magic hat is fresh out of rabbits this time — something that wasn't the case in past downturns.

For instance, when you look back at previous recessions, the way out them was pretty evident at the time. There were tax cuts and falling interest rates in the 80s. The 90s gave us the tech revolution, while in 2000 there was room to expand housing.

Conversely, in today's world the answers to our troubles are nowhere in the picture.

Housing is falling. . . Interest rates have nowhere to go but up. . . Higher taxes are a given. . . and there is no brewing innovation with the same power that tech had to lift us out of our doldrums.

All that is left is a Keynesian policy response that cannot go on indefinitely. . .

What's worse, Americans have more than triple the debt they had in 1982 and less than half the savings. On top of that, a bigger share of them has no home equity, leaving them one pink slip away from financial ruin.

These are tough balls to juggle in an economy that relies on consumers for 70% of the total spend. These are the cold, hard realties that the government just can't fix.

But don't tell that to the market. . . bad news is exactly what it's looking for these days.

The only mystery left is how long this show can go on.

In the meantime, every investor willing to ride this wave should be looking at silver as a way to play the falling dollar. After all, as the carry trade drives the dollar lower, silver — just like gold — has nowhere to go but up.

And according to Hard Money Millionaire Editor Luke Burgess, investment in silver more than doubled last year — up 103%.

Luke has uncovered a new silver investment that he believes could return an instant 33% in the short-term and more than double over the next 18-24 months. You can read more about Luke's latest winner here.

In the meantime, don't think for a minute that the Fed will do anything to defend the dollar anytime soon.

After all, stupid is as stupid does.

Your bargain-hunting analyst,

Steve Christ, Investment Director

The Wealth Advisory

I must admit there are nights when I find myself staring at the ceiling, wondering what happened. Everything used to be so different.

Most of time, I just shrug this off as old age.

But thirty years beyond my youth, I sometimes suspect that all we have earned ourselves is a place on the rat wheel—and it's spinning out of control.

If you doubt that, then you absolutely must watch this lecture given a couple of years ago by Elizabeth Warren.

Yes it is long... but it does explain the pressures faced by the shrinking Middle Class—-pressures that didn't exist back in the 1970's. You can ignore it if you like but you do so at your own peril.

Needless to say, this will be a vastly different country as the middle class recedes.

Besides, the fact is you may just recognize some of the people she's talking about.

It's an eye-opening look at what we've become by a very smart lady.

By the way, a few years later that insightful lecturer became the chair of the Congressional Oversight Panel created to oversee the bank bailout.

Not long ago she warned that "we have a real problem coming..." in regards to toxic assets.

To hear more from Elizabeth Warren click here

Related Articles:

Elizabeth Warren Warns on Toxic Assets

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

The Madness of Extending the Home Buyer Tax Credit

There Is No Free Market in America

To learn more about Wealth Daily click here

I overpaid for the first taxi; the driver pestered me and I settled on a price that was more than I should have paid, but he drove the 15-minute trip from the airport.

The air was heavy with pollution that came from the gur (yurt) village.

People still live in traditional nomadic structures and they burn wood and cow pies and the like. On this night, everyone had a fire going.

The roads were full of potholes. Most lights were off. The buildings I saw as I drove into Ulaanbaatar (or UB, as everyone here calls it), were of the former Soviet-style apartments. More of these ugly grey buildings have been built in the world than any other — that I'm sure of.

My hotel, in comparison, is a top-notch four-star establishment. For $170 a night, I get a place to lay my head, including daily breakfast with eggs to order and thick black coffee.

I hadn't yet heard from my contact from the National Investment Bank of Mongolia, and so I have to be honest. . . I spent some time biting my nails during my flight to Asia. I was worried that I had annoyed Mr. Bayarsaikhan Banzragch, the CEO of the only investment bank in Mongolia. . .

But it turns out he was in Japan on business and had just returned.

Bayar, as he is known, and his lawyer Mrs. Orgilmaa Siizkhuu took me under their wing and gave me access to the Head of the Stock Exchange, the Vice Governor at the Bank of Mongolia (their central bank), and a regional head at the Mineral, Resources and Petroleum Authority of Mongolia.

I also interviewed the man who is building a world class city called Luminu City with a budget of $500 million. It will be a green city (it is always sunny in Mongolia), with solar panels, a 45-foot office tower, shops, and condos. He told me he is "building a second Dubai in the heart of Asia. . . "

And I almost believed him. I'll tell you more about those meetings later. . .

First, I want to point out an article I wrote recently about the commodities boom in Mongolia — gaining momentum then, as I wrote the article, and today, as I type these words from my hotel room — and the significance of the political takeover by the Moderate Social Democratic Party last year.

The contextual significance of Mongolia's political state and the commodities boom is important in understanding just what is on the horizon in regards to the vast fortunes that can be made by this opportunity, as I explained in my last piece:

Untouched for 19 years, the world's last great energy, metal, and mineral boom is about to launch in Mongolia. In fact it's already happening. A new tax law has recently changed the business climate, and the likes of Goldman Sachs, China Wealth Fund, Rio Tinto, and many other big players are rushing through the gates. . .

For the better part of a century, Mongolia has been known for its wealth of minerals: gold, coal, rare earth metals. Heck, the Russians had the whole place mapped out in the 1960s.

But under Russia, very little extraction ever took place. In the early 1990s, Mongolia finally broke free from its status as a Soviet puppet state and the country reacted like many former Russian states: It whipsawed from corrupt renegade capitalism back to its former communist party rulers and a collective mentality.

But neither of these systems was conducive to the massive capital inflows necessary to fund long-term gold, copper, and coal mines.

And as a result, during the commodity boom era of the 2000s, Mongolia was taken over by the anti-capitalists and strict laws were made placing punitive taxes on foreign companies after Mongolia's mineral wealth.

Then last year, the Moderate Social Democratic Party took power. This new group had a pragmatic approach to economics and political ideology. One of the first things those in power did was to cut the corporate tax from 68% to 30%. I bought one small gold miner in anticipation of this new law. . .

It is now up more than 458%.

To give you some perspective, the square footage of this mining property is bigger than the state of Ohio. And the $6 billion investment — coupled with the expansion of the economy — will easily double Mongolia's $9 billion GDP.

But it wasn't long after the plane touched down that I realized there were some things I didn't know when I wrote my article about mining in Mongolia: Mongolia isn't some warmed-over former Soviet state. These people were hard-working, smart, and aware of the fact that their future is very promising.

If I can generalize a population, they remind me of the people I've met from the Western High Plains states, like Colorado and Wyoming. They are a proud, horse-and-mountain people with a long history. After all, one of their ancestors once ruled the world.

They are Buddhists who care very much about the environment and their place among generations. When I mention the amount of gold and uranium their country has, they gratefully attribute from whence they came with the response, "Thank the ancestors."

The feeling I get on the ground is one of controlled optimism.

Mongolia's people are going to meet the future peacefully, with every intention not to mess with the balance of their present-day lives.

I'll keep you informed on my adventures and on-the-scenes discoveries in the weeks to come.

More later,

Christian DeHaemer

Wealth Daily

Cramer, of course, thinks she's dead wrong... writing at least three articles pointing out her errors. But if he spent more time doing research and less time criticizing, he'd realize she was right... (We wouldn't want to remind Cramer of his "brilliant" Bear Stearns call, would we? Too soon?)

Financials really are in trouble, especially this January 1, 2010.

That's when FAS 167, or the Federal Accounting Standards 167, effective January 1, 2010, will take effect. It'll basically force financials to bring bad, off-balance sheet asset back to the books... which could trigger substantial Street disasters, comparable to that of Lehman.

"In June 2009, the Financial Accounting Standards Board issued an amendment to the accounting standards for transfers of financial assets (SFAS 166) and an amendment to the accounting standards on consolidation of variable interest entities (SFAS 167). Both amendments are effective and will be applied prospectively by the company on January 1, 2010 ... Under these accounting standards, the company will record the underlying mortgage loans in these single-family PC trusts and some of its Structured Transactions on its balance sheet. These mortgage loans have an outstanding unpaid principal balance of approximately $1.8 trillion as of September 30, 2009... While Freddie Mac continues to evaluate the impacts of adoption, the company expects that the adoption could have a significant negative impact on its net worth."

Worse, check out what Wells Fargo had to say recently on FAS:

This comes from Wells Fargo's Q3 report:

"I want to update you on our most recent analysis of the impact of the application of FAS 166 and 167, which is expected to result in the consolidation of certain off-balance sheet assets currently not included in our financial statements. We provided a preliminary analysis in our second-quarter 10-Q. Based on our continued refinement of this analysis, we now expect approximately $55 billion in incremental GAAP assets to be brought on balance sheet, representing approximately $28 billion in incremental risk-weighted assets."

And they're probably not the only ones with this hanging over their heads. 

Long story short, financials and our consumer cash-strapped society, are in trouble... big trouble.

We'll look to short some of the big names in Options Trading Pit as we near January 2010.

Here's the Meredith Whitney interview from CNBC yesterday that has Jim Cramer so upset.

In fact, Cramer was so miffed by Whitney's bearishness that he called her "an embarrassment." in his most recent piece.

Even still, the markets did manage to peak yesterday when Whitney let on that she hasn't been this bearish in a year....

As usual, Meredith makes total sense.

By the way, According to a TransUnion report released today, 6.25% of all home loans are past due 60 days or more. That's up 58 percent from 3.96 percent a year ago.

What's more, TransUnion expects delinquency to rise to just short of 7 percent for the fourth quarter, compared with 4.6 percent for the 2008 fourth quarter.

Related Articles:

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The U.S. housing market's 800 lb gorilla

Credit Card Companies Say "Let's Make a Deal!"

Prime Mortgage Delinquencies Double

To learn more about Wealth Daily click here

Editor's Note: Rare Earth Metals (REEs) are nothing short of crucial to the way we live. In fact without them, some of our most important modern technologies could never exist: rechargeable batteries, electric motors, photo optics, and solar cells, just to name a few.

They are so pivotal to modern circuitry that industry insiders came up with a nickname for REEs: 'technology metals.' And on January 1st, Denmark will relinquish its sovereign hold over Greenland's mineral rights, making Greenland's $273 billion rare earth resources private property. To learn about the single company in control of all of it, read the following new report.

——— 

The lithium buying mania has only just begun, as investors and governments scramble for a way to cash in. . .

That's because even they know that lithium could soon replace billions of barrels of oil — or trillions of dollars in black gold revenue.

They also know that demand is expected to continue rising, as the lithium boom takes its cue from the demand for it in the electric car market. . .

We're not talking "flash in the pan" here.

We're talking about exposure to a lithium battery market that's expected to hit $15 billion by 2010. . . and quite possibly $30 billion within a few short years.

Why would you pass this up?

Already, some of the world's biggest players are wasting no time claiming their stake, including Warren Buffett, who recently stunned the market when he announced a $250 million investment in a Chinese electric car company — even though he knows nothing about electric cars.

Even China, Korea, Japan and the U.S. are pouring millions into lithium projects.

I could continue listing examples, but I think you get the point.

How can you not jump on this profit opportunity?

The Boom is Just Getting Underway

There's simply not enough of the element to go around.

And demand is only going to get stronger with limited supply, as lithium batteries are on the cutting edge of powering the coming hybrid and electric car revolution.

Starting in 2010:

• Mercedes will launch its hybrid sedan in early 2010.

• Tesla Motors already delivered its Roadster.

• Nissan will produce 150,000 electric cars.

• Ford has plans to manufacture an electric Focus by 2011.

• And General Motors is betting on the success the Chevy Volt, in 2010.

  And, according to Brian Hicks, if you're skeptical or concerned that fuel efficiency alone is not enough to entice Americans to buy electric cars, consider the Silicon Valley company Tesla Motors. While their roadster is the first production automobile to use lithium-ion battery cells and travel more than 200 miles per charge, it is also capable of going from 0-60mph in less than four seconds.

  Not only will the Roadster leave most sports cars in the dust; the car recently set a distance record in April 2009 when it completed the 241-mile Rallye Monte Carlo d'Energies Alternatives with 36 miles left on the charge.

  At just over $100,000, the Roadster is probably too pricey for the average consumer. . . but Tesla has taken more than 1,000 reservations for the car and expects to begin production of an all-electric and more affordable sedan starting in late 2011.

  But just remember, the Tesla — as well as every other electric car — needs lithium. And demand for lithium is skyrocketing. . . and will continue to skyrocket.

  With limited supply and all this demand, what happens to the price?

  It'll easily take off.

  And as more than four million electric cars could be sold in coming years, there's not nearly enough supply. And it's not nearly enough to meet these projections:

  • Deutsche Bank sees 70 new electric car models by 2011, for example;

  We're talking big numbers — and a big demand that may not be met quickly. But it's great news for any company involved in finding lithium.

  Here are some of the companies that should benefit. . .

  There's always Western Lithium, which our own Brian Hicks recommends. It's well-funded and debt-free, with $7.3 million cash on the books. They recently completed a $5.5 million private placement in May of this year and have a market cap of 70 million.

  And sure, the stock is up a lot this past year. . . but we believe the lithium bull market (one that could mirror the uranium-style bull market), is just getting started.

  While there are many more "must own" lithium stocks to pick up today — featured in the latest Pure Asset Trader special report — there's another element "flying under the radar" that'll change our lives forever. . .

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  Vanadium Leading the Charge

  Sitting between titanium and chromium on the periodic table lies a little-known element that could make investors a small fortune — just as lithium could do.

  You may have never heard of it, but it's all around you. It strengthens steel in offices and tools. . . and could soon play a big role in electrifying cars.

  Future growth for this element already looks very strong in the steel industry. In addition to the trillions in global stimulus spending, CIBC World Markets estimates that global infrastructure spending will hit $35 trillion over the next 20 years. These projects will focus on rail, highways, bridges, and airports. . . and all will require vanadium.

  But growth in energy storage will be a big boon, too. Subaru recently revealed its G4E car, powered by a high-capacity vanadium-lithium battery. That battery alone will be capable of storing two or three times more energy than standard batteries.

  We're talking wild, explosive growth in a sector that just starting to take off.

  How can you pass this up?

  Stay Ahead of the Curve,

  Ian L. Cooper
  Wealth Daily

  
  

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It's terrifying... that is, unless you have a good system in place, which brings us to today's trading idea.

Starting today, and running about three to four times a month, we want to share some of the technical secrets that we've spoken about and use in Options Trading Pit.

Sometimes, it's just so easy to make money in this market... especially if you have a system that works. And if you want more "live" similar trades, we always welcome new readers to Options Trading Pit.

For starters, here are the technical set ups that we use.

Now let's apply it.

Take a look at Wynn Resorts (WYNN) with Bollinger Bands, W%R, and candlestick overlay on a six month chart.

Notice that every time, WYNN hit the upper or lower Bollinger Band coupled with an oversold or overbought W%R read, the stock bounced.

So it was no surprise when the stock bounced from about $51 to about $70 after the stock bounced off the lower Bollinger Band, coupled with an extremely oversold W%R read and a doji reversal candlestick. It was also no shock when the stock began to sell off today. The stock ran to the upper Bollinger Band with an overbought W%R read and plunged.

And we literally have a list of 100 or more of these that we go through every day.

Here are more examples. These are plays that haven't sold off just yet... but are expected to based on the technicals that we use. Each has a gravestone doji parked at the upper Bollinger Band with an overbought read on Williams % Range.

• Landstar (LSTR)

• BRE Properties (BRE)

• Constellation Brands (STZ)

If you buy any, don't risk the house. This is not a market that makes much sense these days.  This is just a sampling of what we look at daily for Options Trading Pit, which is accepting new readers.

Today, you'll read about Brazil — a place where Sam has spent time developing contacts and a frame of reference for how money moves in one of the world's most dynamic markets. The same can be said about Sam's experience in China, Eastern Europe, the Middle East. . . and even Capitol Hill.

In fact, Sam will be reporting to you directly from this week's American Council on Renewable Energy (ACORE) Phase II Policy Forum in D.C. This gathering of top energy policymakers isn't like many Washington conferences that take place far from the guts of government, in a hotel conference room somewhere in Northern Virginia or Maryland's D.C. burbs.

ACORE will be right on the Hill, patched directly into decision-making officials and committees. As you read Sam's dispatches, you'll get the advantage of first-hand information that can tell you when, where, and why certain clean energy companies are set to benefit from Washington's national energy overhaul.

Stay tuned for more,

Brian Hicks

Publisher, Wealth Daily
———

Crisis & Opportunity in the Great Brazilian Blackout of 2009

Thousands of middle-class Brazilians slept on subway station floors on Tuesday night, November 10.

This wasn't a solidarity project to see what life is like for the homeless. . . It was the result of a blackout that hit nearly 70 million Brazilians in 800 cities.

The trigger? Three — count 'em, THREE! — transmission lines. Officials said on Wednesday that torrential rain and thunderstorm conditions caused a trio of high-voltage lines to simply collapse and in turn Itaipu, the world's largest hydroelectric dam, totally broke down.

That initial explanation is now in question, and as of Monday President Luiz Inacio Lula da Silva is pledging a full inquiry. But whatever happened brought one of the world's top emerging markets, enshrined in the BRIC pantheon with Russia, India, and China, into primitive darkness. One transmission failure plunged the proud hosts of the 2014 World Cup and 2016 Olympics into literal obscurity.

This is a problem whose solution requires urgent investment, and it may be a crisis investor's dream scenario.

I spent two weeks in Brazil this spring, chatting with folks in corner cafes, speaking with businesspeople, and learning about the country's ProInfa clean energy infrastructure expansion plan where international companies are set to play a major role. More on ProInfa in a bit. . .

Brazil's Upcoming Wind Energy Auction

ProInfa, the national renewable energy incentive campaign, will help integrate 2 GW of wind energy capacity at a cost of about $6 billion by 2012. The companies that get ahead in the December auction will have to move fast to get capacity up by 2014, which means more production, higher profile, and higher share price.

The New York Times cites Pedro Perreli of the Brazilian Wind Energy Association's amazement that overall, 441 proposals for over 13.3 gigawatts in Brazilian wind power have come in already from companies all over the world. That more than doubles what government and local industry officials anticipated!

Green Chip International readers are already profiting from two Brazilian clean energy and infrastructure stocks, and we're watching the run-up to Brazil's wind-only auction closely.

I'll also be in Peru soon, visiting wind power facilities and talking with people with knowledge of how these deals get done across South America.

First, you'll get a full report from me next week following the ACORE policy conference in Washington, D.C.

And if you want details on the stock plays that are sure to come out of GCI research on Capitol Hill and abroad, check out the service for yourself today. Just click here for your first special report.

Regards,

Sam Hopkins

Here's another great video from Congressman Ron Paul.

Roll the tape....

 Great stuff, Congressman Paul.

 By the way, if you're interested in what the Federal Reserve does and why it was created, I have dusted off a series of old stories on the central bank I wrote two years ago.

The story, of course, is long one. In fact, when I wrote it, it turned out to be a six-part series.

But I wrote them because the truth is that very few people understand where the Fed came from, why it exists, and what it ultimately means for the dollar.

In fact, I always thought that this was kind of strange considering that the Fed Chairman is often touted as being the second most powerful person on earth behind the President. And yet, I don't remember spending more than 30 minutes on it school.

So when I began to really read about the Fed, I found it all to be pretty eye-opening.

Which is exactly, I think, what John Adams may have had in mind when he wrote the following long before the Federal Reserve ever existed:

"All the perplexities, confusion and distresses in America arise not from defects in the constitution or confederation, nor from want of honor or virtue, as much from downright ignorance of the nature of coin, credit, and circulation."

-John Adams

And that I guess is why I've decided to post them again in this blog.

After all, the massive decline in the U. S. dollar hasn't happened in a vacuum. And neither has the inflation that will come along with it.

So here are the six stories that first ran Gold World on September 20, 2006.

You may be surprised by what you learn.

• The Fed, the Dollar, and You

• Born of Panic: The Crisis that Gave Us the Fed

• The Creation of the Federal Reserve

• The Fed: Uncle Sam's Magic Banker

• A Good Deal If You Can Get It

• The Fed, the Economy, and You

Related Articles:

Ron Paul vs. Ben Bernanke

Ron Paul's "National Nightmare"

There Is No Free Market in America

Is this the end of America?

Gold prices and the "new" misery index

To learn more about Wealth Daily click here

But the world is still full of money-making opportunities. Here's a look at some of them from the past week...

• A week after Warren Buffett bought Northern Santa Fe for $34 billion, the buyouts continue. Hewlett-Packard, for example, just announced it'll acquire 3Com Corporation (COMS) for about $2.7 billion. And this won't be the last of the mega-deals: Companies are still sitting on record levels of cash, just waiting to spend. We're talking $994 billion in cash hoarding. Tech companies, for example, are loaded with $269 billion in cash that could be used for M&A and dividends. Keep an eye on Microsoft, Google, Cisco, Apple, Intel, EMC Corporation, Dell, Yahoo, Amazon.com, and eBay Inc.

• Ranging from $78 to $79 a barrel, oil's been quiet this week. But we were hit with a lot of crude oil forecasts, making our Bakken investments that much more appealing. According to OPEC, global oil demand will grow by 700,000 barrels a day next year, thanks to China and India. The always 'trustworthy' Goldman Sachs maintained its $85 a barrel forecast for year end and $95 by next year. And the IEA is reporting that global oil consumption will average more than 86 million bpd in 2010 — marking the third straight month that the forecast has been increased.

• And what would a week in investing be without mentioning gold? Gold continues to rocket. As of this writing, it passed $1,123 for December delivery. The increase now marks the ninth straight day that gold futures have spiked, as dollar-wary investors race to gold.

• Speaking of gold, the Van Eck Market Vectors Junior Gold Miners ETF (GDXJ) started trading this week. But while the fund will offer good gold miner exposure, according to the prospectus, the fund is not allowed to invest in a junior gold miner with a market cap of less than $150 million. That means that some of the top-quality names will not qualify. Still, this fund should give you enough exposure to gold's further run north.

• Also making headlines: New claims for unemployment benefits fell more than expected last week to 502,000 from an upwardly revised 514,000 last week.

• But you can profit from more than the good news. You can profit from the coming bad news, too. As we've been warning, the second round of the housing crisis will soon begin. (U.S. foreclosure filings passed 300,000 for the eighth straight month, as unemployment makes it tough for homeowners to pay bills. A total of 332,292 homes received a default or auction notice, or were seized by banks — that's up 19% year over year.) But there is a way to trade the coming trend, as we've seen in Options Trading Pit.

Stay Ahead of the Curve,

Ian L. Cooper
Wealth Daily

P.S. In case you missed any of the week's top-read articles from Wealth Daily and our sister publications, I've included them here.

Peak Oil Reality: Closer to Peak Oil than Officials Have Admitted
Wealth Daily Publisher Brian Hicks comments on a recent news article that sent shock waves through the energy sector, edging the theory of peak oil ever closer to reality.

Now Has Never Been An Easier Time to Profit: Commodities Again Leading the Charge
Oil prices are rising so fast that the International Energy Agency just increased its world oil demand forecast for 2009, mid-year. According to IEA analysts, we can expect demand to spike an average of $3.6 million barrels a month. . . and we plan to be right there to profit, again and again.

Global Desalination Investments: Where Abu Dhabi is Spending Oil Profits
Energy & Capital Editor Nick Hodge discusses the growth in Middle East desalination and the investments that go along with it.

Smart Grid Stocks: Wires, Lights, and Energy Networks
Green Chip Editor Nick Hodge discusses smart grid stocks. . . and what's in store for the sector in 2010. . .

Biotech Stocks to Watch: The Race for the Cure
Not only is this company working on the cure to one of the deadliest diseases know to man, it's also following an enormously profitable trend in the biotech sector.

Profit Update: Hyatt IPO: We Nailed It — Absolutely Nailed It
Despite the naysayers that advised against buying Hyatt (H) on the IPO, Wealth Daily bucked the trend — and won.

Many of the fortune-hunters who set out on the journey were professionals. They were teachers, lawyers, doctors — even a mayor or two — who gave up respectable careers to search for buried treasure.

Most were well aware that it was unlikely they'd hit the mother lode. But they went anyway — if for nothing else, for the adventure.

Adventurers seeking vast fortunes from Alaska's gold resources are still around today.

But instead of eyeing for small flecks of yellow metal in a river, we're investing in Alaska's gold mining companies.

Alaska is one of the best states in the U.S. to mine for gold. It hosts an estimated gold resource of over 250 million ounces, and is one of the most mining-friendly states in the nation.

In fact, former gold mine developers run the state's Department of Natural Resources, the organization that regulates mining.

DNR Commissioner Tom Irwin is a gold mining veteran with more than 30 years of experience in the industry, overseeing operations such as Kinross Gold's (NYSE: KGC) Fort Knox mine — Alaska's largest gold producer.

So it comes as no surprise. . . The state of Alaska has never turned down a gold mining permit.

Mining legislation is even written right into the state constitution:

With rising gold prices, and support from the state to develop its abundant resources, capital investment in Alaska's precious metal industry has skyrocketed over the past few years. This investment has developed Alaska into the second-largest gold producer in the U.S. — contributing about 10% to total annual U.S. production.

With investment money still pouring in, estimates suggest gold production in Alaska will continue to climb this year, nearing the peak of production during the Klondike gold rush. That means there's never been a better time to start investing in. . .

Alaska's Gold Mining Stocks

Investors have already stuck the proverbial "mother lode" with companies that have quality Alaskan gold projects such as NovaGold Resources (NYSE: NG), Northern Dynasty Minerals (AMEX: NAK), and International Tower Hill Mines (TSX-V: ITH).

NovaGold Resources (NYSE: NG)

NovaGold Resources is a $990 million exploration and development firm that has a 50/50 joint venture with Barrick Gold (NYSE: ABX) in the Donlin Creek mine. Located in central Alaska, the Donlin Creek mine is special because it is expected to be one of only a handful of gold mines in the world capable of producing over 1 million ounces of gold a year. NovaGold investors have had the opportunity to make a gain as high as 289% this year.

Northern Dynasty Minerals (AMEX: NAK)

Northern Dynasty Minerals is a smaller $680 million exploration and development company that has a 50/50 joint venture with Anglo American (LON: AUUK). The two companies share the rights to the massive Pebble copper/gold deposit in southern Alaska. The Pebble deposit is estimated to contain 72 billion pounds of copper, 94 million ounces of gold, and 4.8 billion pounds molybdenum, as well as quantities of silver, palladium, and rhenium. Since the beginning of the year, shares of NAK have increased as much as 133%.

International Tower Hill Mines (TSX-V: ITH)

International Tower Hill Mines is the smallest of the three, with a market cap of $370 million. The company has a total of eleven exploration-stage projects in Alaska, including one with an 11 million ounce gold resource. International Tower Hill has significantly increased the company's resource base over the past several months, so shares have outperformed both NG and NAK. For the year, ITH investors have gained over 300%. In fact, as I write this, shares of ITH sit on a 52-week high.

Gold prices have had surprising strength over $1,100 an ounce of the past few days. And it looks like these three growing Alaska gold stocks could continue to knife higher along with gold prices.

If you're feeling a little more adventurous and want a little leverage, Kiska Metals (TSX-V: KSK) will be an Alaskan gold stock to watch over the next several weeks.

Kiska Metals was formed over the summer by the combination of two international mineral exploration companies: Rimfire Minerals Corp. and Geoinformatics Exploration Inc. The group is now focused on the development of the Whistler project in southern Alaska, which covers an area of 440km² within the same geological belt that hosts Northern Dynasty's and Anglo American's massive Pebble deposit.

The Whistler project is currently home to almost 6 million ounces of gold resources, but the company is rapidly working to increase those resources with a new drill program that began in September.

Conclusion

With considerable resources and a mine-welcoming government, Alaska is a good place to mine for gold. Investors can take advantage of both rising gold prices and the state's goodwill toward mining by buying shares of companies that have exposure to Alaskan gold projects.

There are many other Alaska gold mining companies on the market other than the four I mention above. I found several mid- and large-cap firms and a handful of very small 20 cent stocks with exposure to Alaskan gold while doing research for this article. So there are plenty out there.

As always, it's important for you to do your own due diligence to look for companies with talent, experience, and quality projects.

Three weeks ago, I started to build a brand-new portfolio to seek high-yield gains from junior gold and mining stocks. I've made three recommendations, and all three have since returned a profit for an average 35% gain. You can find more information on how to get access to these three junior gold stocks in my latest research report. 

Good Investing,

Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire

Here's a story that I've been following for some time now. It's interesting to me because I used to be in the mortgage business. That means I kind of know where the bodies are buried.

However, that's not why you should read it.

It should interest you because when this one blows up you will be on the hook for every single penny.  

You see, subprime loans never really went the way of the dinosaur. In fact, your Uncle Sam has been using FHA loans to fund non-prime borrowers for some time now—all the way up to $729,750 in some cases  That's how desperate we've become to prop up home prices.

The funny thing is that we are expecting different results this time.

However, the reality is the agency expects defaults on 24% of all loans insured in 2007, and 20% of those backed in 2008.

Those by the way, were the default rates that imploded the entire sub prime industry. Go figure.

As for the FHA it looks like it's only a matter of time now before it needs to be bailed out.

From MarketWatch by Rex Nutting entitled: FHA reserves fall below 2% minimum, auditor says

"A large increase in foreclosures has pushed the reserve fund at the Federal Housing Administration to a record-low level, according to an independent review of the federal agency's books released Thursday.

The FHA's reserves dropped to 0.53% of its total insured mortgages, less than the 2% required by law. The reserves measure how much capital the FHA has beyond the funds it has put aside for expected losses over the next 30 years.

As of Sept. 30, the FHA had $31.5 billion in total reserves, representing 4.5% of its insurance in force. Read the full FHA report.

Under most economic scenarios, the reserve fund would remain positive, the independent actuarial review said. The baseline scenario assumes that home prices will fall another 6.5%, leading to a significant increase in foreclosures.

The FHA has become a major factor in the housing industry, stepping in to guarantee about a fourth of all mortgages sold in the past year. As of the second quarter, about 50% of all first-time buyers had a mortgage insured by FHA.

The FHA has become a major factor in the housing industry, stepping in to guarantee about a fourth of all mortgages sold in the past year. As of the second quarter, about 50% of all first-time buyers had a mortgage insured by FHA."

By the way, I have no doubt that at its core FHA mortgages are a great program. Unfortunately, there is not much in the mortgage world that the foolishness of the housing bubble can't drag down with it. 

Related Articles:

Mortgage Delinquencies a Set New Record

The Brewing Trouble at the FHA

Pinto: The FHA Needs a $54 Billion Bailout

Catastrophe averted, personal bankruptcies skyrocket

Underwater Mortgages Drive the Next Foreclosure Wave

To learn more about Wealth Daily click here

If you want to take long dark look into the future borrowing power of the United States, you need to keep your eyes on California. After all, everything seems happen there first.

In that regard, it's kind of a preview of what's to come since the Golden State can't make ends meet either.

In fact, California is so broke that IOU's are the new state currency. As a result, the state has tried to sell $21 billion in municipal bonds over the last seven weeks alone.

The problem is there is so much of this paper on the market that yields have had to rise significantly to attract buyers. They are willing to lend, but only if the price is right.  

Because of this the state recently had to pay a 4% tax-free yield on bonds maturing in 2013. That's significantly higher than just two weeks ago when the state paid a yield of 2.48% on similar bond.

Unfortunately, that's a future the United States faces someday when its lenders decide it's not worth the risk. At that point interest rates will go north in a hurry—just like they are now for Gov. Schwarzenegger.

In the meantime, the municipal bond market itself is starting to wobble a bit as one state government after another begins to feel the pinch of caviar dreams on a bologna budget.

Unlike their Uncle Sam, they just can't print their way out of their troubles.

At least not yet....Given enough time, some of them will be certainly be the next up begging for a bailout.  In fact, without last year's stimulus it would have happened already.

Maybe that's why famed short seller James Chanos now has munibonds on his hit list.

"State and local municipal finance are a mess and going to get worse," Chanos told Barron's earlier this week,  the "cracking of state and local municipalities is coming."

As for the states to keep an eye on, here is the list released by the Pew Center just yesterday.

It's in article on CNNMoney by Tami Luhny entitled: 10 states face financial peril

"Here's a summary of what Pew found is plaguing each of the states:

California: The Golden State's housing collapse — and resulting unemployment surge — has plagued the state's economy. The weakening economy prompted revenue to fall by nearly a sixth between the first quarters of 2008 and 2009. State lawmakers have limited ability to deal with California's massive budget gap due to several voter-imposed restrictions, including requirements that all budgets and tax increases pass the legislature by a two-thirds majority.

Arizona: The state depends heavily on a growing economy to bring in tax revenue, and lawmakers don't have a lot of leeway to address budget deficits thanks to voter-imposed spending constraints. Lawmakers relied on one-time fixes to balance its budget instead of making long-term changes.

Rhode Island: The Ocean State has among the highest unemployment rates in the nation and among the highest foreclosure rates in New England. High tax rates, big budget deficits and a lack of high tech jobs are hurting its chances to pull out of the doldrums. State government has a poor record of managing its finances

Michigan: The state never climbed out of the recession that started in 2001, and matters only became worse during the Great Recession. Two of the Big Three Detroit-based automakers went bankrupt in 2009, sending shockwaves through a state on track to lose a quarter of its jobs this decade. The recession accelerated drops in state revenue, and has left Michigan's government trying to deal with today's problems on a 1960s-sized budget.

Nevada: Nevada is one of the recession's big losers as its gaming-based economy suffered. Year-over-year revenue has fallen for two consecutive years, a record. But changing tax laws is tough because some are written into the state constitution.

Oregon: Oregon's leading industries, such as timber and computer-chip manufacturing, have been hit hard in the recession. Lawmakers have approved more than $1 billion in new taxes to keep it afloat. But voters in January will have the final say on another $733 million in new income taxes.

Florida: For the first time since World War II, Florida's population is shrinking — bad news for a budget built on new residents flocking to the Sunshine State. Lawmakers raised $2 billion in new revenue this year, but could face a similar shortfall next year.

New Jersey: The Garden State, which has been plagued by years of fiscal mismanagement, spends more than it collects in revenue. The collapse of Wall Street, which supports about one-third of New Jersey's economy, has only made matters worse.

Illinois: Since the last recession earlier this decade, the state piled up huge backlogs of Medicaid bills and borrowed money to pay its pension obligations. The state's current budget still relies heavily on borrowing and paying bills late.

Wisconsin: Wisconsin has a long history of budget shortfalls. It also borrows frequently to cover operating expenses, among other measures. Unemployment is climbing as manufacturing, the state's largest sector, sputters."

This is what happens when you would gladly pay someone tomorrow for a hamburger today.

Eventually, the bill comes due Wimpy.....

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To learn more about Wealth Daily click here

Xia Bin, for one, thinks China will increase their gold holdings. Mr. Bin is chief of the Financial Department of the Development and Research Centre, an influential Chinese think tank.

In a recent interview with Reuters, Mr. Bin said, "India's okay with it, why shouldn't we be? What's the use for so many dollars, whose purchasing power is weakening anyway? With so many foreign reserves in hand, I think China should buy [gold], without doubt." [emphasis mine]

China is the largest producer and consumer of gold in the world. Yet only 1.9% of their reserves are in the yellow metal. (Globally, the average is 10% of reserves in gold. India recently increased its holdings to 6% when they purchased 200 metric tonnes from the IMF.)

What would happen if China follows in India's footsteps? David Rosenberg, chief economist at Gluskin Sheff, tackled this question in his most recent newsletter. According to his research, the increased demand from China boosting their gold reserves to 6% would drive the price of gold north of $1400.

Rosenberg also analyzed what would happen if the U.S. went back to backing 40% of total monetary base with gold. They say that would drive price per ounce all the way to $2750. America isn't buying gold any time soon, but it is interesting to note how sensitive prices are to purchases by central banks.

China is also gobbling up stakes in mining projects for commodities like copper and iron across the globe. They've managed to snag a near-monopolistic hold on rare earth elements, which are crucial to alternative energy and other next-generation technologies.

Holding the Cards

China is an emerging economic superpower. GDP growth, while probably manipulated by a few points, remains high. The U.S. is more reliant on them (and other lenders) than ever. China, on the other hand, is working hard to become less reliant on exports to the West.

If they're successful, this will allow them to shed dollar assets and/or allow their currency to float against America's. Either way, the greenback will suffer. Such a move would drastically shift global trade balances.

It should also benefit gold in two ways. First, price would be driven up as countries directly increase their precious metal holdings. Second, owners of gold would be protected from a depreciating dollar, as countries continue to diversify their assets.

China, alongside its BRIC (Brazil, Russia, India, China) fellows, is clearly positioning itself for a world in which the dollar is no longer king. Gold will play a big role in this shift.

Personally, I'm preparing for the possibility that this will happen sooner than many analysts think. After all, if China planned to increase gold reserves or let their currency rise, would they telegraph the move for all to see? Of course not. . .

The Chinese renminbi (also referred to as the yuan) may even compete with the dollar for the role of world reserve currency. And it could happen in the next 10-15 years.

That's according to Robert Zoelick, chief of the World Bank: "Over the next 10-15 years, you will firstly see renminbi to be internationalised and provide an alternative [to the dollar]."

Mr. Zoellick also issued a warning on America's reckless fiscal policies: "My caution to the United States is that you have to fix your deficit and budget issues and don't take it for granted this incredibly blessing we earned through the hard work in the first 200 years or so."

I've never much liked the World Bank, but Mr. Zoellick's comments are dead-on in this case. That said, things aren't likely to change any time soon. And until they do, investors can protect themselves by owning commodities (precious metals) and buying companies with global reach. Firms with large international presences will weather currency shifts better than those without.

Editor's Note: If you're looking to make money in the booming junior gold mining sector, there's no better analyst than our own Greg McCoach. In fact, one of his positions is up a whopping 5,000%. Do yourself a favor and check out his Mining Speculator service.

In this case, unease is the rule rather than the exception — especially in today's markets, which make about as much sense as David Blaine does when he levitates above the sidewalk.

Sure it looks amazing, but is it real? Our experience would tell us otherwise.

For investors with a penchant for technical analysis, that unease invariably ends with a trip into the past. For those who swear by it, the lines on those charts are much more than mere points on a graph.

Instead, they are windows into a world where the markets actually begin to make sense. 

You see, there really is something to be learned from the patterns that repeat themselves in the market. And while no two markets are exactly alike, the reality is markets tend to rhyme.

That, at its core, is what technical analysis is all about. For those who understand it, the markets are much more orderly.

And aside from the basics of using support and resistance to pick entry points, using Fibonacci numbers is one way traders can take the mystery out of the markets.

What Exactly are Fibonacci Numbers?

In many ways, Fibonacci numbers form the ultimate pattern, since they are found in things all around us — particularly in nature.

For instance, nearly every flower has a number of petals that is a Fibonacci number, while the construction of a pine cone is ruled by them. Even the dimensions of a strand of DNA are proportional to two consecutive Fibonacci numbers.

First recognized by Leonardo da Pisa, also called Fibonacci, these patterns are sequences of numbers that build upon themselves, beginning with the number 1. The sequence that follows is created by adding two consecutive numbers. . .

For instance, consider this sequence: 1, 2, 3, 5, 8, 13, 21, 34. . . and so on.

As you might have guessed, it's not as random as it looks. A closer inspection reveals that every number in the string is actually the sum of the prior two.

What's more, the ratio between two successive numbers is always the same: 1.618 — otherwise known as the golden ratio. Think of it as one of "nature's laws." This ratio can be found nearly everywhere you look.

For some odd reason, this includes the stock market; traders agree that Fibonacci numbers can be used to determine the critical points that can cause an asset price to reverse.

This phenomenon is known as a Fibonacci retracement, and it often gives the traders who track these numbers an opportunity to re-enter the market on a pullback before the move resumes.

These retracements usually occur at the 23.6 %, 38.1%, 50%, 61.8%, and 78.6% levels, which are ratios related to the Fibonacci sequence. It is at those specific points where the share price of a stock can either meet resistance or find support.

Why that is. . . no one knows for sure. I suspect it is because everyone is working from the same playbook.

Regardless, I've come across these numbers so many times that they are hard to ignore. Bull market or bear market, Fibonacci numbers create price targets across multiple time frames.

How to Calculate Fibonacci Retracement Levels

To calculate these levels and plot them on a chart, you simply calculate the price distance between a major peak and a major trough. Needless to say, there have been plenty of those lately.

For instance, let's take a look at the 12,012 point run-up in the Dow Jones Industrial Average from the October crash in 1987 until the peak of the bubble in 2007.

To figure out the corresponding Fibonacci levels, you would simply divide that amount by the ratio: (12,012 x .236 = 2834)

Finally, subtract that number from the swing point high: (14000 - 2834 = 11165) 

That will give you your Fibonacci level.

Doing so you could have established the following levels of support:

•        A 23.6% retracement of 11,165 (the figure in our example)

•        A 38.1% retracement of 9,411

•        A 50% retracement of 7,994

•        A 61.8% retracement of 6,576

•        A 78.6% retracement of 4,558

Coincidently, if you look back at the DOW charts, you will see the first wave the downtrend bounced at roughly 11,100; the second wave of the down trend bounced at 7900; and the final wave of the downtrend bounced at exactly 6547.

The Road to Dow 11,000

That brings us neatly to today. As we mentioned earlier, Fibonacci numbers can also be used to plot targets in a bear market bounce.

In this case, we would measure the distance from the peak of 14000 in 2007 to the most recent trough of 6547.

Working from those figures would give us the following Fibonacci retracement levels on a chart of the DOW:

In turn, those figures would be our price targets marking what could be expected in a bear market rally off of the lows. So far, they have been pretty accurate.

That leaves 11,152 as the next upside target in the rally which would complete a 61.8% retracement of overall decline. Coincidently, that would bring us on a round trip back to September 2008 when the wheels basically came off the wagon. What's more: that would also bring us roughly to the top of the downtrend line drawn from the peaks.

But let's not get ahead of ourselves. . .

First, we have to see how the DOW handles the 50% level which was reached yesterday. That's often a sign the market may need to pullback to work off overbought conditions in the short term. Even still, we would expect the move to be shallow since the underinvested in this climb have been quick to take advantage of lower prices.

For what its worth, that's take a look at the crystal ball. That's why we're leaning bullish with our sights on Dow 11,000 at the moment.

After that, we suspect it's a whole new ballgame.

And if math is not exactly your thing, there's an app for that. Here's a link that will calculate Fibonacci retracements for you. It tends to be more accurate than my pencil-and-paper method and it's a bit easier.

Picking stocks in a market like this is whole lot tougher than one might think. That's why selecting the proper entry points is always the key to making winning trades. In fact, using methods like this one, The Wealth Advisory team has identified a biotech stock that we think will make a 66% run to the upside by May 1st. To learn more about this opportunity, click here. 

Your bargain-hunting analyst,

Steve Christ, Investment Director

The Wealth Advisory

At first, I wanted 1,000 rounds of hollow points for my Sig 250. But after searching every site I could think of, I couldn't find anything! They were cleaned out like the bakery before a blizzard.

All the major vendors were out of stock. Some weren't even accepting backorders!

If I wanted ammo, I would have to load it — shot by shot — myself.

Luckily, after searching for about an hour, I found all the components I needed.

I picked up casings of Winchester brass, .40 S&W bullets, a brick of CCI primers, and a pound of Hodgdon powder.

The run on guns and ammo has been well-reported since Obama's election. Many believe the run has to do with fear that the Democrats will further regulate guns. And that's part of it, for sure.

But I can you tell you that the run started well before Obama started running for president. . .

Why?

As I wrote to you on November 1, there's a growing sense among the populace that they've been had — by both parties. . . that something dramatic and bad is on the horizon. . . and that the government is behind it.

Here's what I wrote:

In the 16 years I've been in this business, I can't think of a time when there's been more distrust, more graft, and more uncertainty surrounding the world of finance and politics.

The reality is that those two worlds — finance and politics — have essentially merged. And it's no secret there's a revolving door between DC and New York.

Worse still, the media has been actively collaborating, perpetuating the myth that we can spend our way to prosperity, that if we just buy and hold we'll get wealthy some day, and a thousand other idiotic ideas that now rival the hollowness of the phrase "Change we can believe in."

It's incredible to me how many of these talking heads remained on air, despite the fact that they couldn't have been more consistently wrong if they'd known in advance how things were going to turn out.

No matter which way you look, you get the sense that you're being gamed. And you're right.

The plain fact is no one in politics, in the media, or in mainstream finance cares about you, aside from your value as a "useful idiot." — Wealth Daily, November 11, 2009

Think I'm kidding?

Well check this out. . .

I practically built Angel Publishing (which has over half a million readers to date), on the back of a single idea: an investment trend that I knew — if it turned out to be correct — would create a fortune for myself and my readers.

I also knew that it would take guts to put forth this investment thesis because I would be going against the establishment.

That idea was Peak Oil. Or more simply, the idea that the world was running out of cheap oil.

For years I was called a quack. . .  a conspiracy theorist. . .  and a bonehead.  Fox Business News brought in my colleague, Chris Nelder. . . and promptly called him a "Peak Freak" on-air.

Wait a minute. The world was awash in oil, right? After all, the government and Exxon told us so. And these guys are smart and well-intentioned, right?

Right?

Well, two days ago, a news report from the UK sent shock waves throughout the energy sector.

According to an article by The Guardian entitled "Key Oil Figures were Distorted by US Pressure, says Whistleblower":

The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying.

The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves.

Now the "peak oil" theory is gaining support at the heart of the global energy establishment. "The IEA in 2005 was predicting oil supplies could rise as high as 120m barrels a day by 2030 although it was forced to reduce this gradually to 116m and then 105m last year," said the IEA source, who was unwilling to be identified for fear of reprisals inside the industry. "The 120m figure always was nonsense but even today's number is much higher than can be justified and the IEA knows this.

"Many inside the organisation believe that maintaining oil supplies at even 90m to 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further. And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources," he added.

A second senior IEA source, who has now left but was also unwilling to give his name, said a key rule at the organization was that it was "imperative not to anger the Americans" but the fact was that there was not as much oil in the world as had been admitted. "We have [already] entered the 'peak oil' zone. I think that the situation is really bad," he added.

But as far back as 2004 there have been people making similar warnings. Colin Campbell, a former executive with Total of France told a conference: "If the real [oil reserve] figures were to come out there would be panic on the stock markets . . . in the end that would suit no one."

You're being gamed. Period.

The government thinks you're too stupid to handle the truth.

They can go sell crazy somewhere else. I'm not buying it. I never did.

If you read Wealth Daily, you at least give yourself a fighting chance.

In 2004 I started writing about Peak Oil. In the summer of 2006 I started writing a book on the topic. And in May 2008, Profit from the Peak was published to rave reviews.

It's time to revisit the "Trade of the Century."

I've contracted the best futures traders in the market today. Their job? Put together a trade on Peak Oil.

I expect by January 2010 to give you this trade.

And while the peak oil clock is ticking, there remains an opportunity for my readers to get in on what may be the last great oil run on U.S. soil. Fact is, oil and gas companies are chomping at the bit to set up drill operations in this region. This report details three opportunities for you to profit during oil's homestretch.

Stay tuned,

Brian Hicks
Publisher, Wealth Daily

Here's a great interview from CNBC this morning featuring William Mack. He is the Chairman of the Board for the Mack-Cali Realty Corporation.

In it Mack declares that commercial real estate is somewhere between "an orderly massacre and a disaster."

Roll the tape...

Good stuff, Mr. Mack. 

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