But while I so stubbornly poke holes in the political machine in Washington, I must avoid being hypocritical. If I shame our legislators for disregarding the democratic keystone principals of checks and balances, I must be careful to avoid the same pitfalls.

That means it is critical for you to hear voices other than my own. I do not want to become a scribe who dictates through his pen. I want this to be a democratic forum.

That’s why I am pushing my views aside today and giving room to Jeff Clark, the editor of Casey’s Gold and Resource Report.

If the name sounds familiar, it should. His work has graced this column before.

Here’s what Mr. Clark has to say. If you are a gold bug, you’ll love it:

“Enron? Bear Stearns? Bernie Madoff? They’re all big stories about big losses and have hurt a lot of employees and investors. But none come close to getting my vote for the decade’s most dastardly deception…

“First came Enron, with $65.5 billion in assets, going belly-up and becoming the largest bankruptcy in U.S. history at that time. Chairman Kenneth Lay said that Enron’s decision to file bankruptcy would ‘stabilize the company,’ but over the next five years the company was completely liquidated. The stock went from a high of $84.63 in December 2000 to a whopping 26¢ one year later.

“And what had we been told by the media? Fortune magazine dubbed Enron ‘America’s Most Innovative Company’ for six consecutive years. A well-intentioned friend wanted to give me a gift subscription to the magazine for Christmas; I choked on my cocktail and luckily he assumed my drink was too strong. In the end, you can thank Enron for bringing us the Sarbanes-Oxley Act of 2002, a ghastly financial reporting regulation for which compliance is grossly expensive, and – stop the presses! – hasn’t prevented similar repeats.

“Next came WorldCom filing for bankruptcy in 2002, their assets of $103.9 billion dwarfing Enron’s. ‘We will use this time under reorganization to regain our financial health and focus, while operating with the highest integrity,’ assured CEO John Sidgmore. Was his eggnog spiked? Today, WorldCom stock certificates have been spotted as doilies under pancake house coffee mugs signifying it’s decaf.

“Tyco, Adelphia, Peregrine Systems… it’s a crowded field around this time. But their stories of fraud and greed and mismanagement get boring after awhile. Just watch the closing credits from the movie Fun with Dick and Jane and you’ll see what I mean.

“Bear Stearns set us all up for the Big Meltdown of 2008. It was B.S. (no, I mean Bear Stearns) that pioneered the asset-backed securities markets, and we all know how that turned out. Later we learned that as losses mounted in 2006 and 2007, the company was actually adding to its exposure of mortgage-backed assets, gearing itself up to 35:1. With net equity of $11.1 billion supporting $395 billion in assets, B.S. carried more leverage than a streetwalker’s push-up bra.

“And during it all, Bear Stearns was recognized as the ‘Most Admired’ securities firm in a survey by Fortune magazine (there’s that Lower Manhattan tabloid darling again). Frequent sightings of company executives on country club fairways assured the public that all was well. And CEO Alan Schwartz told us there was ‘no liquidity crisis for the firm’ and insisted he ‘had the numbers to back it up.’ His company was sold four days later to JPMorgan Chase at $10 per share, a 92% loss from its $133.20 high. Perhaps his numbers were prepared by ex-Arthur Andersen employees.

“Lehman Brothers, the 158-year-old investment bank, was next and still today holds the title as the largest bankruptcy in U.S. history. L.B. succumbed to 2007’s Word of the Year, ‘subprime,’ and its $600 billion in assets all went poof! In just the first half of 2008, before the meltdown, Lehman’s stock slid 73%.

“And what did CEO Dick Fuld tell us in April of that year? ‘I will hurt the shorts, and that is my goal.’ He must have been referring to the attire of his tennis club buddies, because the ones who actually got hurt were numerous other banks, money market funds, institutions, hedge funds, REITs, brokers, private and public trusts, foundations, government agencies, foreign governments, employees, and investors.

“Moving on to the largest U.S. government bailout recipient by far, AIG’s troubles spawned my favorite placard of the decade: seen outside their Manhattan offices stood a sign that simply read, ‘Jump!’ Maybe its creator heard what I did from AIG’s financial products head Joseph Cassano: ‘It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of these [credit default swap] transactions.’

“He must have substituted his prescription eyewear with those giant New Year’s Eve glasses, because the government sunk $180 billion into the company and it still had to be split up and the assets sold to the highest bidder. I’m sure that his non-flippant comment had nothing to do with him making CNN’s ‘Ten Most Wanted Culprits’ list in 2008.

“GM, with $91 billion in assets, filed for bankruptcy in the summer of 2009 and is now largely owned by the U.S. and Canadian governments (i.e., taxpayers). The $19.4 billion in federal help wasn’t enough to keep the nation’s largest automaker out of bankruptcy. But don’t despair: the government is pouring another $30 billion into GM to fund ‘reorganization operations.’

“GM shares? Bye-bye. For 83 years GM had been a member of the prestigious 30 Dow Industrial stocks. It managed to survive the Great Depression but not this decade’s Greater Depression. Yet chairman Ed Whitacre had insisted, ‘I remain more convinced than ever that our company is on the right path and that we will continue to be a leader in offering the worldwide buying public the highest quality, highest value cars and trucks.’ I wonder what he thinks now that the stock is named ‘Motors Liquidation,’ trades only on the pink sheets, and sells for about 50¢?

“Topping off our list is the infamous Bernie Made-off (er, Madoff), who scammed $65 billion over 20 years from unsuspecting institutions and wealthy investors. But don’t be too upset, because the number is probably half that amount. Hey, the alleged size of the losses comes from his own ledger book, and should we really trust his balance sheet? Dubbed the largest Ponzi scheme ever, I beg to disagree, as you’re about to see…

“By now you are probably wondering… what’s bigger than all these? He’s covered the major frauds and scams of the past decade – what could possibly be left?

“To quote my favorite sleuth, Hercule Poirot, “When all the facts are laid before me, the solution becomes inevitable.”

“Here are a few clues…

“Federal Reserve Chairman Ben Bernanke said on July 16, 2008, that Fannie Mae and Freddie Mac are ‘adequately capitalized’ and ‘in no danger of failing.’ Then-Secretary Treasurer Henry Paulson declared on August 10, 2008, ‘We have no plans to insert money into either of those two institutions.’

“Both Fannie and Freddie were nationalized 28 days later, on September 8, 2008.

“Ben Bernanke claimed on February 28, 2008, ‘Among the largest banks, the capital ratios remain good and I don’t expect any serious problems of that sort among the large, internationally active banks…’ Henry Paulson added on July 20, 2008, that ‘It’s a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.’

“Since the recession started in December, 2008, 144 banks have failed.

“Paulson informed us on April 20, 2007, that ‘All the signs I look at show the housing market is at or near the bottom.’

“The number of foreclosures skyrocketed shortly thereafter and will now any day surpass those during the Great Depression.

“Ben Bernanke announced on June 20, 2007, that ‘[The sub prime fallout] will not affect the economy overall.’

“Less than one year later, the stock market crashed, losing 53% of its value, and is still down 25% despite one of the biggest bounces in history.

“Those in charge of our country’s finances not only failed to see the crises developing and then bungled the handling of the recovery, they’ve deliberately misled us about what they’re doing to our currency. In spite of emphatic promises, flowery speeches, pat-on-the-back assurances, and continual reassurances, here’s what they’ve actually done to the dollar:

-Since September 1, 2008, the monetary base has ballooned from $908 billion to $2.0 trillion. The current monetary base is now equal to bailing out General Motors 23 times.

-Bailout funds in 2008 and 2009 total $8.1 trillion. That’s almost 78 WorldComs. It’s over 123 Enrons.

-U.S. debt has risen sharply, from $6.2 trillion in 2002 to $12.1 trillion today. That’s over $39,000 per citizen.

-David Walker, the comptroller general of the Government Accountability Office from 1998-2008, warned that the U.S. is on the hook for $60 trillion in unfunded liabilities. Independent analysts peg the figure at near twice that. Whatever the number, it is incomprehensibly large. The only way we will meet these liabilities is to print the money and inflate them away.

“We’re bailing out corporations that should fail, making financial promises we can’t keep, and adding layers of debt we can’t possibly repay. And the real killer is, if we don’t have the cash, we just print it. It is, by any reasonable account, the ‘blunder that will plunder’ the next several generations. It is changing America permanently, and the problems will persist long after you and I are laid to rest.

“Bottom line: after all the bailout programs, housing initiatives, rescue efforts, stimulus schemes, bank takeovers, wars, unemployment benefit extensions, and numerous other promises, the biggest financial deception of the decade is what the U.S. government is doing to the dollar. Nothing else even comes close.

“This reckless activity has spooked our foreign creditors, weakened our global standing, diluted our currency, is punishing savers and retirees, and ultimately sets us up for a level of inflation this country has never seen before.

“Yet, what is the guardian of our economy and money telling us now?

‘Will the Federal Reserve’s actions to combat the crisis lead to higher inflation down the road? The answer is no; the Federal Reserve is committed to keeping inflation low and will be able to do so. In the near term, elevated unemployment and stable inflation expectations should keep inflation subdued, and indeed, inflation could move lower from here.’ (Ben Bernanke, December 7, 2009).

“This is pure rubbish. If inflation could be controlled by just thinking stable inflation thoughts, then Ben should be able to grow a full head of hair by just thinking scalp follicle thoughts. This is so ridiculous, it’s insulting.

“Government actions make a mockery of their words; what they say and what they do are diametrically opposed. It’s clear that inflation is not a question of if, but when.

“Any level-headed individual has to conclude that there will be a steady – and likely accelerating – decline in the dollar’s purchasing power. It’s inevitable.

“The great masses don’t quite understand it yet, but they will. There will be no escape from the cold, hard slap in the face citizens will receive when a high level of inflation arrives. And when it does, it will make a mockery of any opposing viewpoint.

“So the question before you is simple: Will you be a prepared survivor for what lies ahead, despite what our government leaders tell us, or will you be a complacent victim of the biggest financial deception of the decade?

“For me, there’s only one solution. Don’t kid yourself into thinking a man-made asset will protect your purchasing power. This is the time to be overweight gold and silver. I advise letting them serve their purpose for you.”

I thought all you contrarian gold bugs would be interested in Casey’s not-so-subtle opinion.

If you want to learn the best ways to buy and hold gold and silver, and the stocks that will help you outpace the inflation that’s right around the corner,give Casey’s Gold and Resource Report a risk-free try and learn how to escape with your assets intact.

For $39 a year, it’s a no-brainer. Click here for more information.

I used this insight and logic to warn investors about an imminent downturn in gold prices earlier this month. I got a lot of “feedback” from disappointed gold bugs. But it didn’t take long for them to eat their words as the price of an ounce of gold fell by nearly 10% in the last month.

But as I said earlier in the week, the slide is over. Of course, unlike the nation’s leaders, I’m willing to follow my words with action.

Here is what I sent to TFN Strategic Trader members first thing this morning:

“It is time to make the move. With the dollar increasing in value, America’s fiscal future looking stronger than its European brethren and record inflows proving safety has taken a backseat to asset appreciation, the price of gold has fallen by nearly 10% over the past month.

“Just yesterday, I read my first article in nearly a year that discusses the downside of the shiny, precious metal. Now that gold is trading for $1,100 an ounce, the sentiment has turned.

“Where were these articles a month ago when I warned of a turnaround? Now that the crowd has caught on, it’s time to change our outlook.

“As option investors, that means it is time to by. All you contrarian investors are going to love this week’s play. It gives you a chance to maximize the gains from gold’s upcoming turnaround.

“With gold shedding a significant portion of its value over the last four weeks, the speculation surrounding the metal has diminished greatly. That means once we get back down to base levels – the charts show its somewhere between the $1,050 and $1,100 per ounce range – we are set for even more upside.

“Rising inflation, interest rates and economic activity will boost demand well into the new year.

“Here is how I want you to take advantage of the situation. It is simple. Buy…”

You didn’t think I would give it away did you? To get in on the action and learn what I recommended, click here.

***We have come to the end of the year. In some ways I will be glad to see it go and in others, 2009 will be missed.

As a financial pundit, there will never be another year like 2009. Between pyramid-scheme scandals, unfathomable amounts of government intervention, a market nosedive and a roaring comeback, we never had a shortage of topics to cover.

As an investor, the action was bittersweet. Nobody likes extreme volatility like we saw in the first half of the year. Sure, there was profit opportunity, but not if it means losing your hair and risking your house.

For buy-and-hold investors, the year will end with gains of about 20% from the major indices. A nice victory, but still well short of where we were two years ago.

For in-and-out traders, the sky was the limit in 2009. Over at TFN Strategic Trader, we wrapped up a significant number of triple-digit winners.

But instead of looking backwards, it’s important to look towards the future and see what is just across the horizon. For 2010, it will be all about currencies, commodities and small caps. With so many of the nation’s smallest companies restrained by lending restrictions and top lines that refuse to grow, the next twelve months will be pivotal for the smallest of publicly traded companies.

For investors with the determination and skill to uncover the companies likely to be successful during that time, expect strong rewards. You can bet we will cover this sector in great detail as the year kicks off.

Until then, enjoy the last few hours of 2009 and have fun celebrating the arrival of the New Year.

Baltimore — (TFN): I spent most of my weekend in the attic of my century-old house. I wasn’t hiding from a hormonal, pregnant wife. She’s been fairly tame lately. And it wasn’t to escape a surprise in-law attack.

If you must know, I was installing an exhaust fan above the master shower. You’d think sometime over the course of the last 110 years, somebody would have done the job for me, but it turns out the task was all mine.

Now I know why.

While I was up there in a sea of pink insulation, I had one chore I was not looking forward to. With a ladder that reached just 25 feet, there was no way I was going to be able to caulk around the exhaust outlet some 35 feet in the air the easy way.

I was going to have to lean out the attic window and use every last bit of cell elasticity to reach my target.

As I was hanging there, with a pregnant wife hanging on to my right ankle, I couldn’t help but think about Obama’s “Cash for Caulkers” plan. It’s what happens when you hang upside down for too long.

I couldn’t help but wonder would it have been smarter to wait a few months and get reimbursed half my expense? Or, better yet, call up one of Biden’s 700,000 newly employed “green workers” to handle my caulk gun?

Nah, I’ll save them for when it’s time to scrape the old shingles off the roof this summer. If Obama thinks insulation is “sexy,” he’s going to love asphalt shingles in July.

*** In case you missed it this morning, the nation’s great orator organized another national pep rally. This time it was at a Home Depot store in Virginia.

Of course, Obama was not shopping for a new hammer or a couple of boards to build Bo a new doghouse, he was there touting the potential of his latest jobs initiative and economic booster, the so-called “Cash for Caulkers” program.

Even though I’m positive it was an in-and-out kind of speech, I wish the president had spent some time walking the aisles and shopping the store’s shelves. He may have learned a thing or two about the nation’s economy.

Most importantly, he would realize much of his plans are going to improve the lives of everybody but Americans. After all, the average home-improvement store is not filled to the brim with “Made in America” tags.

Home many windows, doors, rolls of insulation, tubes of caulk, washing machines, driers, ovens and dishwashers are made domestically these days? The only thing in Obama’s plan that is made in America is the ten-bucks-an-hour jobs of installing all those foreign-made goods. But that’s a one-and-done job.

Installing a couple of stimulus-bought windows and squeezing a tube of caulk won’t do much good this time next year when it’s time to fund little Johnie’s 529 plan.

That’s why I’m not buying this long-term recovery mumbo jumbo. I don’t trust a global economy supported by a wave of government spending. And neither should you.

If the default risk growing in Greece, Spain, Dubai and Austria is any indicator, the next few years are going to be doozies. It’s one thing when Bank of America can’t make its payroll. It’s a whole different story when it’s the folks charged with maintaining your safety and freedom.

You had better insulate your houses and caulk the windows shut now. You’re going to need the protection from the storm that’s brewing.

*** Did you hear the news from the timber industry today? It’s revolutionary stuff. It proves just why we are so bullish on the cyclical commodity.

Again, thanks to government intervention (or ineptitude), investors have some thinking to do. The question now is if Weyerhaeuser’s (NYSE:WY) long-debated plan of turning itself into a REIT makes the massive timber company a good buy.

As of this morning, corporate executives have decided to make the plunge and start paying the majority of its net income to shareholders. They are starting the payout with a special dividend that, while still undisclosed, is estimated to be worth about $29 per share in cash and stock.

It’s not a bad payout for a company with a $43 share price.

As hinted at above, any major move like this one is not a random act. Government’s over-arching hand has got to have something to do with it. In the case of Weyerhaeuser, the company is “going REIT” in an effort to avoid massive taxation.

By paying its profits to shareholders, the Washington-based company avoids the debilitating tax liability of owning millions of acres of valuable timberland.

Now Uncle Sam’s got to deal with the politically sensitive subject of trimming the top off all of those lucrative dividend payments.

It’s a good thing the IRS is hiring.

Baltimore – (TFN): Get ready for Stimulus Version 2.0. With unemployment in double-digit territory, credit still tight and consumers refusing to part with their cash, it’s obvious Washington’s first bailout did nothing but put the nation even further in debt and give China an even larger stake of the country’s financial future.

Instead of stepping back and searching for a viable solution (if there is any), Obama is jumping right back into the stimulus game.

But of course, the word stimulus is nowhere to be found. This is a jobs program.

Sure, it contains another $50 billion for roads, bridges and water projects… just like the first version.

Sure, green energy and “weatherization” is a strategic focus… just like the first version.

And of course, it promises to boost hiring across the country… just like the first version.

Unfortunately, we all know Stimulus Version 1.0 was a big, fat flop. It cost the nation nearly a trillion dollars, has put our triple-A credit rating at risk and, worst of all, was managed worse than the Detroit Lions.

Now, they want to do it again.

Well, Mr. President, when it comes to my hard-earned tax dollars, you don’t get a mulligan. There are no do-overs in the world of global economics. You do or you die.

The fact that $200 billion worth of TARP money is at stake is what scares me the most. It portrays this government’s reckless abandonment of the law. (Never mind the fact that some two-thirds of the original stimulus is still warming in some apparently forgotten account).

Lest we forget what TARP stands for: Troubled Asset Relief Program, not give a penny, take a penny.

This ultra-expensive life ring was supposed to save the nation’s banking system from the ramifications of ungodly levels of leverage. When my congressman voted yay instead of nay, he never had any inkling the money would go to putting double-pane windows inside of some row home.

But in a government where 100% retroactive taxes and appointing your girlfriend to a high-level office are standard operating procedure, should I expect anything less?

It’s true. You give a politician an inch… he’ll steal your wallet.

*** Fortunately not all governments are as economically ignorant as the gang masquerading as “leaders” in Washington. Thanks to verifiable economic growth, investors smart enough to look overseas have a shot at sizeable gains in the not-so-distant future.

One of those savvy investors just so happens to be my boss, J. Christoph Amberger, the founder and publisher of TodaysFinancialNews.com.

As a German-born American, he knows a thing or two about foreign economies. So when he speaks, I listen. And when he writes, I read.

Right now, Christoph has his eyes on oil, that ultra-addictive liquid we all need to survive… at least economically speaking.

While the subject may not be making the nightly news here at home (Tiger is taking care of that front), you can bet it’s a big deal in those countries that actually have an economic future.

For Christoph, the future of the oil industry lies in the hands of China and India.

He tells me – and his tens of thousands of loyal readers – to expect a “new oil shock” in 2010. Thanks to increased demands from India and China, crude prices are set to jump back to the pre-recession levels of $150 a barrel.

His reasoning may surprise you, but if you’ve followed his advice before, the potential for gains won’t.

Christoph has picked a handful of winning plays with solid double-digit gain potential. The dividends alone will hand you quarterly checks worth up to 14% of your initial investment.

As contrarian investors you will no doubt agree with his take. Here’s a link to his latest report. I want you to read it.

*** Finally… the dollar. After a couple of weeks of doing his best to reassure China and other lenders that our national debt was not spiraling out of control, Obama is talking out the other side of his mouth today.

In his speech earlier today, the President said, “We are going to have to spend our way out of this recession.”

In the same speech he promised tax cuts for small businesses, an elimination of loan fees and – I can’t believe I am going to write this – the creation of a “Cash for Caulkers” program.

That can’t be good news for the dollar’s recent rally.

But really, the dollar story comes down to one thing, and it has nothing to do with politics or government programs. We all know the economy will naturally heal itself. Much of the progress Obama is claiming as his own is a result of this natural process.

If you think the American economy will strengthen on its own over the next year, you’re a dollar bull. If you think Obama’s spending will outweigh any economic growth, you’re a bear.

As for me, I’m a fan of the cycle. The hot-air machine in Washington can do whatever it can get away with and the natural economy won’t sway in one direction or the other.

We’re in a cyclical recovery and that’s good for the dollar. Unfortunately, as I said on Friday, that’s not good for the equities market.

It’s times like these it pays to be a contrarian.

This story goes well beyond Murdoch’s decision to start charging for his company’s online news content. It is a debate about monopolies and the government’s role in protecting or destroying them.

In case you missed it, there is a great editorial in today’s Wall Street Journal by the CEO of Google, Eric Schmidt (scroll down for link). In the piece, the doctor doesn’t necessarily lash out at Murdoch and his recent attacks aimed at Google, but the desire to call Murdoch a crybaby is obvious.

Schmidt makes it clear that Murdoch’s woes are not Google’s fault, but are the fault of an industry that has sat on its hands for the last decade as competition quietly, but firmly snuck up to the back door.

Now that Murdoch owns a very expensive media empire, his plans are to use his massive industrial weight to keep the media industry from swaying in any direction. He’s certain that charging for his content will force his customers from straying to competitors.

Of course, Schmidt has something very different to say. Essentially, the CEO tells Murdoch to start getting creative. His company is dumping 100,000 clicks a minute onto the online news sector. If the industry can’t find a way to profit with some four billion hits a month, well, it’s not Google’s fault.

The answer lies somewhere in the middle. But of course, Washington thinks it can solve the problem. As you read this, Murdoch and his gang are discussing the “future of journalism,” with the Federal Trade Commission.

They are not down there asking for a bailout or inquiring about tickets to the next state dinner. They are asking for (or flat-out buying) protection from the anti-trust gang.

Just like a Manhattan businessman goes to Guido looking for some “fire insurance,” Murdoch and company are in Washington asking for protection from the ankle-biting competition.

What does Murdoch want from Obama?

He wants what every man wants, the ability to buy more. Under current regulations, Murdoch is unable to make purchases in certain rival publications and media outlets. But with the notion of critical mass on his side, if he could get the right to buy and control his rivals, he would have a much better shot at coercing the industry to move in the “right” direction. He could save journalism as we know it.

Will Washington bite?

Um, let’s see. With a horde of newspaper and television ad space on his side, does Murdoch have anything to give to politicians in exchange? This one’s a no-brainer.

If politicians can get on the good side of Murdoch or his competitors, the political campaign process may not be quite so expensive in 2012.

So here’s my first official prediction for 2010: Washington is going to take action and the media industry is going to be a hot one.

We got a first glimpse of what’s to come early today with the finalized deal from GE and Comcast. The next year, especially if Murdoch makes the right moves, will be filled with similar stories of consolidations and acquisitions.

Giants like Time Warner and Liberty Media are going to be players. And little guys like Virginia’s Media General and McClatchy will be in play.

It is going to be an interesting year as the industry finally gets serious about finding a clear strategy for the future.

Smart investors will make good money from the action and smart contrarians will know the money flows right back to Washington.

*** You have got to love the action from the natural gas markets these days. Even I, the bear of bears, wasn’t expecting yet another injection into the nation’s gas storage facilities this week, but what’s investing without surprises?

Thanks to today’s news, we were sitting on gains of as much as 415% on one of our three remaining natural gas plays. The lower gas prices go, the higher that figure will climb.

Here’s what I told TFN readers today about the nation’s natural gas glut:

“I am about as bearish as it gets when it comes to natural gas, but even I underestimated how bad the situation really is.

“While most analysts were expecting the year’s first official drawdown in the nation’s natural gas inventories, I conceded and said they were right. I expected a drop in supplies of one, maybe two, billion cubic feet of gas.

“Most analysts expected twice that figure as the nation starts to crank up its thermostat. After last week’s smaller-than-expected gas infusion, a withdraw this week looked like an easy call.

“I was so certain, I recommended TFN Strategic Trader members lock in gains on a couple of our natural gas plays. We locked in gains of 56% by selling half of our position in one play and 50% gains by unloading another play in its entirety.

“It looks like we jumped the gun.

“According to the Energy Information Agency’s latest report, released at 10:30 this morning, the nation managed to produce more gas than it consumed once again.

“This time last week, the agency showed a gain of one billion cubic feet. This week, the figure doubled to a weekly increase of two billion cubic feet.

“Under normal circumstances, this would not be much of an issue. But the nation’s storage facilities are 99.9% full and pipeline pressures are rising as suppliers try to squeeze in as much of the fuel as possible.

“So far, natural gas futures have not reacted too strongly to the news (which helps prove my theory about selling yesterday). December gas contracts are down by just $0.035 so far, which puts the price at $4.495.

“As the winter rolls on and investors and analysts finally realize this winter will be unlike any other for the natural gas market, that price will sink lower and lower.”

Keep reading here to read about several of the ways to take advantage of the situation.

*** Finally, there’s a celebration in my hometown tonight. We got word early this morning that Harley Davidson has officially decided to keep the doors open at the factory that employs nearly 2,000 local workers.

Of course, at least half of those workers will be asked to leave over the next couple of years and the remaining workers will be working harder and getting paid less, but isn’t that the way it works these days?

Maybe we shouldn’t blow up the celebratory balloons just yet.

Enough alliteration. Let’s talk business.

While I will never complain about a day that sends almost every position in our portfolio into the green, there are way too many red flags in the air for me to celebrate today.

Sure, the TFN Strategic Trader portfolio currently boasts six plays worth double-digit gains (47%, 44%, 50%, 10%, 29%… and 200%), but it’s a contrarian mix if I’ve ever seen one.

In other words, if our current portfolio is on fire (and it is), something is not right with the nation’s economy.

As with most things American, all we have to do is turn to The Donald for an answer.

Earlier today, Mr. Trump phoned his friends at CNBC. He had a bone to pick and he knew his the staff of “financial experts” – who gladly fill in when a Today Show gab is missing – would lend an ear.

Trump gets a lot of press time, but most of us agree the only thing he’s an expert at is bankruptcy proceedings. Taking his financial advice is like getting a clipping from a blind barber – another of Trump’s apparent flaws.

Sometime during the past few weeks, a bank must have looked at Trump’s credit record and said, “No way, Jose,” because the king of narcissism is angry at the banking industry.

He tells his audience that banks must be forced to lend more of that taxpayer cash they are sitting on. Trump believes the economy will never recover unless the banking sector loosens its standards and starts writing checks again.

Um, Mr. Trump, isn’t that what got us into this mess? Guys like you taking massive loans without a way to pay and then calling a bankruptcy lawyer.

Really, what could go wrong if we follow Trump’s advice and allow the government to force banks to lend?

Sure, most of those shaky loans will never get paid back and we’d be in a worse financial fiasco in eighteen months, but boy would it feel good now.

And there lies your problem. In a world where reality-show wannabes make front page news for embarrassing the White House and a golf star’s car accident gets more press time than Iran’s recent nuclear moves, it is all about feeling good now.

Who cares what tomorrow’s consequences will be? Somebody will bail us out. We feel good now.

It’s sad to say, but that’s the same logic driving the stock market these days.

Sure, the dollar is eroding fast, unemployment is above 10%, the national debt is off the charts, taxes are on the rise, and corporate earnings are stagnant, but dang it, it feels good to pretend it will be a “V-shaped” economy.

Anybody with half a financial brain knows it will all crash down someday, but too many of them just hope and pray that somebody will step in and fix it.

I know from the comments I received about my recent gold commentary, many Notes readily understand what’s to come. That’s why they are rushing to the “safety” of gold.

But let me warn you once again; gold’s recent run has as much to do with the nation’s feel-good-now mentality as the Salahis’ sudden rise to fame.

The collateral on both sides will not be pretty.

My advice? Go short. If it works for TFN Strategic Trader members, it will work for you.

*** With all of this talk about healthcare reform, Afghani strategy, White House crashers and gold’s 30% run, one industry has been greatly overlooked. And, once again, the action comes thanks to the folks in Washington.

The ethanol industry – which was recently plagued by bankruptcies and production shutdowns – is soaring these days as it awaits word from the EPA that ethanol allowances in gasoline could be raised from 10% to 15%.

Here’s a bit of what I told TFN readers earlier today:

“The ethanol industry is having yet another good day. After near political abandonment, the nation’s biofuel sector reeled from the pain of a wave of bankruptcy filings earlier this year.

“But now, thanks to some more political maneuvering the industry is once again finding itself on the leader board.

“Should you get used to it?

“Before we answer that question, let’s look at the catalyst for the action. Today was supposed to be the EPA’s deadline for a decision that would allow gasoline blends to contain up to 15% ethanol versus the 10% cap now in place.

“But word this morning says the EPA is not ready to make its decision quite yet. It now wants to make the decision by sometime next summer. Judging by the day’s pricing action, the Street views this as a positive sign.

“Companies across the industry are eager to push more of their product into the nation’s fuel source.

“One of the big winners today is Pacific Ethanol, the once highly touted California-based producer with subsidiaries in and out of bankruptcy court over the past year.

“Word that more ethanol production may be around the corner was enough for the company to pull the mothballs out of its Burley, Idaho production facility by January. The company owns a total of four production facilities, only one of which is currently operating.

“If the word from the EPA is positive, expect shares to continue to climb. As I write, traders are getting in (and out) at $0.87, up 56% on the day.

“Two more companies worth mentioning are…” To find out, keep reading here.

*** Finally, don’t forget about the question of the week: Is it a coincidence the weekly political roundtable programs air at the same time churches offer their weekly services?

We’ll discuss the various views on Friday.

Earlier today, the Treasury auctioned off yet another chunk of American debt. This time it offered seven-year bonds to the tune of $32 billion. In all, the nation will go in hock for yet another $118 billion this week.

It may sound like a lot, but it’s just another busy week of financing Washington for Geithner and his crew.

While so many of us in the financial punditry business are worried about a lack of foreign borrowers, it is far from the case today. Yesterday’s $42 billion five-year auction came with a bid-to-cover ratio of 2.81 (alarmingly high) and today’s auction boasted a ratio of 2.76, proving there are still plenty of buyers willing to “enable” Uncle Sam’s spending addiction.

If you are a bullish investor, this is not good news.

Let me repeat… this is not good news!

Here’s the deal, plain and simple. When hundreds of billions of dollars are flowing to Washington, they are not flowing to Wall Street. When Geithner passes his hat, there is that much less money to boost up share prices.

Fine, you say. I invested in gold. With low interest rates and a weak dollar, my gold position will soar.

Wrong!

Why are most gold speculators buying? Because they think countries like China and India are dumping the dollar and pouring into gold.

Well, according to the folks that walked out of the Treasury empty handed this afternoon, their precious metal buying may be less robust than many thought. That certainly is not good news for gold bugs. Gold is a purely speculative bet right now.

If you own any, sell it.

I know that is a sore subject with many readers, so we’ll deal with the topic on Friday.

Just about the only thing Washington’s ever-increasing debt is good for is propping up the housing market. As mortgage rates drop to all-time lows once again (thanks to dwindling bond yields), potential buyers still have a significant incentive on their side.

While Uncle Sam may stash $6,500 in a buyer’s pocket, a 30-year fixed rate of 4.99% will ultimately put much, much more cash in their accounts.

A young friend asked me this morning, “I’ve got sixty grand in a savings account. Should I max out my IRA or buy a house?”
Buy the house!

The markets are setting a trap. And it’s a darn good one. Most investors have no clue it’s there. But if you pay attention, the trip wire is obvious. We’ve got stagnant, if not falling, interest rates, soaring national debt, all the workings of a gold bubble and, guess what, your taxes are going up.

If you think the Dow will hit 14,000 anytime soon, you had better think again. Somebody is about to hit the reset button and it’s not Hillary.

*** Before I go any further, let me tell you that my wife has one of those cushy union jobs. She pays about half a nickel in monthly insurance premiums, she gets a raise in January and her job is as secure as it gets these days.

With that off my chest, let me tell you this.

I hate unions!

They are the reason I have to call India to fix my laptop and why I drive past empty factor after empty factor on my 55-mile commute to work.

But like anything well played, even a union can make a savvy investor money.

Here’s a bit of what I wrote for the TFN site this morning:

“For Harley Davidson, unions have been an unreachable thorn in its side. The problems are almost mirror images of the woes in Detroit: not enough flexibility, high wages, top-notch benefits and a constant threat of a strike.

“This economic downturn is just what the motorcycle maker was prayer for. It gave the company all the leverage to say shut up or get out. More specifically, Harley told the union shut up or we’ll get out.

“The company’s largest manufacturing facility is located in York, Pennsylvania. The union’s current labor contract is set to expire early next year. Knowing the company had a major battle brewing, executives went proactive.

“They started a search for a replacement factory, one with better technology and, more importantly, a cheaper workforce.

“It’s basically a reverse strike. Sign the contract or the factory walks.

“While nothing has been signed just yet, there is a very good chance York’s union will vote in favor of ratification on December 2. When it does, Harley shareholders will be in a good spot.

“I got a peak at the contract last week. It gives the company just what it needs… flexibility.

“While pay is an issue, Harley has no problem paying top dollar if it means high-quality workers. But Harley can’t afford to pay some gray-bearded grump to sit in the break room. That’s why the new contract cuts the labor groups to a mere fraction of previous levels.

“No longer can a worker claim, “I’m a welder. I don’t touch a wrench.” Now, if he’s working, he’s doing what the boss says. It will allow Harley to cut the factory’s headcount nearly in half, saving massive annual labor expenses.

“The new contract also calls for Harley to put about $90 million into modernizing the current facility. While it will be an added line on the expense sheet, you can bet executives are counting on a quick payback.

“I wish I could claim to be the only investor watching the action unfold, but I’m not. Over the last few days, shares of Harley have climbed steadily, sending shares to new 52-week highs.

“Over at TFN Strategic Trader, we took full advantage of the action. Last Friday, we entered a set of the company’s December call options. And yesterday, we sold them for quick-and-easy gains of 60%.

“For once, I have a reason to be thankful for unions. They made us money.”

Can’t complain about that. Keep reading here.

*** Before I go, let me remind you to take time to give thanks for what you’ve got. It’s more important to count our blessing now than ever before. We may not have them tomorrow.

Here’s just a glimpse of what I’m thankful for…

A lovely wife, a baby on the way, a roof over my head, a freezer stuffed with food, friends that would kill their prized pig for me, a steady job, family, the freedom to say I don’t like our government, anything with peanut butter in it and of course, a loyal group of readers that are not afraid to let me know their thoughts.

In the last two years, I’ve:

• Gone long the dollar when it was in the tank…
• Shorted oil near its peak…
• Shorted the big move to Treasuries on the heels of the credit crisis…
• And, most recently, shorted gold at $918 an ounce.

At the time of recommendation, each trade was extraordinarily unpopular, prompting some folks to flat out question my sanity. And yet, taking the dissenting opinion made money each time (the jury’s still out on the shorting gold trade.)

How’d I find the wherewithal – and nerve – to do it?

David Dreman – The Father of Contrarian Investing

I’ve been under the tutelage of David Dreman, known as “The Father of Contrarian Investing,” for many years.

Dreman literally wrote the book on contrarian investing. (If you don’t own a copy of his latest work – “Contrarian Investment Strategies: The Next Generation” – get one!)

In the book, he lays out his straightforward, time-tested investment philosophy to consistently outperform the markets: choose cheap investments that other investors hate.

Sounds too simple to be true, I know. But like any trading genius, Dreman’s track record underpins his investment philosophy…

• Since inception in 1988, his flagship large-cap value fund’s average annual return of 9.2% beats both the S&P 500 and Russell 1000 Value index by a full percentage point. His small-cap value fund has performed even better.
• Since inception in 2003, it has trounced the Russell 2000 Index (the benchmark for small-cap investments) and the S&P 500 index by more than seven percentage points.

Investing in Small Caps Predictions Ring True…

Recall, in January I predicted small cap investing would shine this year because they always do coming out of recessions. And this time has been no exception.

• From the March 9 bottom, small-cap stocks are up 50%, compared to 40% for large-caps stocks.
• And using history as our guide, we can expect more of the same ahead – small caps to trump the gains of their larger-cap peers for at least three more years.
• Thus, not capitalizing on this disparity would be foolish.
• Furthermore, the recent rally has increased stock valuations virtually across the board, so finding winning stocks will require increasingly more investment skill.

And that’s where Dreman comes in… No one on earth is better at unearthing small-cap value investments than he has been.

So how does he do it?

• First, he exploits the fact that the U.S. stocks with the lowest 20% of price-to-earnings ratios returned 16.8% per year from 1920 to 2004 – four percentage points better than the market as a whole. He buys nothing but such undervalued stocks.
• That said, he doesn’t just focus on the “cheapness” of a stock to determine its worthiness. “We don’t like dogs,” says Dreman, adding that, “All our stocks are financially strong, have high yields and earnings growth faster than the market.”
• He pays great attention to the stock filtering process, as well. Specifically, Dreman looks for companies with market caps between $300 million and $2.5 billion. Those are then screened based on their respective P/Es.
• Stocks with P/E ratios greater than the market get discarded, immediately (Dreman is innately opposed to paying a premium for growth). And the remaining companies (those with P/E ratios below the industry median) must possess an above average dividend yield, low leverage, low price-to-book and price-to-cash flow ratios, strong management teams and a catalyst that could spur future growth.

The result is typically three to four stocks in each industry group, with only one or two making the final cut.

Collectively, Dreman uses this investment process to construct a portfolio of 95 to 100 stocks from 50 different industry groups, with a 1% weighting to each. Such a small position size means that a single security can’t sour the overall portfolio performance. Which adds another layer of downside protection. (Deep-value stocks are inherently less risky than high-flying, high P/E growth stocks, anyway).

So clearly, Dreman does much more than simply buy small cap companies that investors have discarded, or ones in the midst of tough times. As he puts it, “We look for reasonably strong companies on the whole.”

But to really put his words into perspective, let’s consider a recent purchase…

Dreman Invests In Small-Caps With Aaron’s Inc.

Last year, Dreman added Aaron’s Inc. (NYSE: AAN) – a small-cap company that allows consumers to rent-to-own plasma TVs, household and office furniture and computers, without any credit checks.

Most investors looked at that business model, cringed and sold the company’s stock, causing it to lose 33% in 2007. After all, could you get any riskier than catering to consumers with poor or no credit during a credit crunch?

Dreman, of course, is too smart to fall for that. This guy can sniff out his prey from a mile away. He knew the current credit freeze was about to push previously credit-worthy buyers away from Best Buy and right through Aaron’s front doors. And with the stock trading at a historically low valuation below 11 times earnings, it was a no-brainer.

Sure enough, with an uptick in demand, Aaron’s earnings jumped a solid 19% last year alone.

And the stock defied the market, rallying 39% in 2008 while everything else took a bath. This year, it’s tacked on another 25%, thanks to a 55% jump in earnings in the first quarter.

Bottom line, small cap stocks can be some of the most profitable investments in any market. Should this market pull-back continue, consider this another great opportunity to pick up some attractive small caps.

But like Dreman, I recommend you stay away from dogs at any price.

Source: Investing in Small Caps: Why it Pays to be Contrarian

Here at Notes we spend the best part of the day combing the little-known world of contrarian investing for money-making ideas the mainstream has overlooked.

We call it the underground, because the kind of market intelligence we dig up can’t be found in the mainstream press. And many of the ideas that circulate in this hidden world actually take advantage of mainstream manias and hysterias to bag big profits.

Small-cap expert Marc Lichtenfeld at The Smart Profits Report says the secret to this profit-income combo is to look for that rare flower: small-cap stocks that pay solid dividends. Now, most investors don’t look to small-caps for income potential. But although most small-caps recycle profits back into the company growth, a number of small-caps do pay dividends…

Owning dividend-paying stocks generates income and improves a portfolio’s return over the long-term.

However, it’s hard to find good small-cap companies that pay dividends. Smaller companies usually pour any excess cash back into the business to help it grow, rather than distributing it back to shareholders.

In fact, of more than 7,400 stocks with market caps under $1 billion, only 1,356 pay dividends. And if you want a meaningful dividend yield – let’s say 3% – the number decreases to less than 800.

I further whittled down the list to companies with high current ratios, low debt, and profit expectations to help ensure that dividends would continue to get paid.

I also stayed away from companies that paid a very high dividend. Companies with yields approaching 10% or higher may find those payouts unsustainable if business continues to be difficult.

Yes, if you want a higher potential reward, you do need to take on more risk. But buying stocks with sky-high dividends is riskier than those with solid but more sensible yields.

Readers should take note that the Nasdaq and Russell (small-cap indexes) have risen 58% and 67% from their lows. So it makes sense to take a more defensive position in small-caps right now. Marc has taken the pain out of choosing the right growth-income balance stocks with three rock-solid picks in this sector…

1. WD-40 Company (NASDAQ: WDFC): The company makes everyone’s favorite industrial lubricant – WD-40 – plus household cleaners and other products. Through the first nine months of its fiscal year, it generated $18 million in profits and boasts $36 million in cash versus $21 million in debt. Earnings per share are expected to grow 13% in fiscal 2010.

Current dividend yield: 3.4%

2. American Ecology Corporation (NASDAQ: ECOL): The firm handles America’s hazardous waste. Not a great business if you’re the guy with the rubber gloves moving barrels of the stuff. But not bad if you’re an investor – particularly a new one, given that the shares have endured a beating over the past year.

ECOL is profitable, has $24 million in cash and no debt. Over the first six months of 2009, it generated $17 million in cash from operations. So far it has paid out over $6 million in the form of dividends.

Current dividend yield: 4%

3. CDI Corporation (NYSE: CDI): The company provides engineering and information technology staffing services. With so many businesses cutting jobs, it’s had a tough time over the past year. But it’s still profitable, with earnings per share expected to nearly double next year. It has $77 million in cash, no debt and generated $10 million in cash from operations.

Current dividend yield 3.6%.

You’re probably wondering why a bearish newsletter like Notes would recommend buying real estate. After all, we’ve just experienced one of the severest real estate crashes in history.

House prices are in the gutter. Taxi drivers the world over are bemoaning the fact. And you can’t open a newspaper without reading about homeowners “upside down” with their mortgages.

Of course, it’s because of the almost universal hatred of real estate that we feel it may be worth investing in right now. Here at Notes, we believe that being a contrarian investor is the best way to make money in the markets. And that means being greedy when others are fearful and fearful when others are greedy.

The Wikipedia entry for contrarian investing defines a contrarian as someone who “attempts to profit by investing in a manner that differs from the conventional wisdom, when the consensus opinion appears to be wrong.”

A contrarian believes that certain crowd behavior among investors can lead to exploitable mispricing in securities markets. For example, widespread pessimism about a stock can drive a price so low that it overstates the company’s risks, and understates its prospects for returning to profitability. Identifying and purchasing such distressed stocks, and selling them after the company recovers, can lead to above-average gains. Conversely, widespread optimism can result in unjustifiably high valuations that will eventually lead to drops, when those high expectations don’t pan out. Avoiding (or short-selling) investments in over-hyped investments reduces the risk of such drops. These general principles can apply whether the investment in question is an individual stock, an industry sector, or an entire market or any other asset class.

Our motto here at Notes is much simpler to understand. As far as we see it, you’re either a contrarian or a victim.
Underground investor Steve Sjuggerud reckons it’s now almost time to buy residential real estate. This from Friday’s DailyWealth:

If you own rental properties and are looking to unload them, you may get a nice tax break out of it, says tax expert Raife Neuman.