Baltimore — (TFN): You don’t believe all the hype do you? As we close out another year and another decade, the pundits are busy rehashing the action of the past ten years.

The political types are discussing the rise and fall of the Bush administration, a couple of wars and the nation’s first black president. The Hollywood folks are talking about the end of the sitcom, the death of an icon and the phenomenon that is American Idol.

And, of course, the financial types are talking about the decade that never happened. You know, the fact that at the start of the decade, the Dow was actually worth more than it is today.

Sure, if you happened to be the poor sap that bought the Dow on January 1, 2000 and held it until today, you’d be down about 9.5%. But I’m willing to bet that is not you.

As a contrarian investor, you are more likely to be holding a pile of gold. In that case, you are sitting on gains of about 300% over the past decade.

But again, I don’t think that is you, at least not entirely. If you are anything like me, you are sitting back, wondering if the next decade is going to be as good as the last.

Think about it. We had high interest rates, record low rates, a housing bubble, a tech bubble, record high oil prices, ultra-low natural gas prices, a couple of wars and the biggest government bailout you could ever imagine.

If you can’t make money in that kind of environment, you flat-out aren’t trying. Even if you racked up 300% gains from gold, you could have and should have done better.

The only thing the last decade proved was buy-and-hold investing is dead. But that’s why we have exchanges, so you can buy and sell assets when the mood strikes.

If you were a true contrarian investor – bought when nobody else was buying and sold when nobody else was selling – you probably just locked in monstrous gains on gold, you are rolling in cash at the moment and are looking for the just the right opportunity to hop back in.

If so, the next year and the next decade are going to treat you very, very well. If you think the last ten years was full of upside downs, wait until you see what’s in store.

Government healthcare, more bailouts, more regulations, more taxes, more government control, more investing options, more interest rate movement, more bubbles, more international exposure… the list goes on and on.

Yeah, we may be back to where we started, but it took one hell of a journey to get us here.

Take my word for it; the next ten years will be the decade for contrarians. Gold will soar. The dollar will fall and interest rates will rise. Better yet, the exact opposite will happen during calculated, short-term blips.

That means we have the kind of market active forward-thinking traders yearn for.

Now is the time to make your move. If you have been sitting on the fence, waiting for the right time, take the end of the year to approach a new starting line and join one of our three services, TFN Strategic Trader, Hot Stock Confidential or Penny Stock Confidential.

All three perfectly play the contrarian viewpoint, and better yet, as a member, you’ll never have to worry about saying, “where’d the last year go?”

You’re at the start of the best decade of your life.

*** As contrarian investors, we like hard assets, the more down and out, the better. Right now, there is no better tangible good, with a worse reputation than good ‘ole American coal. Politicians hate the stuff, factories love it and investors have yet another shot to get rich off of it.

In 2006, I was a bit of a coal industry junkie. I read books on the stuff, wrote countless articles about my research, even went on the radio, TV and the seminar circuit talking about the nation’s dirtiest fuel source.

In today’s world of “green energy” and global warming scares, coal is a nasty four-letter word. But with a couple centuries worth of the stuff buried underground, we all know that’s going to change. Come the next political campaign or environmental hype, coal will launch back into the foreground.

You know it. I know it. And the folks at Bucyrus (NYSE:BUCY) know it. That is why the heavy equipment maker is placing a $1.3 billion coal-industry bet this week.

In a move that tells Caterpillar (NYSE:CAT) and Joy Global (NYSE:JOYG) that they had better pay attention, Wisconsin-based Bucyrus is cutting a check to Terex (NYSE:TEX) in exchange for the company’s mining business.

Again, this is the kind of far-sighted, buy-when-nobody-else-will move that pays incredible dividends in upcoming years. It’s the kind of stuff contrarians dream about.

Just when the coal industry could look no worse, the sector’s biggest names move their bishops in an ever-lasting game of chess.

Today’s move is beneficial for both sides of the bargain. Terex gets a cash infusion that allows it to concentrate on its core business and Bucyrus gets a hunk of assets that allow it to up the ante versus the industry’s behemoths like Cat and Joy Global.

Here’s what you can expect out of the coal industry over the next year: more consolidation, greatly increased share price, strong demand growth, and, most importantly, better representation amongst the nation’s politicians.

Now’s the time to make your move.

*** I wish I had better news for the gold bugs. It has been dang near a month now since I said to sell the stuff and prices have gone ever since. Don’t blame me. I’m merely the messenger.

There is good news. The downturn won’t last long. It’ll be just enough to get the speculators and the hyperbolic masses off the wagon and then prices will turn north once again.

As soon as the magical metal bars are selling for less than $1050 an ounce, put in your buy orders once again. My take is we’ll see $985 by mid-January, but just in case China makes more waves between here and there, $1050 is a good entry point.

When the stuff is selling for $1250 in April and $1,500 this time next year, the cushion won’t matter so much.

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.

Bill Bonner (The Daily Reckoning, UK):

The ‘recession’ did more damage than they think

Claptrap! Nonsense! Balderdash!

Everywhere we look, someone is saying something ridiculous.

Which is good news to us. This Daily Reckoning was getting to be serious work…what with the world facing a total financial meltdown and all.

So, we’re pleased to be able to lighten up by, once again, telling you what an idiot Tom Friedman is. You already knew that? Well, it doesn’t hurt to repeat it…

We hadn’t seen much of the old Tom recently. His recent editorials in the New York Times were no smarter than before, but a bit subdued…as if some chemical trace of good sense had slipped into his system, perhaps from a paper cut. But now, he’s back, big as life and twice as stupid.

We’ll come back to Tom in a moment, but since this is a financial service, we should probably begin with the financial news.

The Financial Times is looking over its shoulder. The recession is over, it says; time to take stock of the damage.

“Beyond the Crisis… With most of the world’s economies officially out of recession, the FT launches a series examining the legacy of worst global economic crisis since the 1930s,” says the FT. But according to the figures below the headline, the crisis wasn’t so bad. The US economy walked backward only 3.5%. Now, it’s making progress again.

The FT editors should keep their eyes on the road. The ‘recession’ did more damage than they think. And it isn’t over… There’s more trouble ahead.

The ‘recession’ in the US has wiped out…

…ten years of stock market progress. Actually, stock prices are no higher than they were in 1998…

…ten years of employment progress. You have to go back to the ’90s to find a time when so few people were working in America…

…ten years of income gains. The typical household had less real, disposable income than it had 10 years ago.

In other words, a whole decade has been lost. Baby boomers are now ten years older, and less prepared for retirement than any previous generation in US history.

In Florida, joblessness has reached 11.2%. The jobless picture gets even grimmer when you consider the effect of long-term unemployment on the unemployed.

“It’s a killer disease,” says Thomas Cottle of Boston University. “People are going to be damaged and may not recover in their lifetimes.”

The FT elaborates: “The longer people are out of work the more their skills decline and the less appealing they become to employers.”

That puts the boomers in a bad spot. If they lose their jobs now they may never work again. Which means, they will face retirement with very little money…and a keen interest in making sure the feds keep the money flowing their way. They may not recover in their lifetimes…

Housing starts are at a 10-month low. Mortgage applications are at a 12-year low. As far as we can tell, both housing and employment figures are getting worse.

In short, the ‘recession’ is far from over, even if the feds are able to jive up the GDP figures from time to time.

Click here for the rest of Mr. Bonner’s insightful analysis at The Daily Reckoning, UK edition.

It’s the same way for politicians. Give them some cash and they’ll have it spent in no time flat, even if they can’t find anything worth buying.

Take, for example, the infamous Troubled Asset Relief Program, TARP in informal nomenclature. Passing the $700 billion program was a matter of financial and economic life and death according to Washington.

They gave us the same panicky “must-have” arguments as a six-year-old in the toy aisle.

But once they got what they wanted, their “toy” sits unused in the corner. As I write, TARP has over $140 billion in uncommitted funds and $300 billion that has yet to be spent.

Yep, they really need that money, didn’t they?

But the story gets even better. Fully expecting a miraculous recovery by the end of this year, our policymakers set TARP to expire on the final day of the 2009. They figured Obama would certainly prop all 300 million of us on his shoulders and carry us to safety by year’s end.

Now that the economic situation is not nearly as rosy as Obama promised a year ago, Washington is crying once again how badly it needs the money. It’s just how little Johnnie cries and moans when little Janie plays with the toy truck he hasn’t touched in months.

Geithner and his team have hundreds of billions of borrowed money up their sleeves with few viable ways of spending it. But now that we are asking for the money back, they say they need it… at least through next October (definitely not through November elections).

Do we ever grow up? It’s like a bunch of kids playing with very expensive toys in Washington.

*** Have you noticed a lot of Washington’s “economic recovery” programs are up for renewal these days?

TARP, the housing stimulus and all sorts of unemployment benefits have been or will be extended. I’m surprised we haven’t seen the resurgence in Cash for Clunkers.

There’s even a bill that would tax Wall Street to the tune of $150 billion annually to help create new jobs. It’s called, get this, “Let Wall Street Pay for the Restoration of Main Street Act of 2009.”

All these extensions and new programs are a surefire signal that all is not grand in the economic world and Washington had absolutely no idea what it was getting itself into as it spent nearly three trillion dollars to supposedly prop up the nation’s economy.

With Congress continuing its reach into the chest of the domestic economy, its no wonder gold prices are hitting new records day after day. By the time Washington is done, nothing “American” will have any intrinsic value left.

But just as I said yesterday about investing in the dollar’s downturn, be cautious of jumping on the golden bandwagon. It could be trouble.

So far this year, gold’s Street value has increased by 32%. It’s a strong gain when compared to historic moves, and it beat’s the S&P 500’s year-to-date climb of 22%, but how far will the bulls take it before they say enough is enough and the bottom falls out once again.

After all, gold really isn’t worth a lick.

You can’t eat it. It won’t fuel your truck. It won’t give you shelter and it won’t protect your house (unless you’ve got a good arm). When the dung really hits the fan, gold’s only strongpoint is it’s more valuable than a fancy certificate that says you own 1,000 shares of XYZ.

But even then, it’s only valuable because we say it is.

Let’s be flat-out honest with each other here. What are the chances of full-on economic calamity? I mean the kind of situation where you will dig your gold out from beneath the old oak tree and take it to the grocery store to buy a slab of bacon.

In other words, what are the chances you will actually use gold for its “emergency” purpose?

Slim to none, and I’m more pessimistic about this economy than any Roubini-following perma-bear.

Gold’s a trap, especially for the folks buying at today’s prices and actually paying to store the rare metal in some vault.

If you absolutely have to own gold, keep your ownership to a minimum, a few grand worth of coins or so. Nothing more.

Better yet, take advantage of the gold rush of ’09 and invest in the world’s gold miners. They are the ones fleecing the bandwagon riders and creating the ultimate market-beating profit potential.

In this market it is more important than ever to not be a clueless sheep merely following the herd.

Be the shepherd and lead the lambs to slaughter.

*** As options investors we love to lead the pack. That’s why over at TFN Strategic Trader, we are all smiles today. After locking in gains of 400% last week, we sold another set of call options for quick-and-easy gains of 60%.

On Friday I sent out a buy alert. This morning I said sell. Traders that followed my advice locked in three-day gains of 60%. Way better than gold.

Isn’t that a scary thought?

Just a couple of days after Obama touched down in Washington, China makes a very American decree. It’s telling its banks it had better shore up their capital situations or face strong sanctions from the government.

They say imitation is the sincerest form of flattery. America did it first, now the communists are following.

In case you missed the news over the past year or so, China’s economy is flat-out soaring ahead. While no figure that disseminates from Beijing is ever trusted, most analysts believe the country’s GDP is growing by a rate of 7% or so. Some even say it has eclipsed the 10% mark.

Just like here in the States, very little of that growth is organic. China’s government is just as fond of manipulating natural market forces as our friends inside the beltway.

And, of course, anytime the government gets involved, some unnatural and unexpected economic reverberations will be felt.

Just as their American brethren did over the past decade, China’s banks are taking advantage of a fixed currency and an optimal lending environment by sending all the money they can dig from the couch cushions into the streets of China.

As the economy grows, the leverage on their books multiplies. Like we learned just 13 months ago, the situation will eventually collapse under its own weight.

That’s why Beijing has stepped in and told the banks that they had better save some money for their backup coffers… or else.

This is bad, bad news for a country surviving on borrowed money (no, not us… this time). China’s economy has been artificially inflated by the government’s cash infusions. But now the leadership is starting to pull back, realizing enough is enough.

Continuing with Friday’s lead, this proves natural market forces are still alive and well. Better yet, it proves China is in for some bumpy traveling.

If you would have asked me early last week about China’s economic health, I would have told you I like what I see. But then something odd happened.

Obama visited. And it’s been downhill ever since.

*** I love it when the markets make a mistake. After some positive economic data from the consumer front this morning, the equities market put in quite a showing today. In fact, even the ultra-bearish natural gas sector followed the crowd of bulls today.

It has created another fantastic buying opportunity. Natural gas prices climbed by less than one percent, but much of the sector is up by two or even three times that figure. Investors mistakenly got caught up in the rally.

Over the next few days they are going to pay for it.

Late last week, we locked in gains of 400% thanks to the natural gas market’s recent selloff. Thanks to today’s action, investors that make their move now have yet another shot at triple-digit gains.

To find out how, read my updated report.

This is going to be a fun week for the energy markets.

*** Let’s face it, the dollar is in trouble. But so is the sun at the center of our solar system. The big question is which will implode first. Now that the dollar has slowed its decline, the race may be tighter than you think.

The dollar will eventually be tossed aside, but will it happen in the next million years?

Here’s a bit of what I told Contrarian Profit readers this afternoon:

“Is the drop in the dollar worth watching? Just like the sun will eventually shine its last ray of light, the mighty dollar will someday buy its last barrel of oil or its final container of Chinese imports.

“We all know it is going to happen, so why bother discussing it. Right?

“There is no doubt the world’s currency of choice has more pressure stacked against it than ever before. But even with $12 trillion in debt and nearly a trillion of annual interest payments due within the next decade, the greenback is still stronger than it was just sixteen months ago.

“While so many of us are betting against the dollar and calling for its demise, plenty more investors are using it as a security net, buying American treasuries to protect themselves in case the bottom really falls out.

“With the sun someday going to fade, I could sit in my basement and wait for the big day to come, or I could live my life without worry.

“It’s the same thing with the dollar. We could bet against the greenback and profit as it drops, or we could forget about the minimal return potential and keep our eyes looking forward, where the real money is at.

“Here’s the scoop. The dollar is likely to fade, at most, six percent below today’s value against the Euro. That’s major erosion for such a massively distributed currency, but six percent over a few years doesn’t stack up to a hill of beans in the grand scheme of things.

“I can list a couple of dozen stocks that are up by twice that figure today alone.

“No doubt, you should pay attention to the dollar, as a six-percent decay in the value of the world’s most important currency will change all sorts of valuations. But don’t invest in the cause, invest in the effect.” Keep reading here.

The dollar is going to fall, but you and I may not live long enough to get rich off the move. The smart money is looking somewhere else. I say we follow.

After last night, I’m ready to get out the 00 buckshot, myself.

I’ve got my eye out for good intentions, gone bad after spending the last three editions of Notes discussing the idea of financial regulatory reform.

During 52-mile commute home yesterday, they were all over the place, anything from idiotic signs to a couple of state cops setting a trap and writing tickets for not moving to the left lane when passing a stopped emergency vehicle.

The gung-ho troopers had rush-hour traffic slowed for over a mile.

But my mind really started spinning when I passed an out-of-state big rig. I could not help but notice the federal and state ID numbers stenciled onto his door followed by a host of annual registration decals from a cornucopia of states. Between the tolls, the permitting fees and the growing list of regulations, it’s no wonder the trucking industry’s bottom line collapsed.

Once I finally crossed the creek and pulled into my driveway, I was ready to sit down and relax by turning on the local news. Let’s just say it’s a good thing the guns are locked up. That TV would still be smoking.

Here’s what the local news “personalities” had lined up to tell us.

They started with a lead story about Harley Davidson’s plans to abandon its largest manufacturing plant at the heart of our local community. Unless it gets strong union concessions in the next few weeks, the company plans to pick up and move to Shelbyville, Kentucky.

Can’t say I really blame the company. The local union tends to form a picket line every other year.

After a short break to show off the latest products from GM (a commercial you and I paid for), the news was back on. This time they were discussing how a local homeless shelter had reached full capacity and is now forced to turn dozens of needy folks away each day.

The bright side of Harley leaving is the county will have all the space it needs. Most of the abandoned Caterpillar factory remains empty as well, just a couple of miles down the street.

Next up was the neighboring city’s news of layoffs and a tax increase. With revenues down and the state battling a budget crisis of its own, the mayor is writing up pink slips and preparing new tax calculations.

He’s even interested in sending local churches a tax bill, noting a third of local property owners don’t pay a penny.

After that cheery bit of news was another story of layoffs. This time it is the state of Pennsylvania cutting 319 jobs, taking the total reduction for the year to 769, plus 2,000 unfilled positions.

But don’t worry. The state’s lawmakers have decided to forego their annual cost-of-living raise. Their pay will stay at $78,000 this year.

I finally gave up on watching the newscast after the “investigative team” revealed we need to keep a close eye on those lobbyists hanging out with our lawmakers.

There’s a news flash.

The state’s two top lobbyists, natural gas drillers and the tobacco industry, appear to be better represented in the state’s capital than any of its constituents.

After missing a legally imposed budget deadline by well over 100 days, the state was hit with a bevy of new taxes and program cuts. The only two groups that came out ahead were, you guessed it, gas drillers and tobacco producers.

The smokeless tobacco industry kept its ultra-low retail tax and another 30,000 acres of Penn’s woods are now open to Marcellus Shale drilling.

With that much lobbying taking place, one would naturally think us tax-paying folks would be able to find out who was the grand recipient. But politicians are sneaky.

Because they write the legislation, they know the best way around it.

It turns out, no state lawmaker has surpassed the public-disclosure thresholds for lobbying gifts and contributions. Go figure.

I have to get a permit to nail a shed up in the back yard, but they can rob us blind and its 100% legal.

After that bit of news, there was twelve minutes remaining in the newscast but I couldn’t take any more. I went down to the garage and cleaned my gun.

*** It is good news for TFN Strategic Trader members. As natural gas prices plunged by close to 7% today, our recent play against the trend is paying off big time. All four of my recent picks are up by double-digit proportions, with one big winner now worth gains of a whopping 385% as the underlying position sunk to record low territory.

There is word spreading across commodity trading pits that the nation will continue to inject natural gas into its reserves throughout November, the month when withdrawals typically occur. I said this would happen months ago.

To see what will happen next, read this report.

*** Gold prices keep soaring. And investors keep wondering when they’re going to bump into the ceiling.

Some blame the weakening U.S. dollar for gold’s rise. Contrarian maven Bill Bonner extended that to the weakness of all “fiat” currencies — not just the dollar. My colleague Christoph Amberger over at TFN was a tad less general. He pointed out today that gold actually traded at $200 less per ounce in 2008… when the dollar’s exchange rate against the euro was even lower than today, at $1.63.

He thinks the main factor behind the dollar’s relative decline to gold is the fact that it doesn’t pay to own dollars any more: “Zero-point-seven-five percent APR on a CD? That’s just marginally better than the lint in your pockets! Now, gold is an asset notorious for not generating returns other than speculative gains. It doesn’t pay interest or dividends. But at this point, neither does the U.S. dollar. Or the yen. Or the euro, pound sterling, Icelandic krona: “The comparative opportunity cost of holding gold has been eliminated! Plus, the cash flows out of the dollar have created an asset bubble that will keep inflating!”
How long will this last?

As long as the Federal Reserve keep punishing dollar savers with non-existing interest rates! That may be at least another year: “Not because the world is abandoning “fiat currencies”… but because holding dollars is a losing game now — engineered and maintained by the U.S. government!”
So far, the team over at TFN’s Hot Stock Confidential has been rubbing their contrarian hands as gold went up: Bullion may be up twenty percent for the year. But HSC’s silver stocks are beating that yield by multiples! Just today, the team took 32% gains in just over a month on Silvercorp.  Amberger points out that this was double-digit gainer #70 for HSC members so far this year.

But they’re not abandoning precious metals. Not at all! Here’s what they’re up to: “Our next Hot Stock Pick is coming out this Thursday. With gold futures at record highs of US$1,151 an ounce today, we’re going to stick with a precious metals pick: At today’s levels, the gold reserves of this junior Canadian gold miner are worth a whopping $460.4 million!

“Let’s put that into the fuzzy math of financial newsletter marketers: With 333.42 million shares outstanding, $1.70 currently buys you 1.38 ounces or $1,589 worth of that gold! As gold prices keep moving up in the great game we call the Commodities Carry Trade, this U.S.-traded stock could snag you a cool 30% gain before New Year’s.”

Hot Stock Confidential members will be receiving this Hot Stock Pick of the week tomorrow before noon. You might want to be one of them. Join up right here.

In the days following Obama’s inauguration, Washington quickly passed a wide set of tax reforms. Part of the legislation included a $400 tax break for the country’s working class and increased healthcare funding for the country’s poor, unhealthy children thanks to increased taxes on the tobacco industry.

It is no surprise neither measure has worked out as planned.

According to reports today, more than 15 million of us will have to pay back the $400 we saved in taxes over the last few months due to an error on Washington’s end.

I hope Uncle Sam doesn’t expect interest on his loan come April.

The news out of the tobacco industry helps us continue our discussion on regulations. The good and the bad.

Winston Churchill once said, “If you have ten thousand regulations, you destroy all respect for the law.”

The great orator hit the notion perfectly. With Congress working on reform after reform, the American people eventually became deaf to the noise from Washington.

Worse yet, we became savvier at circumnavigating weak legislation. Just ask the tobacco industry.

In an effort to fund children’s healthcare, the Obama administration levied a massive 2,000% tax hike on the nation’s roll-your-own cigarette industry. Taxes for the tobacco used to roll a custom smoke rose from $1.10 per pound to $24.78 per pound.

Washington figured the massive increase would deter smoking and create well-needed revenue care of the folks that refuse to kick the habit.

As you can likely deduce, it didn’t work.

What happened was manufacturers ripped off one label and slapped on other. Roll-your-own tobacco production plunged while pipe tobacco production, with its $2.83 per pound tax, soared.

Before the tax, pipe tobacco demand was just 270,000 pounds per month. Just a few weeks later, it hit 1.7 million pounds.

Turns out Washington had no idea pipe tobacco was so similar to the roll-your-own stuff that it could be considered a direct replacement.

The mistake is now costing the government some $384 million annually in lost tax revenues.

Once again, it proves the markets are always a step or two ahead of new regulations.

Barney Frank may think he can write a law that tells Wall Street to behave, but in reality all he’s doing is pushing the action from one unlit corner to the next.

I can’t wait to see what they come up with next.

The response from the “real world” is almost always ingenious, like a classic Tom and Jerry cartoon.

*** I sure hope the Fed knows what it is doing. With Big Ben stubbornly clinging to record-low overnight rates, the top inflation cop needs another trick to keep market forces at bay while still enticing a skittish economy to come out of its shell.

His latest trick? Paying interest on banking reserves left with the Fed. It is a trick used at other central banks to create a “corridor” that keeps rates from sinking too low or rising too high.

But many pundits don’t think the Fed is ready for such management “tricks”, especially as it sits on a massively inflated balance sheet.

I am one of them.

I am against the measure not because I feel it won’t work. It most certainly will work and has in the past.

I am against it because who in the world wants to give anybody in Washington any more power?

The Fed already owns the banking industry and now it wants to create even more opacity.

Over the last three days, we have seen more than enough examples of how increased government power fails. The more we mess with the markets, the harder they are to control and predict.

For all of you that constantly shout, “Fire the Fed,” here’s a tip of my hat. I’m starting to see the light.

The distortions from reality are mind-boggling, yet all of us depend on the status of the simple fiat for our financial wellbeing.

The person with the most skin in the dollar game is, no doubt, President Obama. The nation’s economy hinges on the fate of the greenback and the White House knows it. That is why it is doing anything it can to slow the slide.

Even if it is entirely psychological.

Today, reports are flowing from Washington that show Obama may have plans to use up to $210 billion in TARP money to lower the nation’s ever-increasing deficit.

It is creative accounting at best and a $210 billion bribe at worst.

While the average Oprah-watching, Crocs-wearing American won’t take a second out of their do-nothing day to read below the feel-good headline, there is a handful of us that are actually paying attention.

With this idea of “paying down our debts,” it is vital to remember the Treasury didn’t pull the $700 billion in TARP funds out of some cavernous account.

We borrowed that cash. And now Obama wants to use the borrowed money to pay back our debts, minus a year’s worth of interest of course. It’s like taking out a loan to pay off your mortgage.

The timing of these rumors is more than suspicious.

Just yesterday, China slapped the currency markets in the rear by once again raising the notion of dumping the dollar and making a sudden change in its exchange-rate policy.

Ironically enough, less than 24 hours later, Obama has a $210 billion check in his hand ready to “repay” our debt.

It is money from one hand, around the back, and into the other.

But it gets better.

Obama is not the only one trying to mask Uncle Sam’s debt problems. Just about every exporting country in the world is desperate to keep the dollar strong.

They have to. Their economies depend on it.

Rumor has it countries like Russia and South Korea have been buying dollars on the open market over the past few weeks, in an effort to keep the greenback’s slide from gaining even more momentum.

The governments would rather risk devaluing their reserves than allow their economies to suffer from the effects of a weak dollar.

Looking forward, the question is how long can the manipulation last? How long can the dollar remain artificially inflated? And how long until the markets naturally take care of the situation?

While we may not know the exact answer to any of those questions, it does not take an economics scholar to realize the outcome will be horrific, at least for those of us with dollars in our pockets.

*** The solution? Buy gold. According to the top dog at Canada’s behemoth gold miner, Barrick, we have every reason to believe we surpassed “peak gold.”

That means all the easy gold has already been stripped from the ground and supplies are only going to shrink from here.

According to the CEO, Aaron Regent, global gold production peaked in 2000 and is expected to continue declining into the foreseeable future. So far, mine production is down by nearly 10%.

The news of increasing supply constraints comes at a time when demand is already surging. For those of you that were under the bleachers during Econ 101, it means prices will continue to rise.

There has been a lot of discussion about a sudden collapse in gold prices as many investors believe the current boom is merely a fear-induced bubble. Two or three months ago, I would have bought the story. But not now.

The dollar is simply too weak and foreign reserves are accumulating gold too quickly for prices to fall sharply.

China’s immense buying alone is enough to limit near-term fallout. The country has already doubled its gold reserves and Beijing continues to be a major buyer.

Just one more reason for bulls to send prices higher.

*** Just so you can’t say I don’t let you in on anything for free, I’m going to toss a freebie your way.

With gold prices reaching into record territory, it is a perfect week for Van Eck to release its Market Vectors Junior Gold Miners ETF (NYSE:GDXJ). The freshly created fund gives investors a stake in 38 small- to mid-sized gold miners.

For investors looking for a simple way to take advantage of the gold bull with some additional leverage, this is the ETF to do it.

Thanks to the speculative nature of junior miners, expect shares to beat the market when gold prices are surging and underperform when the bears return. For now, there is plenty of upside potential.

This from Marketwatch:

Sales were quite weak across a broad swath of the retail sector in October, an indication that the fourth quarter could be worse than the just completed third quarter, when inflation-adjusted consumer spending fell at the fastest pace in 28 years. Retail sales account for about half of consumer spending and about one-third of domestic demand. Retail sales are down 4.1% in the past year. Sales fell a downwardly revised 1.3% in September. Sales in August were also revised lower to a 0.7% decline. The dismal report confirms what the business sector has been saying: Consumer spending is falling rapidly.

This from Today’s Financial News:

It is a fact that the real estate industry has historically been a leading indicator of the American economy. When it falls, Wall Street falls. When home prices rise, so does the Street. If that continues to be the case, the American economy is on the rebound.

For proof, look at today’s new-home sales figures released by the Commerce Department. Compared to sales in August, the amount of new homes that sold in September rose by an unexpectedly high figure of 2.7%.

Over 464,000 freshly built houses traded hands across the country. Three years ago, that number was nearly three times higher. But that is all in the past. What matters is that this month’s figure marked an end to the real-estate landslide.

So what has caused buyers to return to the markets? Two things, falling prices and fear of the stock market.

As for falling prices, take a look at these figures. One year ago, the average new home sold for $240,300.  Right now, that figure is just $218,400.  Buyers smart enough to realize home prices are not going to drop any further are getting an instant 10% discount on their homes.

Next, there are plenty of folks unwilling to take a leap into the stock market right now. With the nation facing a deep recession, the equities market is a scary beast for the uninitiated. They figure if they invest in real estate, their investment will always hold at least some value. After all, a piece of land cannot go bankrupt and disappear overnight. Smart idea. Instead of burying their money in their backyard, they are making it work for them.

News you can use

Even with the strong selling last month, inventory levels are still near record-high territory. Over 390,000 new homes remain unsold across the country. According to the experts that calculate such things, that is a 10.4-month supply. Inventories dropped by over 7%.

With prices falling and such a high inventory of homes still on the market, few builders are willing to raise a new house unless it is already sold. That simply means the market is correcting itself and the free economy is working.

As long as the government stays out of the industry, it should recover in short order.

So where is the investment potential? It depends on how much you have to invest.

If you have plenty of cash and have access to the markets along the western coast, buy all the deeply discounted properties you can afford. Rent them now and sell them in a few years. Your investment will pay off handsomely.

If you don’t have a few hundred thousand dollars lying around, you can reap equally large gains by investing in a few choice real estate investment trusts (REITs). Trusts like Post Properties (NYSE:PPS), which is involved in apartment rentals and condo sales, and American Campus Associates (NYSE:ACC), which is taking advantage of the shortage in student housing and a real-estate industry bottom, will do well. And just as almost all REITs do, they both pay nice dividends of 9.7% and 5.5%, respectively.

The facts are obvious. The real estate market is turning around, proving the American economy will be on the rebound fairly soon. We have seen the worst of this crisis.

Now is the time to re-allocate your portfolio and ensure you are properly positioned to take advantage of the bull that lies just over the horizon.

Source: Last Chance for Deep Discounts In Post Properties (PPS) and American Campus (ACC)