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.

In a role that would later deem him “the man who broke the back of inflation,” Volcker took the helm of a weakened and disillusioned Fed in August 1979. Known for his no B.S. attitude and blunt, conservative style, Volcker’s appointment was only made under significant pressure on the Carter White House to lick the inflation problem.

After years of wishy-washy policy – and a widespread sense that the Fed simply didn’t have the cojonesto deal with inflation once and for all – the intense pain that Volcker was willing to inflict (via high interest rates) led to the inflation-subdued conditions from which the late, great bull market sprang in 1982.

Volcker was also in the mix on August 15, 1971, when President Nixon shut the gold window. As Tricky Dick informed the world that “We are all Keynesians now,” ushering in a decade of runaway prices and platform shoes, Volcker was dispatched on an urgent, two-year globe-trotting mission in his role as Treasury Under Secretary for Monetary Policy and International Affairs.

The goal of Volcker’s mission: To hold together the long-standing currency exchange system that Nixon had blown apart in 1971… and convince the rest of the world America had not gone mad.

No one has more claim to “been there, done that” than Volcker. Perhaps more importantly, Volcker has shown a capacity to act under pressure – and to make incredibly tough decisions when need be. In his role as Fed Chairman, taking on a dragon (inflation) that many thought unslayable at the time, Paul Volcker endured scathing criticisms and sharp reversals of fortune that would have broken lesser men.

So Where Did He Go?

All this counted as good news when, in 2008, it emerged that Volcker was advising the Obama campaign. Many who had misgivings in regard to team Obama’s unknown and untested political agenda were soothed, at least partially, by the thought of a wise and experienced hand like Volcker’s playing a role.

Alas, on examining the policy put forth by Washington thus far, the man’s fingerprints are nowhere to be found. The White House gave Volcker an impressive sounding title – head of the “Economic Recovery Advisory Board” – and then seemed to ignore him completely from that point on.

It’s true that Volcker, now in his 80s, has a heightened taste for fishing these days. But one has to wonder if there wasn’t a bit of bait and switch going on here. Use a man’s stature to lend gravitas to a fresh-faced political campaign, promise to listen closely and heed his wisdom, and then…

A Wall Street Railroad

We here at Taipan Daily have no special dispensation as to why the meatheads in Washington do what they do.

But we do have the ability to make an educated guess or two… and the guess here is that Volcker wound up getting railroaded. It’s a good bet that Volcker made the mistake (if one could call it a mistake) of being too forthright in his views – not willing enough to “play ball” as it were.

You see, the White House finance team is dominated by a Wall Street mentality. So dominated, in fact, that insider culture permeates the place like the smell of trout guts in a fish market.

One can see this (or rather smell this) in observing team Obama’s top financial pitchmen, Tim Geithner and Larry Summers. As president of the New York Fed, Geithner was a creature of Wall Street, bought, sold and paid for, from day one. Even the staid New York Times has called out Turbo Timmy, noting his exceptional “reliance on bankers, hedge fund managers and others.”

And if Obama advisor Larry Summers didn’t start out aspiring to be top shill on the hill, he certainly wound up settling in to the role quite nicely, having raked in a cool $8 million (give or take) in speaking fees and hedge fund consulting fees these past few years.

In addition to the above, add in the fact that Goldman Sachs is not just a mega-powerful investment bank these days, but a weird sort of temp agency with a quasi-official role in filling all high-level government finance posts.

The net result is a sort of noxious self-interest cocktail that proves toxic to anyone not considered a tried-and-true friend of Wall Street. And that would include Paul Volcker.

Glass-Steagall Blasphemy

In the eyes of Wall Street, Volcker’s apparent sins are twofold. First, he openly endorsed “Glass-Steagall-like” restrictions on Wall Street investment houses. Second, he showed warmth to the idea of banks as utility companies.

The Glass-Steagall Act was passed in two parts in 1932 and 1933. The second half of Glass-Steagall, also known as the Banking Act of 1933, required commercial bank activity and investment bank activity to remain separate by law.

For 66 years, Glass-Steagall was the law of the land. Under Glass-Steagall, investment banks could not take customer deposits or make commercial loans. Commercial banks, meanwhile, could not get involved in high-powered investment bank-type activities.

Glass-Steagall was repealed in 1999 (Thanks Phil Gramm!) by Republican majority vote. Thanks to this move, the blind-idiot-behemoth known as Citigroup was born. Before the repeal, Citi had to more or less stick to its boring customer deposit knitting. After the repeal, Citi was free to gorge on the high-powered stuff, with the leverage of customer bank deposits and FDIC insurance as a backstop… resulting in the quivering mass of financial wreckage now splayed out at our feet.

In suggesting that a new “Glass-Steagall-like” reform would be a good idea, Volcker declared himself an enemy of Wall Street. Through the eyes of the bankers, unfettered leverage is good – even if it blows up the entire country every once in a while – because anything that fattens the kitty at bonus time is good. To return to the days of Glass-Steagall would be a step backward in the banksters’ eyes, as would any maneuver that threatened to permanently reduce their power.

The same thought process applies to Volcker’s endorsement of the “banks as utility companies” idea. This is the notion that any business back-stopped by government should be a safe and boring business by law. The logic runs something like this: “You want to do sexy exotic stuff? You want to take big risks with your own investors’ capital? Fine. Just don’t do it with taxpayer funds, don’t do it as a government-backed entity, and don’t expect a bailout if you blow up. If you want to enjoy FDIC insurance, “too big to fail” support, or any other form of government support or largesse, then you need to take the plain-vanilla restrictions that come with that.”

Seems like a fair trade-off, no? In the eyes of Wall Street, that’s exactly the problem.

Keeping the Deal

Right now Wall Street has a very sweet deal, which some have memorably characterized as “socialism for the rich.” One can also think of it as “I take the upside, you take the downside.” As in, when a cockamamie scheme works out, the players reap tens or hundreds of millions… but when it doesn’t work out, the taxpayer gets socked with the bill.

If the White House were to embrace the idea of making banks more like utility companies, as Volcker suggests, then Wall Street’s sweet deal would disappear. The pleasingly asymmetric nature of the equation – heads Wall Street wins, tails someone else loses – would be lost.

And so, most likely, this is why Volcker has been muzzled. Geithner and Summers live in Wall Street’s back pocket. They are shills or, possibly worse still, moles… tasked with making sure the interests of the true master are served. President Obama seems either not to know or not to care. Either way the result is the same… the financial interests of the United States have more or less been hijacked by a quiet oligarchy. Worse still, when the self-interests of this oligarchy run directly counter to the economic interests of the country, it is the country that loses. Every time.

Paul Volcker, on the other hand, is not a shill. Not a mole. Or at least, he hasn’t shown any clear sign of being such. If Volcker had been “compromised,” he would be out there towing the party line – putting his credibility to work in service of the agenda, à la Colin Powell and the Iraq War.

One can only speculate as to the thoughts in Paul Volcker’s head. Your humble editor’s guess, though, is that the man feels snookered. He may well have been caught up in the bright shining spirit of the 2008 presidential campaign… the thought of a new day, a new broom sweeping clean, and helping America out of a serious jam (as he once did all those years before).

But one can only do so much, and good intentions only stretch so far. On realizing the truth, the 81-year-old Volcker may well have shrugged and gone fishing.

Source:  The Unconscionable Muzzling of Paul Volcker

During that same time frame, the price of gold went from $400 an ounce to a peak of $730 an ounce by May 2006. By the time the Fed stopped hiking rates, an ounce of gold was sitting at nearly $660 an ounce – an increase of 65%.

As you can see, when there’s a long bull run pushing the price of gold, it doesn’t matter if interest rates are increasing or decreasing, the price of gold should shoot higher.

With inflation and government spending out of control, we should see much higher gold prices in the next 12 months.

That makes today a perfect time to begin acquiring gold at a significant discount.