(SPECIAL MONGOLIAN ISSUE)

Featured Trades: (SILVER), (SLW), (SLV)
iShares Silver Trust

2) The Leveraged Upside Play in Silver. Silver really seems to have the bit between its teeth, not pausing at all after blasting through $21/ounce to a new 30 year high. If you think the move will continue, you better take a look at Silver Wheaton (SLW), a stock I have been recommending for a year, and has clocked a gain of 104% (click here for the call).

The great thing about this company is that it is a silver royalty stock. I'll spare you the legal details. Suffice it to say that it has a locked in cost of silver at $4/ounce, and current earnings forecasts are based on $17. With the white metal last trading at $21.40, any gains drop straight to the bottom line. Furthermore, the opening of new mines will see production soar from 23 million ounces a year to 40 million by 2013, giving you a double leveraged effect to the upside.

The only caveat I would ad is that this is not exactly a new trade, and that there is certainly more risk at $26.30/share than there was at $14. If silver turns, this will definitely be your E-ticket ride to the downside.

Featured Trades: (QUANTITATIVE EASING)

1) Bring on the Bernanke Put! It is now clear that the Fed's unprecedented message last week implying that public enemy number was deflation, not inflation, has given a green light to global risk accumulation of every description. Any further slowdown in the economy will now be met with aggressive quantitative easing. Although I don't spend vast amounts of time dissecting Fed statements, the words are unequivocal:

"The Committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate."

Never was so much said by so few words.

It is rare that everything goes up at once, but that is exactly what we got, with stocks, bonds, foreign currencies, commodities all rallying hard. Coming into the Fall, I did have some concerns that asset classes that performed well over the summer, like emerging stock markets, precious metals, and the grains, might sell off on any American stock market strength, as managers rotate money from outperforming groups to laggards.

It was not to be. On Friday, the 23 point leap in the S&P 500 was matched by gold punching through $1,300, silver hitting another 30 year high above $21, the grains tacking on 5%, and most emerging markets reaching either six month highs or all time highs.

Who was not invited to this love fest? Financial stocks, where a weak housing market continues to wreak havoc with balance sheets, whether they publicly admit it or not. The US dollar was also missing in action, since any quantitative easing is certain to fan the inflationary fires down the road. The euro has blasted through to a multi month high, and the British pound is threatening the same.

I warned readers that the markets were primed for a move like this (click here for 'My Equity Scenario for the Rest of 2010'). All of the seasonal and historical indicators were predicting that in an election year like this one, six months of famine in the equity markets would then be followed by six months of feast. It looks like the S&P 500 now has a free pass to make a run to the 200 week moving average at 1,200, and possibly the high for the year at 1220. After that we'll see how real this is, for stocks anyway.

Party away like there's no tomorrow, but keep an eye on the door as usual, and keep snugging up those stops on US equities. Use the strength in long dated Treasuries to unload what you still own.

Helicopter Ben Says It's Party Time

Featured Trades: (EWZ), (PBR), (OIL)
Brazil iShares ETF

3) Why You Should Buy Brazil's Petrobras. I often get asked why I haven't been more positive about Brazil (EWZ). The answer is twofold; an upcoming election was about to bring a regime change in the high growth country, and there was a huge supply overhang from the upcoming secondary equity offering from Petrobras (PBR), the largest in history.

That turned out to be a good call, with the main market dropping 6% so far in 2010, when most emerging markets were going to the moon.? PBR has been a great short, dropping 31% from its peak.

Now Petrobras issue is done, and it is time to review the space. The company raised a staggering $70 billion, with the Chinese government coming in a major participant. The issue was priced so low that success was assured, despite its gargantuan size. Hedge funds and institutional investors whittled down their PBR weightings, hoping to cover their underweight on the deal. As the issue was generously oversubscribed, they are now scrambling to cover these shorts.

Petrobras will use the funds raised to develop their enormous Tupi offshore field, which is estimated to have 50 billion barrels of recoverable reserves. That will double the company's production to 3.9 million barrels a day by 2014, which is equivalent to 20% of American consumption. The company is well on its way to becoming the next oil major.

I think oil is a great place for the long term, and now is not a bad time to get in, as it has been one of the few underperforming commodities this year. I usually say buy the dips, but the dip in PBR has been going on for the past six months, so just buy now.

Featured Trades: (PALLADIUM), (PALL)
ETFS Physical Palladium Trust ETF

2) Palladium Explodes to the Upside. If you are thrilled about the recent performance of gold, you have to be absolutely ecstatic about the ballistic rise of palladium, which has soared by 33% in the past two months. Double dippers beware! Moves like this by industrial commodities do not occur in the face of a collapsing economy.

Palladium, named after Pallas, the Greek goddess of wisdom, has been mined in South America for over 1,000 years, was discovered as an element in 1804, and saw jewelry use start in 1939. But in 1975 it really came into its own when a nascent environmental movement got legislation passed requiring catalytic converters on all new American cars.

Toyota's USA's president, Jim Lentz, believes that the US car market will recover from the present 12 million annual units to 15 million by 2015. You can forget the drug induced haze of 20 million annual units free money brought us, returning in our lifetime. Fewer than one million of these will be hybrids or electrics. That means industry demand for catalytic converters is ramping up by 3 million units a year.

Which catalyst will the auto makers choose? Palladium at $539 an ounce or platinum at $1,642 an ounce? Hmmmm, let me think. They do have new management now, so maybe they'll figure it out. Some 80% of the world's palladium production comes from Russia and South Africa, dubious sources on the best of days. That means that a long position in this white metal gives you a free call on political instability in these two less than perfectly run countries.

Also known as the 'poor man's platinum,' demand for palladium for jewelry in China has been soaring with the growth of the middle class. On top of this, you can add $387 million of new demand from the palladium ETF (PALL) launched in January, which will soak up a hefty 10% of the world's production.

Those set up to trade the futures can play the Decembers contract, where a margin of $3,713 gets you a 100 ounce exposure worth $53,900. If you are looking for something to stash in your gun safe, bury in the backyard, or give to the grandkids on their college graduation, get physical. You can buy 100 ounce bars at $50 over spot, or Royal Canadian Mint one ounce .9995% fine palladium Maple Leaf coins at $50 over spot. And yes, you can even buy them on Amazon by clicking here.

Featured Trades: (QUANTITATIVE EASING II), (BEN BERNANKE), (TBT)
SPDR Gold Trust Shares ETF
iShares Silver Trust ETF
Market Vectors Coal ETF

1) Bring on the Conspiracy Theories! There is a wonderful conspiracy theory propagated by Tea Partiers that has been making the rounds in the financial markets for the past several months. In a desperate attempt to salvage the November election, president Obama has ordered Fed governor Ben Bernanke to flood the system with $2 trillion of liquidity. This is the QEII you have been hearing so much about. The move will give the economy a much needed shot in the arm that will enable the Democrats to retain control of both houses of Congress. Two more years of Obamanomics will then follow.

The only problem with this theory is that it is complete hogwash. For a start, Ben Bernanke is a Republican originally appointed by President Bush. Then there is Fed independence to consider. The board of governors is well stocked with enough conservatives, like Richard Fisher (click here for my chat with him), to make such a politically inspired maneuver impossible. If the Fed weren't set up this way, it would become a political football kicked back and forth with every election. Congress would order the stimulus machine to be stuck permanently in the 'ON' position.

You also have to ask the question of whether QEII will make any difference at all to the economy. With banks desperately seeking to deleverage and unwilling to lend, the level of interest rates today is truly irrelevant. The 35 million homeowners with negative equity, about 25% of the total, certainly aren't going to be refinancing anytime soon. Much of the drag on the economy springs from the sorry state of the real estate market (click here for 'Years of Pain to Come In Residential Real Estate'), so there is little the Fed can do, unless it starts buying millions of houses and burning them down.

Personally, I think the American central bank is out of bullets, and that any such gestures would amount to pushing on a string. Believe me, I have been watching the Japanese do this for 20 years, to no effect. There is one thing the Fed does understand, and that is that any QEII implemented now would be highly inflationary down the road. This fits nicely with my (TBT) recommendations.

But hey, as I learned in my journalism days, never let the truth get in the way of a good story. My late editor at The Economist, the brilliant Peter Martin, taught me that belief will trump fact every time. Facts change, opinions don't. That totally works for me, because this theory on the true motivations of the Fed is driving cash into hard assets at an unprecedented rate, commodities and companies that I have been pounding the table about for the past 18 months. I made that call because it dovetailed nicely with global macroeconomic trends which I see continuing for another decade. Most people get invited to dinners. I get invited to mines.

If the market wants to run the prices of my assets up for the wrong reasons, I say bring it on! The dollars I am making as a result are just as good at the bar.

This is What a Chart Should Look Like

Great News for Hard Assets