For more than a year there has been rampant speculation about a Facebook IPO, and now one is finally on the way.

According to a report in The Wall Street Journal, Facebook is looking at a deal that would value the company between $75 billion and $100 billion, WSJ reported, making it one of the biggest in U.S. history.

Facebook is looking to raise as much as $10 billion, which would make it the fourth-largest U.S. IPO behind Visa Inc. (NYSE: V), General Motors Co. (NYSE: GM), and AT&T Wireless. A $100 billion valuation would make Facebook worth as much as global powerhouse McDonald's Corp. (NYSE: MCD).

WSJ reported Morgan Stanley (NYSE: MS) would be the lead underwriter, a job that could give the firm more than $500 million in fees. [But that $500 million could lose 90% of its value if this government practice is allowed to continue. Major financial companies won't be the only ones threatened, either. This will hit everyone's investments - and could devour a huge chunk out of your retirement account. Take a look at our latest free report right here for details.]

A strong performance by Facebook could test the idea that social media companies are overhyped. But before you get excited about Facebook shattering that theory, you'd do well to look at some of the other hot tech IPOs of the past year.

Can the Facebook IPO Standout from Tech Flops?

A series of tech IPO disappointments in the past year has fueled speculation of another dot-com bubble.

Online music provider Pandora Media Inc. (NYSE: P) is down more than 30% since its IPO last year. Business networking site LinkedIn Corp. (NYSE: LNKD) is down 14% from its listing price, and daily deal site Groupon Inc. (Nasdaq: GRPN), has plunged 27% since its debut only a few months ago.

Most recently, a strong debut by online gamer Zynga Inc. (Nasdaq: ZNGA) flopped. It fell nearly 14% the same day it IPOed. The company has posted a slight rebound since but is still performing below its lofty expectations.

The question investors have to ask themselves is: What makes Facebook different?

After all, it is the most trafficked website in the world, but its business model leaves a lot to be desired.

"One out of every 12 people in the world visits the popular social networking site, and the collection of human data that's stored there makes Facebook the largest, self-fueled marketing database in human history. That point is well taken," said Money Morning Chief Investment Strategist Keith Fitz-Gerald said "But exactly what is Facebook going to do with all of that data?"

Furthermore, Mark Zuckerberg, the young genius behind the company will be challenged to manage a global company whose financial performance will be scrutinized every three months by investors. And Facebook still faces concerns about users' privacy.

Yet the company's planned $10 billion offer would value the social network between $75 billion to $100 billion, said people familiar with the matter.

Popularity vs. Potential

"This appraisal highlights Facebook's popularity, not its earnings potential," said Fitz-Gerald. "Facebook may have jumped ahead of Google as the most visited website in 2010. But it's not worth $100 billion."

Fitz-Gerald points out that Google Inc. (Nasdaq: GOOG) made $3.26 billion in revenue in its first year public (2004), but it had valid, often user-driven sales opportunities.

Google's advertising targets, through its search engine, at least, are often looking to be "sold" when they go to the site. Whereas, Facebook users don't want their chatting/gaming/posting time consumed by invasive or even passive salesmanship.

Said Fitz-Gerald: "Sure, Facebook has a lot of people trolling through its site. But the important question is: How do they monetize that traffic? In other words, they face the same old dilemma salesmen have faced since the beginning of time: How do you convert the "tire-kickers' into buyers."

If Zuckerberg can turn his site into an advertising gold mine, the potential for the company could be endless.

IPO Shares Reserved for Elite

But even if the company can monetize its popularity, regular users won't be able to get into its IPO.

Instead, Facebook's IPO shares will be reserved for the wealthiest investors, not the loyal users who have fueled Zuckerberg's rise to riches.

Before Facebook, Zuckererg was just a college student....

Today, Zuckerberg's net worth is $17.5 billion and he's ranked No. 52 on the Forbes list of billionaires - No. 22 in the United States - and No. 9 on the Forbes list of powerful people.

"Zuckerberg made history with Facebook - and now he's the king of social media and social networking - the man with the Midas touch," said Money Morning Capital Waves Strategist Shah Gilani. "But now it's time for him to give some of the gold that he's earned as the head of Facebook back to the people who helped make that happen. They're the ones who have brought his company to the forefront. They're the ones who should be participating in this."

So, how could Zuckerberg use the Facebook IPO to give back to those who've helped him become an Internet legend?

Gilani has a plan for that...

The Facebook IPO Lottery

Gilani suggests Zuckerberg reserve a portion of the IPO for Facebook subscribers - since they're the folks who really made him the king of social networking (as well as one of the youngest billionaires in history).

Giving Facebook subscribers access to shares at the offering price would actually be simpler than it might seem, Gilani insisted. In his plan, Facebook could reserve 20% of the IPO shares for Facebook subscribers, and then dole those shares out via a lottery.

"I think the shares of Facebook are going to be highly coveted in the IPO realm, and I think there's going to be worldwide demand for it," Gilani told Varney. "So the investment bankers, the underwriters, are going to parcel those shares out as they normally do to their favorite elite clientele that they want to support."

Given that the Facebook IPO is likely to be one of the hottest ever, Gilani said that his proposal would probably be the only way the average investor could get a piece of the company at the offering price.

Without such a reserve, retail investors who really want to own Facebook shares will be forced to buy on the secondary market after Facebook's share price has experienced what's expected to be a stratospheric zoom.

Zuckerberg's Second Act

"Facebook was Act One for him," said Gilani. "This kind of pioneering move with the Facebook IPO could be Act Two - the encore. If social media is a force for good, this would be Zuckerberg's opportunity to once again prove he's a real social innovator."

And altruism doesn't have to be the sole motivation for Zuckerberg, either.

The company's most ardent subscribers are likely to be deeply loyal shareholders, too - especially those who get into the Facebook IPO via the lottery. Those folks will probably view the shares as more of a badge of honor than an investment, and will be loath to dump them during tough times. And that will help put a floor under Facebook's stock price, Gilani insists.

"Most of these people are very likely to hold onto their shares - recognizing that they're part of the social-networking group that broke historic new ground," Gilani said. "Zuckerberg will see that it's just good business."

Gilani said such a move would show Zuckerberg truly believes in the social networking trend he's helped evolve.
For more investing ideas from Shah Gilani and Keith Fitz-Gerald, take a look at our latest special presentation. It shows you how to get $26,000-worth of our best investing ideas. And it's free to new Money Morning readers like you. Just go here.

There's not a day goes by that I don't see some variation of the theme that China is going to crash, or that somehow that nation will blindside us, and that its markets may fall 60%.

This is like saying the U.S. markets were in for a hard landing in March of 2009 after they had fallen more than 50%. Folks who bit into this argument and bailed not only sold out at the worst possible moment. They then added agony to injury by sitting on the sidelines as the markets tore 95.68% higher over the next two years.

People forget that the U.S. stock market - as measured by the Dow Jones Industrial Average using weekly data - fell more than 89% from 1929 to 1932, more than 52% from 1937 to 1942, and more recently experienced a decline of more than 53% from 2008 to 2009 - and that doesn't even account for four 40+% declines beginning in 1901, 1906, 1916, and 1973.

Each was a great buying opportunity, and following those meltdowns, our markets rose more than 371% from 1929 to 1932, more than 222% from 1949 to 1956, more than 128% from 1937 to 1942, and more than 95.68% in just over two years starting in March 2009 - one of the fastest "melt-ups" in market history.

People forget that world markets dropped 40%-80% in 1987. And as legendary investor Jim Rogers noted earlier this month, that was not the end of the secular bull market in stocks, either.

People forget that our nation endured two world wars, a depression, multiple recessions, presidential assassinations, the near complete failure of our food belt, not to mention the deadliest terrorist attacks the world has ever seen, and more.

And guess what? It's still been the best place to invest for the last 100 years. (But that could be about to change. Take a look at the new U.S. dollar report from Money Morning to learn the insidious truth behind America's global depreciation.)

So what if China backs off or slows down?

The Asian currency markets blew up in 1997. Mexico's market fabulously went up in smoke during the great tequila crisis of 1994. And Argentina failed to the tune of a 76.9% crash starting in 1997 only to give way to a 1,724.56% rally from 2001 to 2011.

Gold rose by more than 600% in the 1970s, then fell by 50%, which terrified investors at the time. It subsequently rose by more than 850%, something else Mr. Rogers noted in recent interviews, as have I.

China is undoubtedly going to have several hard landings in our lifetime. Despite the fact that China is thousands of years old, modern China is a mere 40 years old, if you consider its opening following the historic Nixon-Kissinger visit in 1972.

And today's China has 1.3 billion people -- all of whom want to live the way you do.

It's growing by an average of 9% a year or more and has done so every year for the last 41 years straight. We've just poured an estimated $7.7 trillion into our economy and the best we can do is 2.5%. The European Union (EU) is on track for 0.2% growth in 2012 after trillions in euro backing there.

Make no mistake: China's government is well aware that it has a problem. Unlike our own government and those in the EU, it has raised bank reserve requirements repeatedly before loosening them a bit last month. Beijing hiked interest rates six times in the last two years.

They are deliberately tapping on the brakes. They actually want segments of their economy to fail so they can reboot parts of the system, including China's real estate market, which is a prime example of this.

The Reality of Real Estate

Real estate has been bid up to obscene levels in many parts of the country - not throughout the entire country, but in parts. And those are the places Beijing wants real estate developers to fail so that values can come back to more realistic levels while capital gets freed up for additional investment.

Take Beijing for example. There are plenty of writers at the moment who love to point out that it will take the average Beijing resident 36 years to pay for their house versus 18 years in Singapore, 12 in New York, and 5 in Frankfurt.

Well, Beijing is a first-tier metropolis so right away you know this number isn't an apples to apples comparison. Factor in second- and third-tier cities like outside Beijing, Shanghai, Shenzhen, Guangzhou and prices drop to 3,000-5,000 RMB/m2 and take 4-10 years to pay back, which is roughly in line with international standards.

Look at cities like Moscow, Zurich, or Tokyo and the argument falls apart further.

For example, in Tokyo and other cities across Japan, Japanese banks at one point offered 100-year mortgages. And property, once acquired, tends to stay in the family for generations. You can still get 50-year mortgages if you want, and you might need to because property values remain unthinkably high even after a 30-year collapse.

Here are some other things to think about:

1. Unlike the U.S. property bubble, which was nearly nationwide, Chinese borrowers must put 30% down for first-time purchases, 50% down on second purchases, and make full cash payments for third properties (where third properties are allowed). This means Chinese homeowners and banks can withstand a 30%-50% drawdown in prices before actually experiencing negative equity and stands in stark contrast to the United States, which is riding Occam's Razor in that regard.
2. Using Beijing as an example for the entire Chinese housing market is shortsighted. While prices in second- and third-tier cities have also experienced increases in value, they are far less (relatively) than first-tier cities. And it is in second- and third-tier cities that the majority of Chinese citizens live. Using Beijing (or Shanghai) as a gauge for the entire Chinese real estate market would be like using Las Vegas, Miami, or Phoenix as a gauge of the entire U.S. property market in 2007.
3. Chinese banks have not collateralized their mortgages into risky collateralized debt obligations (CDOs) and subsequently insured them with unregulated credit default swaps (CDS).
4. And lastly, when the U.S. property bubble burst our country had more than $12 trillion in debt. China, by contrast, is sitting on $3.2 trillion in reserves (which represents 54.5% of the country's entire GDP). While Beijing would obviously rather not do it, it could theoretically recapitalize its entire banking sector and have plenty of money to spare.

More Than Manufacturing

Another doomsday scenario people like to bandy about is the notion that China will collapse if exports fail or U.S. demand drops. That's a gross exaggeration and much of the pabulum that you hear is completely wrong.

For example, it's commonly cited that exports make up approximately 40% or more of China's GDP. In reality, the figure is between 10%-20% even after decades of explosive growth. The CIA estimate is 18%, and of those exports, the U.S. accounts for a mere 18% of the total.

Fully 75% of the GDP comes from domestic spending and domestic investment.

As for the notion of U.S. demand, what China bashers don't realize is that the United States is dangerously close to being completely irrelevant to the Chinese growth model. China will not live and die by U.S. demand.

There is always going to be an imbalance between the value-added content of what China imports and what the country exports. China's exports are becoming more and more upscale just as Japan's did, which is probably the same pattern for all developing nations.

This is sort of like the great days of the British Empire - you sell us iron ore and we will sell you nails, hammers and shovels. If the value of an economy goes up, it's only natural that the value of the products it deals with, sells, and consumes will, too.

Also, China's trade surplus is shrinking as a percentage of gross domestic product (GDP), from almost 11% in 2007 to 3%-4% in 2010 to 0.246% ($14.5 billion) of its $5.87 trillion GDP as of November 2011 - further reinforcing the notion that domestic consumption is becoming a bigger force in China's economy even with the slowdown.

Don't Miss Out

I'm not saying China is going to have smooth sailing - but then again, neither did the U.S. in the 20th century, and the DJI gained 24,000% over that 100-year period. China is merely going through the first uncomfortable growing pains of its adolescence.

Remember, in 1912 the United States still used child labor, had massive inequalities of wealth, and women still couldn't vote. So holding China to the same standards as the modern United States is inappropriate, considering the country has only been open to the rest of the world for 40 years.

You have to look at China appropriately. You can't arbitrarily force the 21st century U.S. lens onto other countries in a vain effort to judge them.

Additionally, other parts of the Chinese economy are doing very well. Most manufacturing, agriculture, pollution treatment, water treatment, power, and resource development are just a few of the areas undergoing tremendous growth.

The point is, many people look down upon China with the same sort of derision once reserved for post-war Japan. And if you grew up in the 1950s or 1960s and thought Japan was only for cheap tin toys and didn't invest there, you missed out in the same way investors who look down their noses at China will.

Keep in mind that China's economy is roughly one-third the size of the overall U.S. economy and growing fast. Together America and the EU are approximately 10 times the size of China.

So if it does suffer a major correction, it's not the end of the world - nor the financial markets. And if the markets fall by 60% in the next year as some people suggest, I know what I'll be doing...buying.

Four Ways to Safely Invest in China

In the meantime, it's best to look at China within the overall scheme of things. And here are the investments you might want to consider:

1. Buy yuan. It's still a blocked currency but you can legally get your hands on it using bank deposits, CDs, or exchange-traded funds (ETFs). The official story is that it's being held down. Bull. Since 2005 it's already risen by 23.29%, which is more than the U.S. government wants you to believe. If anything, the dollar is worth too much (But right now, Washington bureaucrats are on a campaign to devalue your dollars - by up to 90%! That would mean a $1 million retirement account would only hand you about $5,000 a year in income if you don't act quickly. This new report from Money Morning reveals Washington's secret plan.)
2. Buy commodities. When China's markets grow, so too does global demand for raw materials. The nation has no choice but to buy because it doesn't have many native resources.
3. Buy shares in Chinese companies on Chinese exchanges. One of the things that people miss in their rush to dismiss China is that they're tracking those shares of Chinese companies listed in the United States. That's a mistake. If the U.S. markets take a header, of course Chinese-listed companies on the NYSE and other U.S. exchanges will, too. Still, it's probably best to wait for the dust to settle before wading in.
4. If you're aggressive, you can even try a classic "short" then go reverse long once the markets gain their footing.

Four months after chief executive Carol Bartz was let go, Yahoo Inc. (Nasdaq: YHOO) appointed new CEO Scott Thompson to salvage the sinking Internet company and do something Bartz couldn't - win shareholder support.

Thompson, most recently president of eBay Inc.'s (Nasdaq: EBAY) PayPal unit, is taking over the lead role. Yahoo is in dire need of new strategies to increase site traffic and attract advertisers if it hopes to defend against increasing competition from tech giants Google Inc. (Nasdaq: GOOG) and Facebook Inc.

Shareholders were frustrated with the decision, however, since they were pushing for the struggling Yahoo to sell.

"It's probably a slight negative because I think the best outcome for Yahoo would be an all out takeover by Microsoft," Brett Harriss, an analyst at Gabelli & Co., told Bloomberg News. "Hiring a new CEO makes the sale of the whole company unlikely."

Thompson is the company's fourth CEO in five years. Now the pressure's on him to win over shareholders and inspire investor confidence before the share price plunges.

If the share price does fall, again, investors should look to other, more vital, technology investments. Some of the biggest can be found in a new report by Money Morning. You can find that report right here.

New Yahoo CEO Scott Thompson a "Surprising Choice"

Thompson excelled at PayPal, contributing to its expansion into online daily deals and mobile payments and increasing PayPal users to more than 100 million.

However, he has no experience with content - Yahoo's bread and butter. Yahoo Chairman Roy Bostock said Thompson's primary focus will have to be on the company's "core business" - providing content in subcategories like news, sports, and finance.

"It's a surprising choice," Ken Sena, an analyst at Evercore Partners Inc. (NYSE: EVR), told Bloomberg. "Scott has a great track record in payments and has proven an effective executive at PayPal and has major tech chops and international experience, but as a content company, which Yahoo has increasingly become, his experience is kind of lacking."

Thompson told investors he wanted to explore Yahoo's options in the mobile sector. He'll also help the company realize more value from its minority investments in Alibaba Group Holding Ltd., China's biggest e-commerce company in which it has a 40% stake worth $14 billion, and Yahoo Japan Corp., or decide if it's best to sell those assets. A sale would appease shareholders while the company regroups under Thompson's leadership.

"If they can successfully complete the Asian asset transactions, in a way that is beneficial to Yahoo shareholders, I think it will buy them some time, and they'll have a chance to build for growth," Ryan Jacob, of the Jacob Funds, told Reuters.

Is New CEO Thompson Better Than a Sale?

Yahoo has piqued interest from other tech and private equity firms over the years looking for acquisition or investment opportunities.

Microsoft Corp. (Nasdaq: MSFT) unsuccessfully pursued Yahoo in 2008. The offer valued Yahoo at $44 billion - more than double its current $20 billion market value. After the attempt fizzled, Microsoft developed its own search engine, Bing.

Since firing Bartz in September, Yahoo initiated a strategic review that triggered a new round of takeover interest.

Alibaba said in October it was considering making a bid for Yahoo. Yahoo was also approached last year with deals from private-equity firms like Silver Lake Partners and TPG Capital, but the offers didn't please shareholders.

For now, it looks as if Yahoo is off the market while new CEO Thompson gets his feet wet. That's not a bad move because if Thompson can start to build shareholder confidence, investor interest will boost Yahoo's share price. And if it does sell, it'll snag a better offer than what it could land now. Recent rumors have priced Yahoo for a sale at $14 a share - almost $2 below recent closing prices.

The key to Thompson's initial success will be acting fast. Thompson doesn't have much time before investors' increasing pessimistic outlook on Yahoo could push the share price even lower.

If Thompson doesn't act fast to rejuvenate the company and its stock, investors should turn to other technology companies - with innovative breakthroughs on the books - for gains in the coming year. Money Morning's latest forecast report provides information on one of these technology breakthroughs. And you can find it right here.

The U.S. dollar will start 2012 on an upswing - but don't let it fool you.

What we're seeing is only a short-term rally inspired by Europe's travails. In the long-term, the U.S. Federal Reserve's loose monetary policy and the United States' own debt burden will drive the greenback back down.

That's the consensus among experts who follow the global money markets and the leading currencies, including several of Money Morning's own analysts.

"The dollar is going to rally in the short-term so long as the primary liquidity mechanism (used by the world's central banks) continues to be dollar swaps," said Money Morning Chief Investment Strategist Keith Fitz-Gerald. "How long that is going to last is uncertain - perhaps March, April or beyond - but once it abates, our own enormous debt problems and inflationary policies will return to the spotlight and the dollar will quickly give up its recent gains."

Indeed, the dollar rallied in the second half of 2011, as Europe's debt battle dominated the headlines. The U.S. Dollar Index, which measures the dollar's value against a basket of foreign currencies, ended about 10% higher than its May 2011 lows, gaining almost 3% in November.

That momentum is likely to continue for the first part of the New Year, but not long after.

Several economic factors will weigh far too heavily on the currency for the upward move to continue - although it's not clear exactly when the short-term surge will lose steam. And investors who understand what's really driving the U.S. dollar's value in 2012 can avoid getting burned by the currency's long-term decline.
(Money Map has 2012 forecasts for more than just the U.S. dollar. In the latest Money Map forecast report you'll find profit opportunities for oil and natural gas, biotech, commodities, artificial intelligence and more. Take a look right here to learn how to get a free download of the complete 2012 Investor's Forecast Report.)

Short-Term Help from Europe

The U.S. dollar's short-term boost will mostly come from the need to support Eurozone governments with more liquidity.

"The ECB (European Central Bank) will be left with little choice in saving banks and their sorry sovereigns other than to print, print, print euros, and more of something almost always leads to a lower price," said CNBC News' Brian Sullivan, who thinks the U.S. dollar will reach parity with the euro in 2012.

The euro fell to a 15-month low against the dollar in the last week of 2011.

U.S. dollar value has also been driven higher recently by increased demand, since the central banks in Europe, the United States, Great Britain, Japan, Canada and Switzerland have all agreed to lower the interest rates on dollar swaps.

"Dollar swaps - you know, those little arrangements that allow foreign banks to swap their unloved currencies for dollars - ... really come in handy when there's a panic and a flight to the safety of U.S. Treasuries," Money Morning Capital Waves Strategist Shah Gilani explained. Since U.S. Treasury securities must be purchased with dollars, increased demand boosts the currency's value.

However, the overwhelming long-term outlook for the U.S. currency is still bearish, mostly due to the weak U.S. economic outlook for 2012.

"The dollar is enjoying a safe-haven status, but long run I'm not a fan of the U.S. dollar," Dr. Allen Sinai, chief global economist at Decision Economics, told Forbes. "Our country has too many problems - with long-run growth forecasts, deficits and how the politics of our country operates are all a negative."

Indeed, the dollar's prolonged decline has been supported by the ongoing struggles of the U.S. economy, the ever-growing levels of U.S. government debt, and the misguided "fixes" and other monetary and interest-rate maneuvers by U.S. Federal Reserve Chairman Ben Bernanke and his cohorts.

These influences won't disappear in 2012.

"The Fed will be obliged to undertake another round of quantitative easing and it will be a major source of negativity for the dollar," said Forex.com Chief Currency Strategist Brian Dolan. "The economy has been so slow for so long, it'll force the Fed's hand."

The dollar also faces a growing challenge from the Chinese yuan in its long-standing role as the world's dominant reserve currency. China's been making strides in turning the yuan into a global currency by increasing its role in the gold market and facilitating foreign investment in its currency.

The U.S. dollar's struggles aren't new, but rather have been a trend for about a decade. You can see the dollar's path of decline with the U.S. Dollar Index, a measure of the dollar's value relative to a weighted basket of six major foreign currencies - the euro (58.6% weight), the Japanese yen (12.6%), the British pound Sterling (11.9%), the Canadian dollar (9.1%), the Swedish krona (4.2%) and the Swiss franc (3.6%).

Since 2003, the index has fallen 27% from near 110.00 to just above 80.00. It gained 2.9% in November, but erased those gains in December to break just about even in 2011.

Luckily for investors, there's a way to play both the short-term rally and the long-term fall of the U.S. dollar.

Investing in the U.S. Dollar in 2012

To play the dollar's fluctuating value this year, investors can use a Forex market contract, futures contracts on the U.S. Dollar Index or the dollar versus leading individual currencies, or one of the new dollar-based exchange traded funds (ETFs). For short-term trades, options on either the futures or the ETF shares also can be used.

Investors who opt to play the currency's near-term strength must remember to monitor the events affecting the dollar's value - a buy-and-hold approach won't work.

"Be nimble," said Money Morning's Fitz-Gerald. "Harbor no illusions about what's happening. Capture profits as they're created by maintaining tight trailing stops, and steadily ratchet them up if the rally gains steam."

One of the leading ETF candidates for a short-term bullish dollar play is the PowerShares DB US Dollar Index Bullish (NYSE: UUP). Actually exchange-traded notes (ETNs) rather than a traditional fund, units are issued in 200,000-share blocks by a "master trust" that seeks to replicate the performance of the Dollar Index by holding a combination of Forex contracts, futures, and options. Those shares then trade in smaller numbers, just like shares of regular stocks, and the price mirrors the percentage changes in the actual index.

That's for a short-term dollar play, but you also should plan to profit from its longer-term decline.

One of the best ways to play the long-term bearish dollar outlook is through ETF/ETN shares, like the PowerShares DB US Dollar Index Bearish (NYSEArca: UDN). It's structured the same way as the UUP fund, but the trust holdings include short Forex and futures contracts and options, combined in a portfolio designed to move inversely to the Dollar Index itself, but by a similar percentage.

The alternate way to make a longer-term ETF play against the dollar is to buy shares in one of the growing number of ETFs linked to foreign currencies - depending on whether you believe that particular currency will benefit from the dollar's weakness.

Currencies with their own ETFs currently include the Australian dollar, British pound, Canadian dollar, Chinese yuan, euro, Indian rupee, Japanese yen, Mexican peso, New Zealand dollar, Russian ruble, South African rand, Swedish krona, and Swiss Franc. Some currencies, like the rupee and yen, even have two funds from which to choose.

When the dollar falls, investors will need protection for all of their U.S. market investments - and anything else that's valued in dollars. For ways to fight the sliding dollar in your portfolio (and a guide to just how bad dollar depreciation could get), take a look at Money Morning's latest special presentation on the U.S. dollar right here.

A final option for bearish dollar investors would be to open a bank deposit account denominated in a foreign currency you think stands to appreciate considerably against the dollar in the years ahead. A popular choice for such accounts is Everbank (**), an FDIC-insured Internet bank that offers deposit accounts, money market accounts and certificates of deposit in both baskets of currencies and those of specific nations, including the euro, yen, British pound, Swiss franc, yuan, Singapore dollar and several other major currencies.

Don't let the headlines fool you, there's lots of money to be made in global investing in 2012.

You're just going to have to be careful - more so than in years past - because right now the line drawn between successful markets and markets that are in danger of collapse is treacherously thin.

Take the fashionable growth markets, the BRICs - Brazil, Russia, India and China - for example.

It's been 10 years since Goldman Sachs Group's Chairman of Asset Management Jim O'Neill coined the BRIC acronym. His recommendation was certainly effective - one of the best of all time, even. But today, all four BRIC countries face problems, and their troubles illustrate the dangers of following investment fashions.

BRICs Break Down

Just take a look:

• China appears the least troubled of the four BRICs. However, it looks to be facing a recession. Inflation is approaching double digits. And there is a massive bad-debt problem in the banking system. Too much money has been invested in uneconomic rubbish - "malinvestment" as the Austrian school of economics calls it. My own guess is that China will do fine long-term but you probably don't want to invest until the size and shape of its problems are clear (Like the Chinese, Americans are becoming all-too familiar with ugly, rampant inflation plaguing their incomes and returns. And things are only going to get worse in the new year. To learn why, go here for the new U.S. dollar report.).

• India has a government that can't stop spending, inflation over 10% and huge corruption. Furthermore, its stock market is still pretty inflated. I wouldn't put much money there until the government changes. Contrary to what you read in the media, almost all the real liberalization progress came under the Vajpayee government of 1998-2004, which the Indian electorate then ungratefully threw out. I'd want an Indian government without the corrupt socialist Congress Party before I'd invest; only then could I be sure that Indian gains would not be poured down a rat hole.

• Brazil has been run by big-spending socialists since 2002 and has been immensely lucky to benefit from the commodities boom. Now the boom has topped out (probably temporarily) but its government is still overspending and has begun to harass foreign investors. Brazil is in big trouble if commodities prices fall.

• In Russia, Vladimir Putin will become President again next March. Need I say more? Like Brazil, Russia has benefited immensely from the commodities boom - in its case, primarily from the run-up in oil prices that could continue (My Money Morning colleague Dr. Kent Moors just released a new report on the coming "constriction" in 2012 oil markets. You can find it right here.). However, it treats foreign investors even worse than Brazil does, it is even more corrupt and it appears to be running out of money.

Don't Bet on Europe or Japan

If the BRIC's prospects are bad, those of much of Europe are even worse.

The Eurozone's debt problem could have been solved early on by throwing Greece out of the euro (a much deserved punishment). However European authorities have now thrown so much money about - in such unproductive ways - that it's doubtful whether the euro is even salvageable anymore.

A recession in 2012 seems unavoidable, although Germany may benefit from the problems of its trading partners (if it is not forced to bail them out). Well-run European Union (EU) members that are not part of the Eurozone1, such as Poland, may also benefit from the chaos, although Poland's current foreign minister Radek Sikorski doesn't seem to think so.

Japan has done so badly for so long that it may be impossible to revive. If public debt were still at the level of a decade ago, Japanese shares would be a screaming buy, as the market is at a quarter of its 1990 peak. However, with debt around 220% of gross domestic product (GDP) and no sign of the country's budget problems being solved, it may be nearing the point of no return and eventual debt default. On the whole, it's best avoided.

Apart from the United States, that leaves one obvious rich-country market,

Canada, and some emerging markets of East Asia and Latin America likely to come out on top. (Australia is currently badly run, and looks likely to "kill the goose that laid the golden eggs" by taxes and environmental regulations.)

1Editor's Note: The terms Eurozone and European Union are frequently confused. The Eurozone is the collection of 17 European Union countries that have adopted the euro as their currency. Poland - like the UK, Sweden and seven other countries - has maintained its own currency. It's not part of the Eurozone, but it is an EU member.

Emerging Opportunities

Canada and Chile are well run and benefit from current high commodity prices. And Chile, for one, has the best credit rating of any economy in South America. Malaysia also benefits from the commodities run-up, while South Korea and Taiwan (which beat China's growth by 4.9% last year) would benefit from a fall in prices. And Singapore does well in all environments except a major world slump, which I don't expect.

The best way to invest in most of these markets is through exchange-traded funds (ETF).

For Canada that's the iShares MSCI Canada Index ETF (NYSE: EWC), with net assets of $5 billion and a price/earnings (P/E) ratio of 14.

For Chile, there's no ETF, but the Aberdeen Chile Fund (NYSE: CH) is well run, although small with a market capitalization of $130 million.

For Malaysia, the iShares MSCI Malaysia Index ETF (NYSE: EWM) has net assets of $929 million and a P/E of 15.

As a hedge against a commodity price crash, look at the iShares MSCI Korea Index ETF (NYSE: EWY) and the iShares MSCI Taiwan Index ETF (NYSE: EWT).

If that's not enough, however, there is one more emerging market that's positioned to do very well in 2012. It is well governed, has ample natural resources, and is currently planning a huge infrastructure build-out. That makes it a prime investment opportunity. However, that recommendation is only available to Money Morning Private Briefing subscribers.

If you're already signed up, then you can read all about it in your Private Briefing dashboard. If not, then I highly recommend you sign up by clicking here. That way, in addition to this global investing pick, you'll receive dozens of other top-tier recommendations.

2011 was an up-and-down year for oil prices, but don't expect that pattern to repeat in 2012.

In the coming year, the trajectory for oil prices will be far more linear - and it's pointed up.

In fact, we could even see $150 oil by mid-summer.

There are two key reasons why:

• Despite the economic crisis in Europe, oil demand proved resilient in 2011. It is poised to remain steady in 2012, and then escalate drastically for the foreseeable future.

• Supplies will once again be constrained, and the potential for political upheaval in major oil-producing nations has increased.
  
• (There's also a potential oil "constriction" moving through the markets. It could send oil prices far into the triple digits in the next few months. And Money Morning Editor Dr. Kent Moors has all the details in his latest new report right here.)

These are the principal reasons oil prices have surged since dipping below $80 a barrel a few months ago. They're also why the world's upper-echelon of energy forecasters has oil prices building a floor above $90 a barrel and rising from there.

Indeed, Goldman Sachs Group Inc. (NYSE: GS) recently recommended that traders buy July 2012 Brent crude futures in anticipation of a rally to $120 a barrel. It was one of the bank's top six trades for 2012 published in its "Global Economics Weekly" report.

Barclays Capital agrees.

"Even in the worst case scenario, the downside to oil prices is unlikely to be anything as severe as during the 2008-2009 cycle," Barclays analysts Roxana Molina and Amrita Sen wrote in a report earlier this year. "As a result, we maintain our price forecast of $115 per barrel for Brent in 2012 and expect $90 per barrel to hold as a sustainable floor even under gloomy macroeconomic conditions."

As for West Texas Intermediate (WTI) crude, which is slightly lighter and "sweeter" than Brent but has been significantly cheaper in the last year, the Energy Information Administration (EIA) expects it to average nearly $94 a barrel next year.

And that's a conservative estimate.

"Given the oil volume constriction oncoming and the continuing increase in global demand - this drives the price, not North America or Western Europe - we will reach $150 or beyond by July 4," said Money Morning Global Energy Strategist Dr. Kent Moors.

Down But Not Out

Of course it's true the global economy will suffer if the European debt crisis is not contained. However, it's also true that emerging market demand will buoy oil prices and eventually push crude beyond the record levels we saw in 2008.

The International Energy Agency (IEA) said in its annual energy outlook that oil demand will rise 14% between 2010 and 2035, from 87 million barrels per day (bpd) in 2010 to 99 million bpd in 2035. And what's more, the net increase in oil demand will come entirely from the transportation sector in emerging economies.

The IEA projects oil prices of $212 a barrel by 2035, as a result.

"It is hard to overstate the growing importance of China in global energy markets," says Fatih Birol, chief economist for the IEA. "The country's growing need to import fossil fuels to meet its rising domestic demand will have an increasingly large impact on international markets."

Birol says that 700 out of every 1,000 people in the United States and 500 out of every 1,000 people in Europe own cars today. In China, only 30 out of 1,000 people own cars. Birol thinks that figure could jump to 240 out of every 1,000 by 2035.



Furthermore, when Japan hit $5,000 of gross domestic product (GDP) per capita, oil demand grew at a 15% annual rate for the next 10 years, according to oil-industry consultant firm PIRA. The same is true of South Korea. However, China reached the $5,000 GDP per capita mark in 2007, and oil demand has only grown at a 7% compounded annual growth rate.

Clearly demand is far more likely to grow than shrink.

"In the last five years, worldwide consumption of oil products has grown from 3 million barrels a day to 7 million barrels," Sergio Gabrielli de Azevedo, chief executive officer of Petrobras SA (NYSE ADR: PBR), the world's third-largest oil producer, told CNBC.

"We are going to have a very tight market in 2012," he said. "At the same time, we have low interest rates, which means that by the year 2012 we are [probably] going to see prices above $100 per barrel on average, but very high volatility, because we have a lot of speculative contracts that have been traded in the market right now."

Supply Squeeze

Additionally, the supply side of the oil market is far weaker today than it's been in the past. Even though demand has eased slightly, total supply has fallen as inventories were siphoned off throughout the year.

U.S. commercial oil inventories fell for the third consecutive month recently, declining by 20.3 million barrels. And an 11.8 million-barrel decline in OECD supplies earlier in the year took the inventory level below its five-year average for a third consecutive month, as well. That's the first time that's happened since 2004.
Asia-Pacific inventories are declining, too.

"Falling global demand is unlikely to create large spare capacity," wrote Barclays analysts Molina and Sen.

Plus there's a wild card: Political turmoil could easily lead to an oil price spike that eclipses the one we saw last spring during the Libyan rebellion.

That would be impressive, considering Libya's revolution took oil prices from $83.13 a barrel on Feb. 15 to $113.39 a barrel on April 29. That's a 36% surge in a period of about two and a half months.

And yet, that was simply the result of political upheaval in Libya - which at the time was the world's 17-biggest oil producer. Just imagine the impact on prices if a political crisis arises in one of the major oil-producing nations of the Middle East.

Remember, U.S. President Barack Obama has vowed to pull all U.S. troops out of Iraq by the end of this year. That's almost certainly a relief for Iran, whose nuclear program has already aggravated tensions with the West.

An International Atomic Energy Agency (IAEA) report on Iran a few months ago accused the country of pursuing a nuclear weapons program. This would violate United Nations sanctions and could lead to military intervention from Israel and the United States.

Iran is the world's fourth-largest oil producer, so military conflict there would lead to a spike in oil prices that dwarfs what we saw during the Libya crisis. Iran produces 3.6 million barrels of oil a day, about 5% of the world's total. By comparison, Libya produced about 1.5 million barrels of oil per day prior to its civil war, or about 2% of the world's total supply.

Iran isn't the only political risk in the region, either. Since the Arab spring many Middle East countries have ramped up social spending to dissuade rebellions of their own. Saudi Arabia alone has unveiled some $129 billion in additional expenditures in recent months.

As a result, the Organization of Petroleum Exporting Countries (OPEC) has raised by $10 the estimate it uses in its reference case forecast. It's now up to a range of $85-$95 a barrel. This is the first tacit acknowledgment from the group that the social investment commitments of some key members will necessitate higher oil prices.

"Political unrest is certainly part of why the oil price is getting so supported despite the decline in the macro environment," Sabine Schels, senior director and global commodity strategist, Bank of America Merrill Lynch Global Research, told CNBC. "Iran is flexing its muscles in the region, and we have all seen how strongly Saudi Arabia reacted."

The IEA says "consumers could face a substantial near-term rise in the oil price to $150/barrel," if energy exploration and development in the Middle East falls below $67 billion annually.

2012 Oil Price Profit Plays

The easiest way to play the looming rise in oil prices is through exchange-traded funds (ETFs).

There are several from which to choose, including: The iPath S&P GSCI Crude Oil Total Return ETF (NYSE: OIL), the PowerShares DB Oil Fund (NYSE: DBO), the SPDR S&P Oil & Gas Explorers & Producers Fund (NYSE: XOP) and the SPDR Oil & Gas Equipment & Services Fund (NYSE: XES).

Of course, there's also no shortage of companies poised to outperform the market.

China National Offshore Oil Corp. (CNOOC) (NYSE ADR: CEO) is a great way to play growing demand in China.

CNOOC is often referred to as the most "Western" of China's oil majors because it was founded with a mandate to form joint ventures with foreign companies. CNOOC is the vessel through which China is acquiring foreign expertise in the energy sector.

The company has already announced it would pay $1.08 billion for a 33% stake in Chesapeake Energy Corp.'s (NYSE: CHK) Eagle Ford shale acreage in Southern Texas, a deal that highlighted China's desire to develop its shale-gas extraction techniques.

And just last month, CNOOC shelled out $2.04 billion to acquire Opti Canada Ltd. and increase its exposure to Canada's rich oil sands. Opti is CNOOC's second step into the Canadian oil sands. A few years earlier, the company acquired a 14% stake in MEG Energy Corp. (PINK: MEGEF), which operates an oil sands project in northern Alberta.

If you want a direct play on Canada's oil sands you might look at Suncor Energy Inc. (NYSE: SU).

Suncorboasts strong and reliable crude oil production from its oil sands operations in Canada. It also has refineries, wholly owned pipelines and specialty lubricant products. The company sells gasoline in retail locations in Canada under the Petro-Canada brand and in the United States under the Phillips 66 and Shell brands.

At a time when the many traditional Middle-Eastern oil producers are besieged by civil unrest, reliable oil production from a country as stable as Canada is especially valuable.

"Of the Canadian oil plays, I most like Suncor because of its position as the most important producer of tar sands oil," said Money Morning Global Investment Strategist Martin Hutchinson. "This is only modestly profitable at current oil prices, but if prices run up or a global crisis restricts supplies, Suncor can be expected to increase hugely in profitability."

Money Morning Global Macro Trends Specialist Jack Barnes likes Suncor, as well. And he's recommended Anadarko Petroleum Corp. (NYSE: APC), EOG Resources Inc. (NYSE: EOG), and Marathon Petroleum Corp. (NYSE: MPC).

Anadarko has stakes in some of the most prolific U.S. oil fields in Texas, Colorado, Wyoming, Utah, and Pennsylvania. It's also an international leader in unconventional production, employing methods like horizontal drilling to increase productivity rates from deep wells.

EOG has shifted its focus to horizontal drilling techniques, as well, transforming from a leading gas drilling company to a major oil producer. Last year, the company increased its liquid production by 49%. And it just reported blowout third-quarter earnings, turning last year's loss into a $541 million profit.

And then there's Marathon, which has a firm hold on North Dakota's Bakken oil shale formation - the largest known reserve of light sweet crude in North America.

Production from the Bakken shale is soaring. It went from a mere 3,000 barrels a day in 2005 to 225,000 in 2010, and could hit 350,000 barrels a day by 2035, according to the EIA.

And finally, there is a small group of oil companies that will be perfectly positioned to take advantage of a short-term "constriction" in the oil markets. This temporary shortfall in production could lead to spiking oil prices and incredible profits for a very special group of stocks. And my colleague Dr. Kent Moors was one of the first (and only) oil industry insiders to figure out this constriction was coming. Take a look right here for Kent's latest special report.

Despite a pullback from its all-time high of $1,923 an ounce a few months ago, gold is still trading in the $1,700 range. In fact, the glittering metal has gained 22% in the past 12 months.

What's more, I believe gold prices will eclipse $2,200 an ounce in the next year, and shoot beyond even $5,000 an ounce after that.
With the economy still in turmoil - and the U.S. dollar sinking even lower in 2012 (Take a look right here to learn how far the dollar will sink in our new report) - gold prices will continue to rise.

So there's obviously still time to get in on this once-in-a-lifetime bull-run, if you haven't already.

Of course, every investor should at least have shares of a gold-based exchange-traded fund, but if you really want to profit from the price surge, you ought to look at gold mining companies.

Let me explain.

A Golden Opportunity

While gold prices have surged in the past year, gold mining stocks have lagged curiously behind over that period.

The Amex Gold Bugs Index, a weighted benchmark made up of 16 of the world's largest gold and silver mining companies, began the year at 540, and after numerous troughs and peaks, we're back near those same levels.

Normally, gold stocks will leverage gold on a 2-for-1 basis, but in this case, we've seen miners move sideways as gold has advanced.

Yet with gold's price powering skyward, the gold miners have seen their margins expand, making them very profitable at current levels. That makes them absolute steals at these prices.

You don't have to take my word for it, either. Just look at what industry insiders are saying.

"A substantial disconnect has developed between the price of gold and the mining companies," said David Einhorn of Greenlight Capital. "With gold at today's price, the mining companies have the potential to generate double-digit free cash flow returns and offer attractive risk-adjusted returns even if gold does not advance further. Since we believe gold will continue to rise, we expect gold stocks to do even better."

Portfolio managers Michael Bowman and Allan Meyer of Wickham Investment Counsel Inc. concur.

"We are now finding a large number of gold stocks are hitting our value screens, something that has been unheard of in the past," said Meyer.

What else are experts noticing?

Well, as gold prices have risen and stayed high, the price/earnings (P/E) ratios of gold miners have been cut in half. That means the sector as a whole is at as compelling a value as it's been in three years. And with the price of gold set to rise still higher on the back of incessant money printing in the United States and Europe, these miners are only going to get more profitable.

How high is gold likely to go?

My own research tells me we should expect gold to easily reach $2,200 in 2012.

A few market mavens have been providing their forecasts too.

Sean Boyd, chief executive officer (CEO) of $7 billion Agnico-Eagle Mines Ltd (NYSE: AEM), recently told King World News, "People are looking for hard assets and gold, being one of the primary hard assets, is a major beneficiary. So we don't see any reason to believe this upward trend in gold won't continue. I think it will continue and we will see $2,000 shortly."

Rajan Venkatesh, managing director for Indian bullion at ScotiaMocatta, said he expects gold prices to touch $2,000 an ounce by March.

And this past June, Standard Chartered PLC (PINK: SCBFF) made what some think is an "outrageous" prediction.

The bank's research team considered the production levels of 345 gold mines and concluded production will rise just 3.6% annually for the next five years, while demand expands much faster.

Their price prediction: $5,000 gold is likely in the near future.

That's a price I'm on record as predicting nearly two years ago.

But now, I've changed my mind - because I think it could go even higher than that.

Top 2012 Profit Plays

So what should you do now to profit from gold's imminent rise?

Here are a few suggestions of gold mining stocks that are primed to play catch up:

• Alamos Gold Inc. (PINK: AGIGF): Alamos is a $2 billion gold miner, operating the Mulatos mine in Sonora State, Mexico. AGI operates one of the lowest cost heap-leach gold mines in the sector, at $459 per ounce. The company expects to boost production at Mulatos by 50% in the next year, and is working toward producing 135,000 ounces annually at $314 per ounce from its Turkish gold project by 2014. AGI has $210 million in cash and no debt.

• Eldorado Gold Corp. (NYSE: EGO): Eldorado is a $9.75 billion gold producer with six operating mines, one under construction, and two in development. EGO currently produces about 650,000 ounces annually at $400/ounce. Right now, 56% of gold production is from China and 44% from Turkey. Eldorado could double its gold output by 2015 through new mines coming online in Brazil and Greece, and by expanding the production at some of its current mines.

• The Tocqueville Gold Fund (MUTF: TGLDX): This is a $2.65 billion fund managed by John Hathaway and has a reasonable expense ratio of 1.35%. Its top ten holdings include large-cap and mid-cap miners, as well as some precious metals royalty companies and about 6.6% in physical gold. The fund does have some exposure to smaller-cap miners that provide additional potential for growth.

• Gold prices rise when the dollar falls. And my $5,000 prediction for gold is based on a frightening new reality in the United States - a reality where the U.S. dollar could soon drive every investor into the poorhouse. In fact, even if you've saved a $1 million, you could still end up flipping burgers in your retirement. But you still have time to prepare if you act right now. Take a look at the new U.S. dollar report from Money Morning right here.

Anyone who hoped the U.S. economy would get back on track in 2011 was sorely disappointed.

The European sovereign debt crisis and the abysmal failure of policymakers to take effective action undermined any chance we had at a strong recovery.

And what's even worse is that we're in for more of the same in 2012. Indeed, the U.S. economy in 2012 will be even more sluggish than originally thought - and for the same reasons 2011 was a disappointment.

The Organization for Economic Cooperation and Development (OECD) estimates U.S. growth will slow to 2% next year, down from a 3.1% estimate in May. It forecasts growth will pickup to 2.5% in 2013.

Of course, these forecasts are contingent upon Congress finding a way to stimulate the economy and tighten fiscal policy - not an easy balance to achieve. Without such action, U.S. economic growth next year could be as slim as 0.3%, and only hit 1.3% in 2013.

Unfortunately, after a year of failing to reach a debt reduction agreement, there's little chance the government will rise to the occasion next year - especially when most representatives are focused more on reelection than they are resolution.

Furthermore, it's also doubtful that Europe's debt crisis will be contained enough to not severely disrupt the region's biggest nations and cause a credit crunch that ripples through the global economy.

That means another year of major risks.

"Uncertainty remains the watchword for the U.S. economy," said Money Morning Global Investing Strategist Martin Hutchinson. "The risks are still pretty high because no one's sure what the Europe outcome will be."

The likely outcome - U.S. economic growth will fall even lower. And investors should be prepared for a falling U.S. dollar as a result of sluggish growth and more economic stimulus coming from the Federal Reserve.

With inflation rising, investors have two choices: Watch their currency and investments devalue considerably in the next year or take action to protect their retirement.

If you'd like to learn more about how to protect yourself from the falling dollar, take a look at Money Morning's new dollar report right here. It's free and provides vital information for everyone looking to protect their investments or retirement today.

Europe: The Biggest Unknown

The OECD stated that Europe's weak monetary union is the main threat to the world economy. According to the OECD, its 34 member nations, including the United States, will grow an average of 1.9% this year 1.6% next, down from the May predictions of 2.3% and 2.8%.

"Contrary to what was expected earlier this year, the global economy is not out of the woods," Chief Economist Pier Carlo Padoan wrote in the OECD Economic Outlook.

"Above all, confidence has dropped sharply as skepticism has grown that euro-area policy makers can deal effectively with the key challenges they face. We are concerned that policy-makers fail to see the urgency of taking decisive action to tackle the real and growing risks to the global economy."

The global growth slowdown has also affected trade. The OECD expects trade to grow just 4.8% in 2012 - a sharp decline from its May estimate of 8.4%.

"The present situation is worse than in 2009," said Padoan. "Trade was the driver of economic growth after the 2008 financial crisis, but now we're seeing risks of protectionism."

To ward off the debt crisis spread, the European Central Bank (ECB) has tried to intervene with bond buying and loans, but its actions so far have failed to deliver long-term repair.

"The real structural problems facing Europe are going to require wholesale lifestyle changes that won't get done in a year or two," said Money Morning Capital Waves Strategist Shah Gilani. "ECB meddling will only serve to extend the problem while they pretend things will sort themselves out."

The smaller Eurozone nations' issues have already spread to the more powerful German economy, evidenced by its disastrous bond auction where barely half the bonds were sold. As countries teeter on the edge of default and the region's stronger economies start to slow down, the problems will spill into the already debt-ridden United States. Just how bad the crisis will be, however, is unknown - and will remain uncertain until it gets closer.

What we do know is U.S. banks' exposure to Europe's crisis will prevent the United States from being immune in the coming year.

"If the euro area breaks up, the banking system will spasm," said Hutchinson. "This will cause a sharp, though probably brief, recession."

While Europe could deliver the biggest blow to the year's U.S. economic growth, it's not the only risk.

A Big Year for Congress

How the U.S. government decides to manage its debt, and how its austerity measures affect consumers, will be the biggest financial concern for U.S. households, not just next year, but for many years to come.

"This is not just an economic challenge, but potentially the greatest political challenge of all time," said Money Morning Chief Investment Strategist Keith Fitz-Gerald. "It heightens uncertainty because new fiscal challenges are destined to collide with lower potential growth and unfavorable demographics including employment, job creation, and productivity."

The lack of fiscal discipline and the inability of Congress to come up with a deficit reduction plan this year have left the United States with more than $15 trillion in debt. The inappropriately named congressional "super committee" tasked with finding at least $1.2 trillion debt reduction savings over the next decade threw in the towel.

While Democrats want a balance of lowered spending and higher taxes, Republicans prefer to reach debt reduction goals only with spending cuts. That's making consumers even more wary of opening their wallets, unsure of what combination of spending cuts and tax increases might be coming.

The government needs to rein in spending, but a tighter fiscal policy comes at the price of further limiting the economy's growth. And if Congress does nothing, people will worry about the automatic and arbitrary cuts of $1.2 trillion that will go into effect in January 2013.

"A serious downside risk [next year] is that no action will be agreed to counter strong, pre-programmed fiscal tightening in the U.S.," the OECD wrote. "Much tighter fiscal policy than in the projection could tip the U.S. economy into a recession that monetary policy can do little to prevent."

While fiscal policy boosted economic growth in 2008, it pulled it down by about one percentage point in 2011. Growth could be slowed by one and a half percentage points in 2012 as more stimulus measures expire.

Besides driving America deeper into debt, Congress's continued missteps will beat down consumer confidence. Without the faith of consumers, whose spending fuels 70% of the economy, U.S. growth will again fail to regain footing in 2012.

The Confidence Factor

Another one of the biggest hurdles to improving U.S. consumer confidence is the moribund housing market. Real estate prices fell 3.6% in September from a year before, according to the S&P/Case-Shiller index.

"Housing is nearing the bottom, and will move only gradually," said Hutchinson. "Though I'd still expect prices in late 2012 to be a little lower than now, but possibly with an upward trend."

Unemployment, although slowing, will remain near 9% next year. And inflation will continue to weigh on consumers.

Hutchinson expects inflation to hit 6% to 7% by year's end.

That means consumers will continue to pay off bills and save what they can, a deleveraging process that will further strain economic growth.

Of course, that doesn't mean the best course of action for investors is to sit on the sidelines. There are investments that tend to thrive in this environment.

Uncertainty Means Opportunity

With the U.S. economy on unsteady footing, gold, silver and commodities are a must-have.

Gold has been trading steadily above $1,700 an ounce as investors anticipate further weakness in global economies and paper currencies. Gold prices are on track to climb above $2,500 an ounce.

Interested investors can buy gold coins and bullion, or they can pick exchange-traded funds (ETF) that follow gold prices.

One we've mentioned before in Money Morning is the SPDR Gold Trust ETF (NYSE: GLD). It's up 22.64% so far this year. You can also try the iShares Gold Trust (NYSEArca: IAU), an exchange-traded fund backed by gold, which has climbed 22.73%.

Another way to profit while U.S. and European economies remain weak is to move into other parts of the world - emerging markets.

Hutchinson likes iShares MSCI South Korea Index Fund (NYSE: EWY). It has a $3.5 billion capitalization and a price/earnings (P/E) ratio of 6.76. It'll also get a boost from a recently signed free-trade agreement with the United States, which is expected to give a 0.6% annual bump to Korea's economic growth.

Hutchinson also recommends Colombia's Ecopetrol SA (NYSE ADR: EC). The Bogota-based oil company is expanding rapidly as a result of Colombia's very attractive offshore and onshore oil deposits. It has a market cap of $84 billion and a P/E of 12.

You can also turn to multinational companies that have expansive global operations.

Look for companies with "proven business models, experienced management, globally sought after brands and fortress-like balance sheets," said Fitz-Gerald.

Among those are McDonald's Corp. (NYSE: MCD), up 24.44% this year, PepsiCo Inc. (NYSE: PEP), which will benefit from higher food prices, and Caterpillar Inc. (NYSE: CAT), with a one-year price target of $114.

Finally, perhaps the best investments in the coming year will be in the oil markets. As emerging markets continue to grow, sluggish U.S. economic results won't prevent rising oil prices.

In fact, Dr. Kent Moors, Money Morning's Global Energy Strategist, believes oil could double in less than six months (And with 31 years of experience advising the Big Boys of oil and energy, he would know.). Take a look at Kent's new oil report right here to learn more.

Right now, the money in your wallet is losing its value.

And worse, there's nothing you can do to stop the U.S. dollar from utter freefall because...

• The Federal Reserve's expansive monetary policy is flooding the banking system with cash, diluting the dollar's value.

• The U.S. government is intentionally devaluing the dollar to make its exports more affordable.

• China is recruiting a host of other countries in its drive to stamp the dollar out of international trade.

(To learn more about the death of the dollar - and find out specific ways to protect your retirement - take a look at our new U.S. dollar report, right here.)

But, you don't have to just sit on the sidelines and watch your money lose value. Instead, you can look to investments in foreign currencies.

This isn't an investing plan for the feint of heart. Currency investing is one of the riskiest monetary gambles you can make.

But, if you have a little "play money" burning a hole in your bank account, currency investing could be a great way to try for sky-high returns.

Here's your quick guide to currency investing...

Currency Investing Basics

For starters, you need to know the term FOREX.

Short for Foreign Exchange Market, FOREX is an international exchange where global currencies are bought and sold. The market value of currencies traded on FOREX is based on supply and demand.

FOREX is the largest liquid financial market (daily trading reaches between $1 trillion to $1.5 trillion), meaning two things: First, you'll be able to find a buyer or seller within seconds at nearly any hour of the day; Second, such large volume means you won't see volatile price swings. Rather, such volume creates a larger quantity of small fluctuations in currency values, which can be viewed as a treasure trove or minefield for an investor depending on his/her experience and strategy.

Unlike a standard market like the New York Stock Exchange, currency trades take place in all corners of the world through telecommunication. And it's done 24 hours a day from Sunday afternoon until Friday afternoon, as there are currency dealers around the world who will quote all major currencies.

So say you decide you want to buy the Brazilian Real, you track down a dealer via your broker and punch in your order. This can be done with an account of your own money, or by starting a marginal trading account.

Marginal trading is trading with borrowed capital, allowing you to invest more, avoid transfer costs and open larger positions. You can borrow up to $100,000 at a very low interest rate (often under 1.0%).

When you close a position, the amount you borrowed is returned, and your profit or loss is calculated and credited to your account.

Technical vs. Fundamental Analysis

There are two basic approaches to investing on FOREX - technical analysis and fundamental analysis.

Despite what its name suggests, technical analysis is a strategy more often used by beginner-to-novice currency investors. Its basic premise is that all possible factors of a currency's value have been digested and factored in by the market, resulting in the current price of that currency. What investors then do with that data is find out patterns - if currency price movements are caused by certain events, and if those events will repeat themselves.

Fundamental analysis takes such data and adds another level of specific data gathering to it. An investor using fundamental analysis will make trades after looking at a multitude of factors happening within the country of a currency - its economic and political situations, central bank interest rate, unemployment level, rate of inflation - that have an effect on its currency.

Making Money on Money

Again, we need to emphasize that the majority of retail investors should leave currency trading to those who have a firm grasp on the currency market and have a high tolerance for risk.

Likewise, we're not going to suggest specific currencies to buy because it's recommended new and novice currency investors take a technical strategic approach as mentioned above.

But, a good place to start would be one of the many new currency exchange-traded funds (ETFs) recently made available. Just as the ETF market catered to the growing demand to invest in overseas companies and indices, so too has it responded with ways to invest in foreign currencies as the U.S. dollar crumbles.

Currency-focused ETFs eliminate two of the biggest challenges of currency investing.

First, you can buy and sell them the same way you do with common stocks. Second, an investment company such as Wisdom Tree manages the fund, so you don't have to be constantly vigilant in keeping track of currency fluctuations and relationships around the globe.

But because ETFs trade like stocks, you'll likely be charged per trade like you would if you were buying or selling stock through your broker. And given currencies' small daily fluctuation range, it's very unlikely you'll see a huge one-day gain for any given currency. So you'd be throwing away money in trade charges if you buy and sell currency ETFs as frequently as you would trade actual currencies on a daily basis.

In that sense, currency ETFs are more like currency "investments" as opposed to daily, or hourly, currency trades.

If this route sounds appealing, you're next challenge is picking from the many currency ETFs on the market.

ETF provider WisdomTree offers and manages several foreign currency ETFs - from as broad as its Dreyfus Emerging Currency Fund (NYSE:CEW) (great for those who like to play emerging markets) to as specific as its Dreyfus New Zealand Dollar Fund (NYSE: BNZ).

Rydex Investments' roster of currency ETFs leans more toward investing in liquid currencies, such as its CurrencyShares Euro Trust (NYSE:FXE), CurrencyShares Australian Dollar Trust (NYSE:FXA), CurrencyShares Canadian Dollar Trust (NYSE:FXC) and CurrencyShares Japanese Yen Trust (NYSE:FXY).

Invesco PowerShares offers three currency products: PowerShares DB US Dollar Bearish Fund (NYSE:UDN) if you think the dollar's going to continue falling, PowerShares DB US Dollar Bullish Fund (NYSE:UUP) if you think the dollar's about to bounce and PowerShares DB G10 Currency Harvest Fund (NYSE:DBV) to bet on a basket of currencies from some of the world's largest and most powerful economies.

And lastly, and most speculatively of the ETF options, ProShares offers leveraged currency ETFs in which you can bet for or against a particular currency, such as its ProShares Ultra Yen (NYSE:YCL), which returns double the gains on the yen, and its ProShares UltraShort Yen (NYSE:YCS), which goes up twice as much as the yen falls.

Once you've grown more knowledgeable and comfortable with the global currencies and FOREX, the next stepping stone could be Zecco, an online brokerage that gives clients the option to trade FOREX either by themselves or with the assistance of brokers.

And if you'd like to know exactly what's in store for the U.S. dollar, take a look at our latest dollar report right here.

Despite the recent downturn in China's stock market, investors need to remain focused on the profit-generating long-term growth potential of the Asian powerhouse.

The Shanghai Composite Index is down about 10% on the year, compared to a drop of less than 1% year-to-date for the Standard & Poor's 500 Index.

Chinese exchange-traded funds (ETFs), a popular way for U.S. investors to dip their toes into the Chinese stock markets, were off an average of more than 21% for 2011. That's a big shift from 2010, when the average China fund gained 13%, or 2009, when the average gain was an eye-popping 64.5%.

Anthony Bolton, one of the United Kingdom's most respected investment fund managers, called the end of the most recent quarter "a brutal period for Asian markets - as difficult a time to be running money as I can remember."

Bolton's UK-based Fidelity China Special Solutions Fund dropped 28.9% in six months.

A recent bounce up from last month's lows has some experts wondering if China's stock markets hit a bottom, or if they might slip still lower.

In any case investors mustn't abandon China, says Money Morning Chief Investment Strategist Keith Fitz-Gerald.

"Long-term, you can't afford to be without Chinese stocks," Fitz-Gerald said. "Timing is not what you should be focused on. You need to be focused on growth, and who has the money."

Fitz-Gerald pointed to the debt-crippled economies of the United States and Europe.

"That's not where the money is," he said. "It's in the emerging economies like China."

* To learn more about Fitz-Gerald's plan to protect investors from U.S. debt, and the collapsing U.S. dollar, take a look at his latest special report. It's free to new Money Morning readers right here.

Controlled Slowdown

Several factors have combined to rock the Chinese stock market this year. The Chinese government has attacked inflation by raising interest rates five times over the past 12 months, but at the cost of slowing economic growth.

Even so, the Chinese central bank has projected the country's gross domestic product (GDP) will grow at a 9.2% rate in 2011 and an 8.5% clip next year.

That's still more than triple the growth of the U.S. economy. The Philadelphia Fed's most recent quarterly survey lowered its projected U.S. GDP for 2012 to 2.4%.

China's exports have slumped as a result of the sagging U.S. economy and the turmoil generated by the debt crisis in the Eurozone, which is China's best customer.

In addition to hiking interest rates, China's government has also increased the reserve requirements for its banks, which reduced the amount of money available for lending, restricting capital.

"The Chinese government wants to prevent excessive speculation," Fitz-Gerald said. "So they're keeping a lid on interest rates and doing what they can to curb the inappropriate use of capital."

Fear Not

The Chinese stock market's recent stumbles, combined with questionable accounting practices among some "reverse merger" companies, which buy the shares of defunct public companies to enter a stock exchange without having to issue an IPO, has created the perception among some investors that China is just too risky right now.

Not so, says Fitz-Gerald.

"When everyone else has had the stink scared out of them, that's when you go in," he said.

Fitz-Gerald is not alone.

Fidelity's Bolton, despite the damage to his fund, also sees China as a good investment over the long haul.

"It is still under-owned by investors, but people see China is not a house of cards that is going to collapse," Bolton said. "When those views fail to materialize, you will see fund flows into China improve."

And Goldman Sachs Group Inc. (NYSE: GS) said it expects looser credit and an attempt by the Chinese government to help struggling companies to boost stocks there eventually.

"We are recommending a long position in Chinese equities," Goldman said in a research note.

Still, investors need to tread carefully, Fitz-Gerald said, as there is "plenty of trash among the treasure."

He advises investors to stay clear of the reverse-merger stocks as well as small caps.

Instead, Fitz-Gerald says investors should stick with big sectors such as energy and consumer goods.

Apart from Chinese stocks and ETFs, Fitz-Gerald recommends "glocal" companies like McDonald's Corp. (NYSE: MCD) and ABB Ltd. (NYSE ADR:ABB) that have both a local presence in the U.S., as well as a global reach.

"I have no doubt whatsoever that the Chinese markets will out-accelerate the U.S. and Eurozone markets over the long term," Fitz-Gerald said. "The Global 100 are all going to China. That's where the growth is."

According to Fitz-Gerald, U.S. investors may be in more need of Chinese and other overseas investments than they know.

In fact, overseas stocks and foreign currencies may be the best protection against the economic massacre currently being perpetrated in America's halls of power today. And investors who stick with U.S. investments only could watch their retirement accounts wither by 90%.

But Fitz-Gerald has a proven strategy to save investors from the demise of the dollar. And turning to China's economic miracle is just one of his tactical plans. To learn more, take a look at Keith's latest special report right here.

A commodity is something that has universal definition and demand.

Everyone knows what food is, and everybody wants it.

Nearly everyone in the world knows what gold is, and nearly all of them want it. The same is true for oil, steel, copper... the list goes on.

In short, commodities are always in demand. The benefits of commodities are permanent and tangible. They aren't a service, or the latest gadget that's hot one day and cold the next.

And, as the U.S. economy continues to stumble, exposure to commodities is more important now than ever.

Read on to discover why commodities should be a part of your investment portfolio... and find out exactly how to build your wealth through commodity investing.

[To find one excellent commodities investment, right now, take a look at my new special report right here. It's about the "little guy" set to crush Big Oil. This tiny New Mexico refinery is taking advantage of a glitch in oil prices that could hand it $6.7 billion in the next year. That's more than 4 times its current market cap. My new special report has all the details.]

Why Invest in Commodities

Commodity investments tend to do best when more-traditional investments (like U.S. stocks) are doing poorly, and when economic conditions are less than ideal.

There are a few factors at play right now that are pushing commodities higher:

• The U.S. dollar has been falling hard and fast. As a result, investors are seeking safety in gold and silver. Accordingly, prices for the metals have eclipsed records.

• China projects its economy will grow 10% every year for the next decade. To do so, it's gobbling up iron ore for new skyscrapers and cars, and buying coal and oil to heat homes and fill gas tanks. It's buying so much, in fact, it's single-handedly driving up prices.

• Bad weather in North and South America and Asia are ravaging supplies of corn, wheat and rice, driving food-price inflation around the world.

And according to renowned commodity market expert Jim Rogers, a number of wild cards are still shaping the commodities market. This bull market in commodities may have a lot more room to run than its typical predecessors for three reasons:

• Global Infrastructure Spending: The Organization for Economic Cooperation and Development (OECD) estimated that worldwide investments in power generation, water and transportation infrastructure projects would exceed $40 trillion by 2030. And that was before countries around the world enacted hundreds of billions of dollars in stimulus spending programs.

• Improving Worldwide Living Standards: About half the world's nearly 6.8 billion inhabitants are simultaneously pushing to improve their living standards, a fact that by itself stands to create a commodities demand-shock never before seen - enough, in fact, to extend the secular commodities bull by five additional years.

• Modernization Efforts in Major Markets: The modernization initiatives in China, India, South America, Eastern Europe and other portions of Asia are extremely bullish for commodities prices.

These forces will likely send commodities prices, and overall inflation, higher - well into this new decade because they aren't readily reversible, according to Money Morning's Global Resources Specialist Peter Krauth.

What about Supply?

Today's demand for commodities, whether it's oil, wheat or gold, is outpacing supply - by a widening margin. Basic economics says that prices must move higher to compensate.

And the problem will only get worse as young economies demand an increasingly larger piece of the pie.

As if that wasn't enough, consider that the world is still running on metals deposits found in the 1970s (or earlier).

Spellbound by higher prices, miners have been pushing every last resource toward ripping them from the ground - rather than looking for new sources.

Companies that can keep the metal coming out of the ground, despite the global supply shock, will have virtually no limit to profits. They'll earn the ever-fattening spread between the amount it costs to pull the raw material out of the ground and the amount the market will pay for it.

Such has been the case for coal, aluminum, iron ore and copper miners - as well as oil producers - who have been making a killing on demand from China, home to the world's largest manufacturing base and the world's largest middle class.

Commodities Investing 101: Mutual Funds and ETFs

If you want an automatically diversified approach, there are scores of mutual funds in the resource sector available. However, that's only a starting point.

Each fund has different holdings and a unique focus. And researching each fund will allow investors to become more familiar with individual commodities companies and what they do.

Mutual funds also have varying risk levels and investment minimums. Make sure to consider both before buying.

Mutual funds buy into commodity-producing companies.

But exchange-traded funds (ETFs) and exchange-traded notes (ETNs) provide investors with more direct exposure to commodity prices. Though ETFs and ETNs trade like stocks, their risk level is far lower, and their price movements more conservative.

The broadest commodities exposure you'll find among the scores of ETFs and ETNs available is probably through the ELEMENTS Rogers International Commodity Index Total Return ETN (NYSE: RJI). Based on the index built by Jim Rogers himself, RJI is comprised of 34.9% agriculture, 21.1% metals, and 44% energy.

Another viable option is the PowerShares DB Commodity Index Fund (NYSE: DBC). While less diversified - with 22.5% agriculture, 22.5% metals, and 55% energy - it boasts large trading volume.

You can also get exposure through ETFs that focus on individual commodities, including agriculture, coal, and steel-related companies.

Van Eck's Market Vectors' suite of ETFs is a great place to start looking, and a standout among them is its Market Vectors Agribusiness ETF (NYSE: MOO). As its name implies, this ETF seeks to track the performance of the DAXglobal Agribusiness Index, which is comprised of companies that derive at least 50% of their revenues from agriculture-based businesses.

The Next Level: Stocks and Bullion

If you prefer stocks, the number you have to choose from is even more abundant. Some are speculative plays such as small, penny stock mining companies. Some are commodity-specific - such as a company with one primary product, like natural gas or silver. Some are blue-chip behemoths with a full roster of in-demand products.

The best example of the latter is Australian mining titan BHP Billiton Ltd. (NYSE ADR: BHP).

BHP Billiton has $140 billion in total resources, making it the largest diversified mining company on earth. With an enviable balance sheet and cash flow, this producer of base metals, precious metals, diamonds and energy is way ahead of the pack.

As far as oil company stocks go, there are plays for investors at each risk level. Low-risk investors should check out Texas oil titan Exxon Mobil Corp. (NYSE: XOM).

Investors who can handle a medium risk level might want to look into EOG Resources (NYSE: EOG), another Texas-based oil producer that explores, develops and produces oil and natural gas.

A more speculative oil play is Canada's BlackPearl Resources Inc. (PINK: BLKPF), which holds oil and oil sands assets in Western Canada. As a pink sheets stock, this is a riskier investment, but it could be worth it if you buy in at the right time.

Expanding past the oil producers market, there's one oil stock you should know about. It's an oil refinery that's currently sitting on a major profit gusher. To learn more, click here for a new special report.

You'd be wise to get some gold exposure too. Gold miners are an excellent hedge against the enormous inflationary pressures now hitting the U.S dollar. And they're a great profit generator, as well.

In this case, the Market Vectors Gold Miners ETF (NYSE: GDX) - composed chiefly of major gold miners - offers both company and geographical diversification, while including substantial leverage to the price of gold. GDX is based on the AMEX Gold BUGS Index (HUI), which represents a portfolio of 15 major gold mining companies that do not hedge their gold production beyond a year and a half.

It's been a rough few weeks for the Eurozone.

Portugal is still in trouble, Spain will be back on the coals after its elections, and if I were a bond trader, I would be shorting Belgium, which has serious deficit and debt problems, runs for months at a time without a government and is in some danger of splitting apart into its French and Flemish bits.

A bailout package for Greece has been agreed to, but the Greeks are struggling to get a government to implement it. And yields on Italian bonds are moving ominously higher, rising above the 7% that some think marks a point of no return.

So does this mean that a euro breakup and a Eurozone economic collapse are inevitable?

Not really.

In fact, of all the European nations in crisis, only Italy has the potential to take down either the euro or the global economy.

Just take a look for yourself.
(To learn how the dollar is being destroyed - and taking your retirement down with it - take a look at our new dollar report right here.)

Getting Rid of Greece

At this point, Greece obviously is a goner as far as the Eurozone is concerned.

Really, it should have been pushed out 18 months ago, when it was first revealed that the country falsified its figures to gain acceptance into the Eurozone in the first place. Its government deficit at the time was 12% of gross domestic product (GDP) - not the 6% it claimed, let alone the 3% it had agreed to abide to on its entry.

French President Nicolas Sarkozy already has admitted it was a mistake to let Greece into the Eurozone, because the gap between its economy and the well-managed polities of Northern Europe was much larger than the area's other members.

Former communist countries like Slovenia and Slovakia have integrated quite smoothly into the Eurozone, because their governments and people had already acquired the discipline necessary for membership. But since its entry into the European Union (EU) in 1981, Greece has lived on handouts, and raised its living standards artificially to a level two or three times the market value of its output. Exit from the euro is inevitable; Greece's problem cannot be solved in any other way.

In fact, the sooner Greece exits the euro, the better. As it stands now, it's rapidly becoming impossible for Greece to get its debt down to a manageable level, since the country's official debt has been deemed untouchable.

Once the EU leaders acknowledge the need to remove Greece from the Eurozone, the country's exit will be neither difficult nor damaging. The process of recreating the drachma will be similar to that followed in Slovenia, Croatia, and other ex-Yugoslav republics which abandoned the Yugoslav dinar in the 1990s.

Inevitably, Greece will have to default on much of its debt, but it's already doing that now.

So if it's handled correctly, Greece should not be a problem for the Eurozone or the world economy.

The PIIG Pen

The other smaller Eurozone weaklings aren't major problems, either.

Ireland had a banking problem because of its immense real estate bubble, and the government got into trouble because it foolishly guaranteed the banks. However, Ireland's current account is now in surplus and its economy appears to have begun growing again - despite draconian austerity measures.

Portugal, like Ireland, has replaced the government that caused the problem, which was largely one of public-sector overspending. However, it could run into difficulty again.

Portugal's living standards (like Greece's, but to a much lesser extent) are higher than justified by its productivity, and its balance of payments is still heavily in deficit. It's in between Greece, which should definitely leave the Eurozone, and Latvia, which was able to bring its economy under control without losing its currency link to the euro.

If Portugal gets in trouble again, leaving the euro will be much easier, and in the long run, better for its economy than forcing further austerity measures. Because it is so small, Portugal won't damage the Eurozone by leaving it. Instead, like Greece, it represents just a trimming at the edges.

Spain's elections should produce a better government, committed to austerity. While it has a much lower debt level than Greece, Italy or Portugal, it combined a real estate bubble with government profligacy. If Italy stabilizes, the market's attention will revert to Spain, but it can probably survive with a dose of austerity and good government.

Belgium is a basket case in terms of public debt, but the vast income it earns from the EU headquarters allows it to run a balance of payments surplus. It's badly run, and for long periods of time not run at all, but probably not an immediate threat to the system - and it would be bailed out if it needed it.

The Eurozone's Achilles Heel

Finally, we have Italy - the Eurozone's Achilles heel.

Italy has slow growth and only moderate payments and budget deficits. Its high debt level is the result of decades of profligate government spending before Silvio Berlusconi came along. Berlusconi achieved less than he promised, but he cut government spending, raised the pension age and considerably improved Italy's finances. If he's succeeded by a capable center-right statesman, Italy should be fine, and the market panic should die down.

However, with Berlusconi's coalition having lost its majority, and the president an aged leftist, there is a substantial chance of instability. If an election takes place that is won by the left, or if a "government of technocrats" that is in practice dominated by the left is appointed, then the corruption and special interests in the Italian political system may prevent necessary spending cuts and reforms, possibly imposing tax increases instead.

Since Italy is already overtaxed, and tax compliance is among the lowest in the EU, higher taxes result in revenue loss and economic downturn that could tip the country over the edge.

Also, since Italy is so large, the EU lacks the money to bail it out. Worse, its departure from the euro would destroy the currency and cause a major global recession. Our own economic health thus depends on the machinations of Italian politics.

Still, in any scenario other than a complete Italian collapse, most of the EU will continue to do fine, although the Eurozone's growth will be constrained by bailout costs and austerity measures.

Of course, non-Eurozone EU countries that are capably managed and have a labor cost advantage over Germany, France, and Italy should continue to do fine, benefiting from not having to pay for bailouts.

For that reason, you might look at the Market Vectors Poland Fund (NYSE: PLND), which has suffered unjustified contagion from the euro mess and is trading on only 9-times earnings.

And while the euro is on the chopping block, the dollar isn't far behind. Our latest free report will show you how to protect yourself (and your retirement) from the death of the dollar. Take a look at the new dollar report right here.

Dear Occupy Wall Street Demonstrators,

Let me start by saying that I applaud your initiative. Grassroots protests are the essence of democracy. And as we've seen with the Tea Party movement and the Arab Spring, nonviolent protests are a powerful way to effect meaningful change.

Yet even though I'm 100% behind you in spirit, I can't fully support your cause.

Don't get me wrong, I want to join you. But I can't - not yet, anyway.

And the reason why I can't support your ultimate goals is a simple one: I don't know what they are.

So how about this? I'm going to tell you what I stand for. I'm going to tell you what my goals are. If you agree, then we can stand together. And I won't wait another minute before joining you whenever and wherever I'm needed.

So here it goes.

The reason I'm already leaning towards your side is that the fountainhead of your disgust seems to be "Wall Street."

Now, I don't know what Wall Street means to you. But to me, it means all the crony capitalists and market manipulators whose calculators and spreadsheets say the present value of their self-serving greed is worth discounting all of America's future.

That's the Wall Street that I'm committed to fighting - the Wall Street that's littered with greed and corruption.

But to me, the "Wall Street" we're fighting against is not synonymous with capitalists. The enemy we share doesn't include the entrepreneurs and self-starters that have built this country up brick by brick.

So if you think socialism is better than capitalism, you can count me out. If you think that redistributing earned income from hard working Americans to support lazy, self-indulgent, able-bodied crybabies is fair, count me out. If you think that making a lot of money, fairly and honestly, is un-American, count me out. And, if you're thinking about violence or destroying other people's property, count me out.

But if you're mad that Wall Street money has bought our Congress; if you're mad that there's an oligarchy of banker puppeteers pulling the strings of the U.S. Federal Reserve; if you're mad that Wall Street is hell-bent on toying with the stock market and turning the screws on fixed-income investors, parents, and retirees to expand their profit margins; and, if you are mad that "too-big-to-fail" banks can wreck the economy and get bailed out, only to become bigger bullies while tens of millions of Americans lose their homes, jobs, and retirement savings, then I am solidly with you.

And, if you're with me, we agree that we need to tear down Wall Street to rebuild Main Street!

That's where we stand, hopefully united.

Now let me offer up a list - a manifesto, if you will - that you may or may not choose to adopt. But remember, I'm not trying to hijack your movement. I just want to offer some vision and clarity.

So these are the goals I'd like for us all, as fed-up Americans, to undertake:

1. Break up too-big-to-fail banks so they aren't threatening our financial system.
   
2. Investigate failed banks for fraud, and indict and incarcerate guilty parties.
   
3. Scale banker bonuses progressively with long-vesting stock options.
   
4. Legislate pay claw-back provisions and criminal statutes for bad banker behavior.
   
5. Eliminate volatility-inducing high-frequency-trading and ETF program arbitrage.
   
6. Make all derivatives exchange traded, highly margined, and transparent.
   
7. Limit credit default swaps to two times the value of at-risk underlying credits.
   
8. Mandate exhaustive studies of the potential market impact of newly created financial products.
   
9. Create simple, effective, light-touch regulations with heavy criminal penalties.
   
10. Cap Wall Street's political contributions and make them transparent.
    
11. Audit the Federal Reserve and limit its lending to domestic banking institutions.
    
12. Give the Consumer Protection Finance Bureau (CPFB) criminal indictment powers, including over the Federal Reserve.
    
13. Make Wall Street answer to the needs of Main Street, not the other way around.

Please don't get me wrong. It's not that there aren't plenty of other things in the United States that need fixing. I think we'd all agree we need to simplify and "fairify" the tax code, if not throw it out altogether. But, your movement is Occupy Wall Street, so let's stick to that.

There's one last thing. I'm certain that with thousands of supporters you'll find a broad spectrum of ideas and beliefs. That we may be united in belief does not necessarily mean we are all alike.

Take me, for example. In some ways, I am a "Wall Street" guy, and in other ways I am one of the 99% you claim to represent. I want an opportunity to make a good living, honestly and fairly. But, like all of you, like all of America, I am sick and tired of the powerful, moneyed oligarchy that runs America profiteering off the backs of hard working Americans.

That's why we need strong, transparent and fair capital markets and honest, smart leaders. The two aren't incompatible.

So what I'm saying is that I'm ready to join your revolution, if you're ready to accept a Wall Street insider who's determined to restore the system's integrity - not destroy it.

And that's why you're going to hear more from me every week, as I call Wall Street's biggest players onto the carpet. And I can promise you this: Some of the indictments I make are going to shock you.

Sincerely,

Shah Gilani

Editor's note: Shah Gilani is the Event Trading Specialist for Money Map Report, a newsletter that keeps investors and market observers ahead of trends. To learn more about Money Map Report and Shah's fellow editors, click here.

The Statue of Liberty is one of the most recognizable American icons in the world.

And as she towers 305 feet above Ellis Island, what's Lady Liberty wearing? Copper - 60,000 pounds of it.

Clearly, copper's big in art. It's also a key metal that keeps the world economy humming. Copper consumption has grown at an average annual rate of 4% since 1900.

China and India - which some analysts describe as the combined market of "Chindia" - where one of every three human beings resides, needs loads of this element to meet its modernization requirements for electricity and infrastructure.

Copper is also used in today's currency, where most U.S. coins are actually 92% copper, and 8% nickel.

But there's no denying that, given the choice, nearly everyone prefers gold. It's valuable, it's seductive and it's mystical.

Ancient kings fought wars to amass it. Yet, for thousands of years, its most enduring role has arguably been in the form of money - as a store of value.

That's because fiat-paper-currency experiments have never lasted, and always ended badly.

Increasingly, followers of the Austrian School of Economics are nostalgic for gold to regain its former glory, perhaps "backing" a new international currency.

But despite gold's much longer history as true money, copper - the much humbler metal - could be positioning itself to upstage gold.

China's Paper Mountain

If copper is to replace gold as the world's most-valuable metal, China will play a huge role. With all its uses - from hybrid cars to an electricity grid - copper may become both an inflation hedge and a strategic asset.

Today, China sits atop a paper Everest, with foreign-currency reserves worth more than $2.4 trillion. No public financial institution boasts that degree of financial-asset firepower. Of that total, more than $800 billion is held in U.S. debt.

A war chest of this size serves as a great insurance policy during tough economic times. The trouble is that China is painfully aware of the damage that U.S. dollar inflation will inflict on that massive hoard of greenbacks.

During a visit to New York last February, Luo Ping, a director general at the China Banking Regulatory Commission said: "We hate you guys. Once you start issuing $1 to $2 trillion... we know the dollar is going to depreciate, so we hate you guys, but there is nothing we can do."

There is something you can do, though. Bernanke has already issued nearly $1 trillion in "quantitative easing". And the dollar is depreciating fast. Luckily, you're not the Chinese government.

You can combat the fall of the dollar, but only if you act quickly. Click here for our free research report.

China has tried to fight its dollar depreciation fears with gold. And so far, it isn't working. The country recently announced an increase in its official gold reserves to 1,054 tons, an increase of 76% from 2002 levels. China accomplished this without a single purchase on global bullion markets. How?

By quietly becoming the world's largest gold producer, then buying up all that it produced.

Sounds like a solid plan. But it turns out, when you buy gold from yourself and pay yourself with U.S. debt, you still end up with the U.S. debt on your hands in the end.

Even with its golden stockpile, China is still looking for a good way to spend its debt dollars.

Red Gold to Back a New Currency?

I expect China will continue to covet gold. But with such a large reserve in dire need of both diversification and securitization, this emerging global superpower of 1.3 billion citizens has set its sights on other tangibles. Let's face it, the gold supply is small, and China needs resources of all kinds.

So it makes perfect sense for Beijing to trade holdings it has too much of - like U.S. Treasuries, for example - for assets China needs more of, like copper. There are multiple benefits to this strategy, too: Not only is China swapping a holding whose value is declining (dollar-based holdings) for a tangible asset whose value is on the rise (copper). It's also getting (in copper) an asset that's central to its ongoing infrastructure build-out.

Yet some believe that China's actions reflect a new strategy, since this acquisition binge goes way beyond national consumption requirements. And with a full war chest, that buying could be sustained for some time.

Copper could be used to back a currency, but it's also necessary for the modernization of China, and even in the next wave of automobile technologies - both electric and hybrid - an industry this nation could lead.

China's share of the copper market is a world-dominating 38%. Clearly, its record import levels last year were an influence that helped vault the copper price by 226%.

Dr. Copper's Diagnosis

Commodities traders often refer to this all-important non-ferrous metal as "Dr. Copper." Its price and supply/demand characteristics are widely assumed to reflect the health of the world industrial economy, hence its "Ph.D. in Economics."

Given that reputation as an excellent barometer, it's tough to understand just what's keeping copper prices high at a point in which the risks of a double-dip recession worldwide are exceeded only by the fears of one.

So what's propping up copper prices? For one thing, hedge funds are taking physical positions in the metal, rather than through futures contracts, due to concerns the Commodity Futures Trading Commission (CFTC) will bring in position limits.

What's more, China's State Reserves Bureau has purchased large amounts of copper, pushing the nation's year-over-year imports up by 63%.

The Longer-Term View

I am convinced that we are still relatively early in a secular commodity bull market. In fact, with the modernization of Chindia and numerous other less-developed nations, I expect this bull market will be one for the record books. Fundamental demand coupled with inflation will push resource prices to unimaginable heights.

But that doesn't mean - in the intermediate term - that copper hasn't gotten ahead of itself. Look for its price to weaken somewhat before the price of the metal resumes its upward trajectory.

Even if a new international commodity-backed currency were to emerge, it's likely that copper will only be one of its underlying components.

For now, copper will continue to be overwhelmingly used in industry and infrastructure, with 75% of output going into electrical applications.

From my vantage point, gold will remain the ultimate form of money, while copper will retain its Ph.D. in Economics.

That's why I'm not expecting copper thieves to steal Lady Liberty's dress and melt it down, but I do expect copper to become increasingly valuable as our secular commodity bull rages on.

The last question investors need to answer is a simple one: How do I profit from this trend? If you're looking for a simple way to play copper directly, check out the iPath DJ AIG Copper TR Sub-Index (NYSE: JJC) Exchange-Traded Note. This ETN tracks the price of Copper High Grade Futures Contracts traded on the New York Commodities Exchange.

Is it really so preposterous to believe the United States and Europe would conspire to keep pole position in the global financial system?

I don't think so - and neither does China.

That much was revealed in a diplomatic cable recently uncovered by Wikileaks.

According to the 2009 cable from the U.S. embassy, China believes the United States and Europe have, as a matter of policy, suppressed the price of gold to discourage its use as a reserve currency.

And there's a pretty compelling case to be made for a gold price conspiracy.

The Gold Price Conspiracy

The cable summarized several commentaries in Chinese news media sources on April 28, 2009.

"The U.S. and Europe have always suppressed the rising price of gold," it reads. "They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency."

According to the cable, China believes that by building its gold reserves, it can not only safeguard itself against the declining value of the dollar, but encourage central banks around the world to expand their gold purchases, as well.

"China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold," the cable said. "Large gold reserves are also beneficial in promoting the internationalization of the RMB [renminbi - China's currency]."

Now, if all we had were the Chinese claiming the U.S. and Europe were suppressing gold prices, it would be easy to disregard as superficial propaganda.

But in fact, there's evidence that supports this claim. (And is it any wonder with the dollar crashing through the floor? Don't believe me? Take a look at our latest research on the dollar and the death of the American dream right here.)

In the decade between 1999 and 2009, central banks - dominated by the West - were net sellers of gold in every single year. And that's despite the fact that gold in that time soared from $250 an ounce to $1,200 per ounce - a nearly 400% gain.

Then there's the infamous "Brown Bottom."

Between 1999 and 2002, Gordon Brown, then UK Chancellor of the Exchequer (and later Prime Minister), decided to sell nearly half of his nation's gold reserves. At the time, just the advance notice of these substantial sales drove gold's price down from $282.40 an ounce to $252.80.

Those gold sales yielded an average price of $275 an ounce, raising a total of $3.5 billion. Today, those 395 tons of gold would be valued more than $19 billion.

You have to admit, it doesn't make a whole lot of sense to sell a solid asset whose price is moving steadily higher each year - especially when the United Kingdom's debt problem then wasn't nearly as bad as it is today.

The answer: Because there's a conspiracy afoot.

Gold Dust on The Fed's Hands

Here's more damning evidence.

A U.S. District Court this year ordered the U.S. Federal Reserve to disclose to the Gold Anti-Trust Action Committee (GATA) the minutes of an April 1997 meeting of the G-10 Gold and Foreign Exchange Committee, as compiled by an official Federal Reserve Bank of New York.

And it's a bombshell. The minutes suggest that officials from the G-10 governments and their central banks were, in fact, conspired to synchronize their policies to affect the gold market.

It turns out that U.S. policymakers aren't just worried about preserving the dollar's role as the world's main currency reserve. They're also worried about the effects higher gold prices could have on the nation's debt burden.

The minutes include comments by a U.S. delegate identified only as "Fisher," which is likely Peter. R. Fisher, head of open market operations and foreign exchange trading for the New York Fed.

Fisher, the minutes say, made the case that rising gold prices would increase U.S. debt.

Fisher "explained that U.S. gold belongs to the Treasury. However, the Treasury had issued gold certificates to the Reserve Banks, and so gold also appears on the Federal Reserve balance sheet," the minutes say. "If there were to be a revaluation of gold, the certificates would also be revalued upwards; however [to prevent the Fed's balance sheet from expanding] this would lead to sales of government securities. So the net benefit to Treasury would need to be carefully calculated, since sales of government securities would expand the public portfolio of government securities and hence also expand the Treasury's debt-servicing burden."

Indeed, Fisher's remarks are an open acknowledgement that the United States has an interest in suppressing the price of gold.

So, clearly, there is a growing body of evidence that Western governments, central banks, and even some of the largest investment banks have a vested interest in subduing the price of gold. Furthermore, they've already acted on behalf of that interest.

But now the tide is turning. The dollar and the euro are on the ropes and emerging markets have been steadily increasing their gold purchases.

While authorities in developed countries are making it more difficult for investors to build gold holdings, China and other developing markets are doing just the opposite. They're actually encouraging their populations to adopt physical gold and gold investments like futures and exchange-traded funds (ETFs).

So I think it's high time the average Westerner looked to the East for cues on wealth preservation and their attitude towards gold.

To help you do just that, here is our latest report on the Big Three of investing today: Gold, The U.S. Dollar and Inflation. They're all inextricably linked - thanks to the U.S. government, and they're all vitally important to anyone looking to invest, retire or just get by in America today. Learn the future of all three right here.

So-called "inverse funds" are widely misunderstood and can be tricky to use, but these specialized investments have a place in most portfolios.

In fact, with U.S. stocks having zoomed more than 80% off their market lows, now could be the ideal time to add inverse exchange-traded funds to your portfolio.

But there's definitely a right way and a wrong way to use them.

So it's worth taking a closer look.

The Lowdown on Inverse ETFs

If you're not familiar with inverse exchange-traded funds (ETFs) - or haven't used them, yet - don't worry. You're not alone. Despite the fact that they've been around a few years, I've found that many investors either aren't aware of them, or don't quite understand how they can be used.

Others who are familiar with inverse ETFs view them solely as a hedging instrument - and don't realize that their strategic use can lead to higher, more-consistent returns over time.

That's ironic, because they've proven their worth, time and again - such as during the run-up in oil prices in 2008, and, before that, during the financial crisis that got its start in late 2007. (And it isn't over, yet. Take a look at my updated report to learn the latest fallout from the financial crisis. This one is hitting regular investors like you and me. And it could reduce your retirement account by as much as 90%. Learn how to fight this new financial threat right here.)

As their name implies, an inverse ETF is a specialized investment vehicle that moves opposite to whatever security or index it's designed to track.

Inverse ETFs trade just like stocks on regular exchanges, which means that investors who want to use them don't have to have special accounts or approval from their brokers. And because they are priced in "real time" - just like regular stocks (and as opposed to conventional mutual funds) - investors who want to really fine tune their approach can literally monitor their exposure down to the minute or the tick if they wish.

Inverse funds can utilize a variety or combination of financial instruments - including options and futures - to achieve their objectives. And yet, their operation is almost completely invisible to the investor. That makes ETFs ideal for counter-balancing long positions in a diversified portfolio without having to worry about the intricacies of short selling, put options, liquidity, taxes or margin management.

Inverse funds also remove the element of market timing from the equation. And that's a very good thing, since the vast majority of investors - individual and professional alike - fail to keep pace with the market averages. In fact, in any given year, about three-quarters of all professional managers lag the performance of the Standard & Poor's 500 Index.

Rydex/SGI created one of the first inverse funds: The Rydex Inverse S&P 500 Strategy Inverse Fund (RYURX). In professional trading circles, it was known as the Rydex URSA, or simply "ursa," which is Latin for "bear."

Today, as part of a $1 trillion industry segment, there are more than 100 inverse funds tracking the S&P 500, the Nasdaq Composite Index, the Dow Jones Industrial Average, as well as all sorts of other indices ranging from domestic small caps to foreign choices like the iShares FTSE/Xinhua China 25 Index (NYSE: FXI).

There are even so-called "ultra" inverse funds, which offer double or triple the inverse results - if you want to be more aggressive. These come with their own unique wrinkles because they use leverage to achieve their objectives. But don't necessarily believe all the bad press they've received in recent years. If used properly, they're hardly the "return killers" pundits would have you believe.

I like to use inverse funds in two ways:

• As an "income stabilizer."
  
• And as an "absolute-return producer."

Let's take a look at both.

Inverse Funds as an Income Stabilizer...

If you've ever been sailing and hit rough water, you might be familiar with something called a "storm anchor." It's something that's thrown overboard in an effort to stabilize the boat.

That's a great analogy. Because inverse funds are truly non-correlated assets, they serve the same purpose as a storm anchor. So if you're dependent on income, using inverse funds can stabilize the principal value of your holdings, while allowing you to concentrate on preserving your income.

This is more of a "set-it-and-forget-it" approach to income investing. And research studies underscore that having 5% to 10% of your overall assets in such holdings is just about right.

... And as an Absolute-Return Producer

If you're more aggressive, you can use inverse funds to achieve absolute returns (a.k.a. profits) during rough market stretches in which everyone else around you is fretting about the losses they're incurring.

Investors who travel this route typically allocate more than 5% to 10% of their portfolios in inverse-type investments - depending upon what it is that they're trying to hedge.
Investors in this group also tend to rebalance their inverse funds regularly - sometimes even daily - to accommodate the market's inevitable ebbs and flows.



Consider, for example, a $10,000 investment that outperforms the markets by 5%. An investor who uses inverse funds to hedge that investment would now want to add an additional $500 to an appropriate inverse fund to rebalance the incremental return (or "alpha," as it's referred to by professional investors).

Similarly, if a hedged investment has fallen by 5%, that same investor would want to sell $500 worth of inverse funds to reduce the net exposure to zero ($0.00).

A Worthwhile Sacrifice

In investing, as in physics, there is no "free lunch." In other words, in order to get the security that these inverse funds provide, you have to give up something.

Because inverse funds move in the opposite direction to the underlying indices they track, they'll take a little off the top when markets are rising.

However, in a world characterized by out-of-control government spending and markets that are exposed to the risks created by seriously out-of-control financial institutions, that's an acceptable trade-off. Especially when it comes to the peace of mind I get by using them.

Actions to Take

Although they are specialized investments, I believe "inverse funds" have a place in most portfolios.

Here are a few of my favorite choices to help you get started.

If you're partial to U.S. stocks, consider the aforementioned Rydex Inverse S&P 500 Strategy Inverse Fund (RYURX). It moves opposite the S&P 500 Index.

If you've got heavy U.S. Treasury exposure - particularly at the longer end of the spectrum as many investors do right now - consider the Rydex Inverse Government Long Bond Strategy Inverse Fund (RYJUX) or even the iPath U.S. Treasury Long Bond Bear ETN (DLBS). Although the latter is technically an exchange-traded note (ETN), the purpose and function are similar.

If you're an investor who favors high tech, or who is big into energy, there's the ProShares Short QQQ ETF (NYSE: PSQ) or the United States Short Oil Fund (NYSE: DNO).

If you find that you share one of my major worries, and are concerned that the U.S. dollar may fall even further (Take a look at my latest research to learn where the dollar is headed and why it could be dragging your investments down with it.), or if you have the majority of your portfolio in dollar-denominated investments, you will find that the PowerShares DB U.S. Dollar Index Bearish (NYSE: UDN) will provide the security that eases those fears.

Finally, if you share my view that China represents the greatest long-term investment potential on the planet - but you still wish to "smooth out" some of the interim volatility that's certain to come - consider the Ultrashort FTSE/Xinhua China Proshares ETF (NYSE: FXP). This is the yin to the yang of the aforementioned iShares FTSE/Xinhua China 25 Index ETF (NYSE: FXI).

The traditional ways of saving money aren't enough anymore.

Over the past few years, it's more than likely that your portfolio took a huge hit... your house lost value... and all the dollars you have tucked away for a rainy day lost value with each passing day.

Whether you realize it or not, you're getting burned.

It's time to look at investing in a completely new way.

The old asset allocation models your stockbroker once promised would never lose money (How did that work out for you, by the way?) are the way of the past. The "growth stocks" aren't growing. The "value stocks" have lost their value.

You need a new plan. And we have it for you.

Here at Money Map Press, we use a 50-40-10 model that guarantees real growth from a solid base of investments and reduces your exposure to risk. To learn more about this strategy - and what the Money Map Report is recommending right now, click here.

Let's get started.

Figure Out Your Risk Tolerance

Not everybody wants to skydive. Some people are content with low-risk, low-return investments.

Some people love the thrill of risking it all for the chance their money will triple or more.
It's easy to be seduced by visions of high returns. But, take a little time to think about your risk tolerance. Think about when you'll need the money your investing. Think about how comfortable you are with risk. And then, make sure your broker knows exactly what your risk tolerance is.

One way to get a good gauge on your risk tolerance is to use one of the risk tolerance tools that are available online. A simple Google search should turn up dozens of results.

Check them out to determine how risky you're willing to be.

Find the Right Broker

The major brokerage firms spend a lot of money on television ads telling you why they are the best. How they have the best tools. And that they are the ones who will look out for you.

Well, if that were true, that financial crisis we're all recovering from wouldn't have happened.

So, when you pick your broker, take everything they say with a grain of salt. Try to find someone you trust - someone you feel comfortable with and someone who isn't going to push you into any investment that you don't feel comfortable with.

When scouting brokers, never gloss over an asterisk - especially when it's placed next to an advertised deal. The fine print it refers to could mean that you're signing up for higher fees than you realize.

Don't be afraid to call the brokerage up and ask every question you have. Sometimes brokers talk like doctors or computer repairmen in that they have their own language they strategically use to intimidate their customers. Keep them in check by writing down every question you have and checking them off only if you understand their answer completely.

Build Your Portfolio

And now we're at the most important part of the process: Figure out what stocks to invest in.

Well, the team here at Money Map Press has built a nearly foolproof portfolio strategy.

But first, we need to dispel a myth.

For decades, we've heard over and over how international investments should comprise no more than 5% or 10% of our portfolio's total value - any more than that is foolhardy and risky.

Well, we're here to tell you that advice is complete bunk!

As we learned from the financial crisis, we're living in a global economy. The best investments are no longer always in the United States. So stepping outside that box is necessary to capture your desired returns.

With that in mind, Money Map Press designed an investment pyramid to help its readers develop more potent portfolios, while also better managing their risk.

Let's take a look at all three categories in the investment pyramid, determine how much of your portfolio each element should account for, and study how you can position your holdings to capitalize on this forward-looking strategy.

Base Builders: Providing Stability and Balance Through Any Market

Base Builders are generally dividend and income investments and should account for as much as 50% of your holdings. This is the part of the portfolio that provides stability and balance through all market conditions. Among the holdings in this part of your portfolio will be investments that many folks view as "boring."

By adopting such a view, however, those investors miss two very key points. First, many of the investments in this category protect you in bearish markets, and can soar 20% or more in good markets. And, second, many of these will pay dividends, a much bigger deal than most investors realize.

Indeed, if you go back more than 100 years - all the way back to 1871, in fact - you might be surprised to discover that 97% of total stock market returns are due to dividends. So it makes sense that the base of the pyramid - and the foundation of your portfolio - would be made up of dividend-paying stocks and other income-producing investments.

Global Growth: Generating Returns from Around the Globe

Global Growth should account for as much as 40% of your holdings. As the moniker implies, these investments occupy the central portion of your portfolio, and include "Glocal" stocks (large U.S. companies with global operations), as well as investments in the hyper-bullish energy and commodities sectors.

Those global giants give investors a piece of the bigger returns being generated by such economies as China, India and Latin America, while still benefiting from the safer U.S. reporting and regulatory environment.

Rocket Riders: Rocket Fuel for Your Portfolio

The Rocket Riders are hyper-growth investments that should occupy up to 10% of your holdings.

Over the long haul, these investments will generate massive profits. But in the interim you can expect them to take you on one hell of a ride.

Ultra-high-growth investments include direct emerging-market investments, newly public shares, alluring-but-risky turnaround plays and other such opportunities that are usually accompanied by equal helpings of volatility and risk.

By combining the profit potential of these mega-growth "Rocket-Rider" investments with the balance of the "Middle-Ground" holdings and the high payouts of the "Base-Builder" plays, you'll always be ahead of the curve as new investment trends develop.

Over time, you'll find this investment pyramid to be an easy-to-use tool - and one that's highly profitable, as well.

To find out about a specific stock in Keith's investment "pyramid" right now, take a look at his latest special presentation. It's about a Rocket Rider with tremendous potential for your portfolio - and the possibility to combat the world's deadliest disease. Learn more right here.

Do you know what the ultimate investment protection is?

It's not gold, and it's certainly not Treasuries.

It's dividend stocks.

Companies that pay consistent dividends are in better fiscal shape than the U.S. government, and the payouts significantly outpace those of Treasuries. The advantage over gold of course is that the yellow metal yields nothing - it's simply a store of value.

And yet dividend stocks also protect against inflation, since profits for the companies behind them tend to rise alongside prices.

To understand the advantages dividends can provide an investor during a down market, just look at the implosion of the dot-com bubble in 2000.

According to Morningstar research, the Standard & Poor's 500 Index lost 9%, while dividend-oriented mutual funds - including high-yielding stocks in the financial-services, mutual-fund and real-estate sectors - gained anywhere from 10% to 30%.

And I shouldn't need to remind you that dividends account for the majority of the stock market's returns.

A study by Yale economist Robert Shiller showed that in the 109 years from 1889 to 1998, the average real return on common stocks was 7%, of which 4.7% was represented by dividends.

While stock prices have been plunging, dividend payments are rising. Through Aug. 31, 243 companies in the Standard and Poor's 500 Index increased or initiated a dividend payment. In fact, dividend payments are expected to end 2011 up 18% from 2010.

That's the case for dividend stocks. Now I'm going to give you some potent investment ideas to help you get on board (Learn how to find a 9.15% dividend stock in our latest special presentation right here.).

Investing in Dividend Stocks

Generally speaking, there are two types of dividend stocks. There are large blue chips, which have a reliable but modest payout. And then there are the obscure companies, which have a higher yield but less safety.

In the first set you'll find companies like The Procter & Gamble Co. (NYSE: PG) with a dividend yield of 3.4%, PepsiCo Inc. (NYSE: PEP) (3.4%), Johnson & Johnson (NYSE: JNJ) (3.6%) or, at the slightly riskier level, Altria Group Inc. (NYSE: MO) with a yield of 6.2%.

All of these companies yield more than Treasuries. Plus, they have the added bonuses of being safer than sovereign debt and less vulnerable to inflation.

If inflation runs at even 10% for a few years, these companies' profits will rise more or less in tandem with prices. So will the value of their assets and businesses. If there's a big stock market crash, the price of these solid companies will decline - but even then, probably less than the market as a whole. And if the dollar crashes, you're MUCH safer in these companies than in Treasuries, because a large proportion of their profits come from outside the United States.

The second set of dividend stocks is where you'll find the riskier high flyers - smaller companies whose dividend yields are above 7% to 8%.

This second group has two advantages: First, the dividend yield itself is far above that available on bonds with any degree of safety. And second, if the companies themselves have solid operations, particularly if there is any kind of growth in earnings, a nice capital gain will accompany the juicy dividend.

Here's an example. My Permanent Wealth Investor service bought shares in B&G Foods Inc. (NYSE: BGS). B&G is in the business of buying tired food brands that are peripheral to big companies' operations (they own Cream of Wheat, for example) and rejuvenating them through active marketing and promotion.

At the time of our purchase, the stock was yielding 7.2%. B&G flourished over the next 18 months. The company's earnings were so robust that it increased the quarterly dividend by 23%. That success brought new investors, driving the stock price higher. Now it's trading at about double what we paid. The stock's yield has dropped as a result of the higher price but only for investors who are just getting in now. And a yield of about 5% is still well above the S&P 500.

Essentially B&G has moved from the second category of high yield stocks to the first; it is now priced as a company with solid operations, some growth and an attractive dividend yield. And even at its current valuation, it is by no means overpriced.

Take Aim at "Alpha Bulldogs" for Investment Protection

Companies like B&G are what I like to call "Alpha Bulldogs." These are companies whose dividend is solid, maintainable, and covered by earnings.

By no means are all high-dividend stocks Alpha Bulldogs. In the financial sector, there are a number of companies that are taking advantage of the Federal Reserve's irresponsible interest rate policy by borrowing short-term and investing in long-term mortgage bonds.

This will give them a very juicy return - until interest rates go up sharply, at which time their borrowing costs may exceed their investment yield and the capital value of their portfolio will collapse.

Outside the financial sector, a number of high dividend stocks pay out more than they earn, or have earnings with a strictly finite life. These companies are essentially cannibalizing capital to pay dividends - not an attractive investment.

We call these companies, which appear attractive but are in reality dangerous "Mangy Curs."

That said, I have one more recommendation for you - an Alpha Bulldog. It is currently trading at an attractive price and yields more than 9%. And you can learn more about it with our latest special presentation from Money Morning Private Briefing. You'll also get some of the best of my high-priced trading service recommendations for less than the cost of a pint of decent beer. Just go here to learn more.

I just finished a battery of media appearances on Fox Business, Bloomberg, BNN and CNBC Asia, and without exception I was asked about two things: President Barack Obama's jobs bill and the U.S. Federal Reserve's "QE3."

The first thing investors and analysts want to know is whether or not the president's jobs bill will work. The answer to that question is "no" - not as it stands, anyway.

The second question is whether or not Fed Chairman Ben S. Bernanke will further extend the central bank to help the economy. Well, I do think the Fed will intervene, but I don't believe for a second that the central bank's intervention will help the U.S. economy.

As a result, we're likely to see stocks enter into a bear market and retest their March 2009 lows.

I know that's a terrifying thought. But to be perfectly honest, there's nothing President Obama or Bernanke can do at this point.
If companies don't want to spend the $2 trillion worth of cash they're hoarding, there's very little the government can do to encourage them to loosen their purse strings.

That said, I want to give you five specific steps to protect yourself from the looming bear market, preserve your sanity - and even profit.

But before I get to that, you need to understand the dangers that are fast approaching.

A Roadblock to Recovery

President Obama and Chairman Bernanke can toss all the money they want at the economy. But no amount of spending can change the fact that we need the following three things to get our market moving again. They are:

1. Sustained demand.
   
2. A solution to the European sovereign debt crisis.
   
3. And a bottom in housing prices.

As it currently stands, the U.S. economy will be lucky to log 1% growth this year, which is even lower than the anemic 1.5% I predicted in my annual forecast.

That's pathetic for a nation that spent more than $1.4 trillion of borrowed money on "stimulus." This lackluster growth is also evidence that the Obama administration's $800 billion stimulus plan - and the Fed's two rounds of quantitative easing - did absolutely nothing to salvage our economy.

And it's only going to get worse. Investors need daily information and recommendations from professionals they trust if they're going to survive the markets in the coming year. Learn how you can get some of the best stock picks and market reports delivered to you everyday. Some investors pay up to $26,000 for this information. But for a short time, you could get it all for just $5 a month. Click here for details.

Citizens are scared silly. Businesses are uncertain. They're uncertain of regulatory changes, uncertain of taxes, and uncertain about their overall economic environment. So they're doing what rational people do when confronted with the unknown: They're hunkering down.

And with good reason.

The typical U.S. family got poorer during the past 10 years due to a decade-long income decline. Median household income fell to $49,995 last year, and is now 7% below where it was in 2000. The number of people living in poverty has risen to 15.1%, the highest level since the U.S. Census began tracking this information in 1959.

It should also be noted that a large portion of that decline is directly attributable to inflation, which the Fed continues to assert is "transitory."

Out of the Fire...

You may be holding out hope that the president's jobs plan will help turn things around - but it won't.

Jobs exist because they create value. You can't just assume businesses will hire for the sake of hiring, which is essentially what the Obama administration's plan does. There has to be demand. All the employees in the world won't do any good if business owners can't grow their customer base and their revenue.

This is true for infrastructure as well. Infrastructure should be built as a means of increasing productivity - not just to put bodies in motion. That's something the "bridges and tunnels" crowd doesn't seem to understand.

That's why we have to consider the president's plan for what it is - yet another government-sponsored diversion of capital and resources.

As such, there are the usual questions about how President Obama wants to pay for this. And that's assuming the plan even manages to get through Congress, which I don't believe it will.

I think the jobs bill is dead in the water, and that the fight over some of its elements will create more uncertainty than jobs. That will be bad for the economy and even worse for the stock market, which will react negatively to the bickering and yet more indecisiveness.

Enter the Fed.

A Five-Step Plan for Dealing with the Looming Bear Market

When the president's jobs bill fails - just as his previous attempts to jumpstart the economy with deficit spending failed - and unemployment rises a year from now if not sooner, Bernanke will undoubtedly step in with QE3.

Of course, it may not be called QE3. It will likely be called "Operation Twist," or some derivation thereof.

But here's the real rub. Quantitative easing, no matter what it's called, is a euphemism for printing money. It is an attempt to bring down longer-term rates and twist the interest rate curve in such a way that companies have no choice but to spend money, and investors have no choice but to take on more risk.

But how low can you go when rates on the short end of the curve are already near zero? Not very.

I saw this firsthand in Japan. The Japanese government took rates all the way down to zero - and nobody wanted the money! Japanese companies wouldn't spend their cash then any more than U.S. companies will spend the $2 trillion they're sitting on now.

Instead, the government will be "forced" to spend even more.

So while Bernanke and President Obama are trying to dig their way out of this mess, they're really only digging our economy into a deeper hole.

That's why stocks are destined to retest the market lows of 2009. I don't know exactly when, but I intend to help investors safeguard their assets and profit by preparing for it now - before it actually happens.

Here's five steps to get you started:

1. Sell Strategically: Sell into strength and capture profits using trailing stops that are gradually ratcheted up as the bounce begins. This will help you raise cash (that can be used to buy into the rebound when it eventually happens).
   
2. Hedge Your Bets: Use specialized inverse funds to hedge downside risk that will accompany the rollover to the downside and rack up significant gains at the same time.
   
3. Consider Alternatives: Buy commodities - most notably gold and oil - on pullbacks. These alternative assets will help preserve the value of your portfolio as the markets roll over. Their value will accelerate dramatically when the world economy recovers - as it eventually will.
   
4. Think Globally: Put new money to work in so-called "glocal" stocks with fortress-like balance sheets, diversified revenue and experienced management. Not only will they help hedge the value of your portfolio, but by concentrating your focus on them you are building in upside potential even if we haven't hit a bottom. Those offering big dividends are best because that will help you keep pace with the inflation the government debt will ultimately induce.
   
5. Stay In The Game: I know it's tempting to bail out given my prognosis for more downside, but attempting to time the markets is a fool's errand - and never works. You just wind up getting skinned twice - once on the way down and again because you were standing on the sidelines and got left behind when the markets ultimately reverse - which they will.
   
6. Find A Trustworthy News And Investment Source: When the markets start to fall, panic will set in. And investors who don't want to lose their shirts need a calm, reliable source of information that will keep them ahead of the markets - and help them profit from the chaos. Take a look at our latest special presentation to find clear, honest market information and stock recommendations without hype or doublespeak.

Even while gold, silver, and platinum steal most of the headlines, there are stealth bull markets advancing in other metals.

Take palladium for instance.

Indeed, while platinum may have the prestige, palladium has the profits.

Palladium has seriously outperformed its sister metal over the past year: Its price has soared 57%, compared to a mere 23% increase in platinum prices.

Platinum is still trading 20% below its 10-year high, which was set at $2,273 an ounce in early 2008. But palladium just established its own 10-year peak at $858 an ounce - and at about $720 per ounce now, it's just 16% shy of that mark. And that's despite the massive sell-off we saw in precious metals recently.

The outlook for palladium - from both fundamental and technical aspects - is decidedly positive. All that's left is for palladium to take out the $858 an ounce target it set earlier this year. Once that happens we could be looking at a blue-sky breakout for the unsung metal.

So let's take a closer look.

Fundamental Factors

Emerging market demand, a weak dollar, and a relative dearth of safe-haven investments have been a boon for commodities prices across the board. But palladium, unlike precious metals, has the added bonus of industrial demand.

Some 63% of palladium is used in automobile catalysts, while only 6% makes its way into jewelry.

According to Scotiabank's recent Global Auto Report, car sales in the world's largest emerging markets - China, India, Brazil and Russia - are on pace to set new records this year.

According to Fatih Birol, chief economist for the International Energy Agency (IEA), 700 out of every 1,000 people in the United States and 500 out of every 1,000 in Europe own cars today. But in China, only 30 out of 1,000 own cars. And Birol thinks that figure could jump to 240 out of every 1,000 by 2035.

That's a clear benefit to palladium demand... and to other select stocks - which could make a killing on higher resource prices. Take a look at our new presentation for other ways to profit from soaring demand.

In fact, this increasing demand has already led to a sharp decrease in palladium supplies.

Over the last five years, palladium was in net supply of nearly 1 million ounces, according to SFA Oxford, a consultancy that specializes in the platinum group of metals (PGM). But just last year that sharply reversed, with a net shortage of 210,000 ounces.

For now, shortages are filled through recycling and stockpiles of the metal.

Yet, as SFA Oxford's projections show, except for this year, a deepening shortage of palladium is on tap as far as the next decade.

Part of the problem lies in South Africa. South Africa is responsible for 57% of the world's PGM production, but many of the country's miners are on strike following the government's decision to nationalize the mining sector.

The South African government's mining charter calls for 26% of the mining industry in Africa's largest economy to be transferred to native African owners by 2014 as part an empowerment drive to rectify the disparities of white apartheid rule.

Native Africans owned just 8.9% of South Africa's mines in 2009, below a target of 15%.

Even if the targets are never met, just the ongoing threat is enough to frighten off potential investments in both new and existing projects, leading to lower total output.

The world's second-biggest PGM producer is Russia. That nation, too, is a wildcard. It's widely regarded as having huge stockpiles of these precious metals, but no one knows with any certainty how much of a cache remains. Some estimate that, after decades of drawdowns, what's left of the Russian stockpile will only satisfy the palladium production deficit until the end of 2012.

Technically Speaking

On a technical basis, palladium is showing signs of consistent strength, too.

If you want to see just how well palladium has performed compared to platinum, just look at the performance of the two corresponding exchange-traded funds (ETFs). The Physical Palladium Shares ETF (NYSE: PALL) is up about 53% in the past year, while the Physical Platinum Shares ETF (NYSE: PPLT) is up just about 20%

As part of the same metal family, platinum and palladium are to some extent interchangeable in certain applications. So it's interesting to watch how their price ratio behaves.

For most of the past 50 years, since the birth of environmental awareness, coal has been the "black sheep" of the power-production family.

Now, thanks to more efficient furnaces, better exhaust-scrubbing systems and other technological advances, coal is regaining favor in the world's energy markets.

However, the biggest factor in coal's recent price surge is steadily increasing demand for the fossil fuel - in power generation and steel-making - aided by rising costs for other types of fuel, like oil and natural gas.

The question for investors, of course, is will this rising demand continue - and how can you profit if it does?

The answer to the first part of that question is almost certainly, "yes," but the second part is a little trickier.

Simple Supply and Demand

Coal has two major uses - fuel for the commercial generation of electricity and heat and conversion into coke, which is used as both a fuel and a reducing agent in steelmaking.

Roughly 92.8% (1,041.6 million short tons) of total U.S. coal consumption (1,121.7 million short tons) was used for electricity production at 22 major coal-fired power plants last year. Roughly 1.9% (22.07 million short tons) was used in coking, while the remainder was used for other industrial purposes and private and institutional (e.g., hospitals and universities) power and heating plants.

On the production side, U.S. coal output rose by 2.2% last year to a record 1,171.5 million short tons, helping fuel a sharp increase in coal exports.

The continued decline in the coking sector reflects the ongoing loss of U.S. steel production to overseas competitors, most notably China.

Indeed, according to all major industry sources - and the U.S. government's Energy Information Administration (EIA), China will be the driving force in the coal markets for at least the next two decades, accounting for more than half of the world's total consumption by 2025. Consumption will also be far stronger in other emerging-market countries than in developed nations.

The EIA projects growth in coal consumption in the U.S. and other nations of the Organization for Economic Cooperation and Development (OECD) will grow from 47.3 quadrillion British thermal units (Btu's) in 2010 to just 48.3 quadrillion Btu's in 2025, an increase of only 2.1%.

By contrast, coal consumption in China is projected rise from 62.7 quadrillion Btu's this year to 90.1 quadrillion Btu's in 2025 - a 43.7% increase.

Total non-OECD consumption, including China, is projected to rise by 36% from 93.3 quadrillion Btu's this year to 126.9 quadrillion Btu's in 2025. So in just 15 years, emerging nations will account for more than 72% of the world's annual coal use.

Worldwide demand for coal will rise to 175.2 quadrillion Btu's in 2025 from 140.6 quadrillion Btu's this year, an increase of 24.6%, the EIA said.

And much of that demand will be in developing countries, along with the major capital flow of the world's markets. Your broker may have told you the only safe way to profit from this movement is with ETFs and ADRs. That's simply not true. Global investors can find safe opportunities coming from these developing economies. Our latest special report has all the details.

Mining Is Falling Behind

Meanwhile, the mining industry has barely managed to keep up with rising global demand in recent years.

In 1990, total world demand was 89.2 quadrillion Btu's, while total world production was 91 quadrillion Btu's, a surplus of 1.8 quadrillion Btu's, or just over 2%.

By 2006, global demand had climbed to 127.5 quadrillion Btu's, while global output had risen to just 128.49 quadrillion Btu's - a surplus of just 0.99 quadrillion Btu's, or 0.77%.

Given the increased worldwide restrictions on mining operations and the shrinking likelihood of new coal discoveries, it's hard to see where another 47.7 quadrillion Btu's worth of coal are going to come from, especially since projections are already showing a potential production shortfall and depletion of existing stockpiles.

There's no anticipated improvement longer term. The World Coal Institute estimates there are only enough proven coal reserves to last 155 years - if the rate of consumption remains unchanged.

Investing in Coal

Unlike with many other popular commodities, individual investing in coal is generally not a simple matter of buying basic futures or forward contracts. That's because coal has extreme variances in quality.

In the United States, for example, there are five primary classes of coal, each with a different Btu rating.

Northern Appalachia coal, rated at 13,000 Btu per short ton, is the highest quality, while Powder River Basin coal (from Wyoming and other Rocky Mountain states) is the lowest quality, with a rating of just 8,800 Btu per short ton.

Because of those quality differences, the spot prices for Northern Appalachian coal and Powder River coal can be more than $50 apart on a given day.

The other classes of U.S. coal are Central Appalachia (12,500 Btu), Illinois Basin (11,800 Btu) and Uinta Basin (11,700 Btu).

While the NYMEX division of the CME Group does trade one major and two minor futures contracts - Central Appalachian, or CAPP (trading symbol: QL); Western Powder River Basin, or PRB (symbol: QP); and Eastern CSX Transportation (symbol: QX) - all are fairly thinly traded and used primarily by commercial interests for hedging and supply management. Inconsistencies with the spot prices can also be high - e.g., the nearby CAPP future closed at $52.30 compared to the spot price of $58.95 recently.

Coal prices also tend to move separately from coal fundamentals themselves. Coal prices track the changes of other energy commodities - primarily crude oil and natural gas - as well as certain hedging commodities such a gold. This was illustrated quite clearly in the last three years.

Coal prices skyrocketed along with oil in early 2008, peaking near $150, before plummeting back to just over $40 per ton in 2009. And now prices are climbing again.

Coal Investments to Make Now

So, assuming the demand will continue to grow - and oil prices will keep rising, dragging coal and natural gas along - how should you play the move?

Exchange-traded funds (ETFs) are among the best choices as there are at least four that take heavy positions in coal-related issues, including two that target coal specifically. All are up significantly in price since the March 2009 market bottom, but they should have ample room left to climb as the recovery gathers added steam.

They are:

Market Vectors Coal (NYSE: KOL): This fund aims to track the price and yield performance of the Stowe Coal Index. It normally invests at least 80% of total assets in equity securities, including American Depositary Receipts (ADRs), of U.S. and foreign companies engaged primarily in the coal industry.

PowerShares Global Coal (NYSE: PKOL): This fund attempts to mirror the NASDAQ OMX Global Coal Index. It normally invests at least 90% of assets in securities, ADRs and Global Depositary Receipts (GDRs) based on the securities in the underlying index, focusing 80% of assets on companies involved in the coal industry.

Market Vectors Steel (NYSE: SLX): Coal is a major cost factor for steel producers and consumers. And this fund invests in major steel players. Since steel is a major component in all sorts of infrastructure construction, the fund's holdings should benefit from new spending linked to developing country growth.

SPDR S&P Metals & Mining (NYSE: XME): A diversified fund that includes coal mining and processing companies among its portfolio holdings, many of which are international - meaning the fund can also benefit from currency fluctuations as well as changing prices for metals and other minerals.

For those who prefer picking individual stocks to riding along with fund managers, take a look at the Energy Advantage portfolio. It offers readers special stock picks in coal, oil, natural gas and "new energy" winners. Learn more right here.

We are on the verge of another financial crisis even bigger than the real estate collapse.

This time, it's in oil. It's not a supply/demand problem, or a geopolitical one. Rather, the crisis stems from the rising inability to determine crude oil's genuine value.

A new round of speculation is growing, manipulating the energy markets. When no one can figure out how much oil should really cost, prices rise artificially... leading to catastrophic fallout.

Oil sector investments will be just a fraction of the global consequences. Oil touches everything. Even if you don't invest at all, this crisis will almost certainly affect you.

Oil Is No Longer About A Wet Barrel Of Crude

Today's oil market is one fueled by instability, intense volatility in pricing and trading, and a level of uncertainty not seen since the late 1970s.

The thing is, the price of oil and oil products has very little to do anymore with oil as a commodity. Instead, oil futures contracts have become an asset themselves - and a structurally flawed one.

I strongly believe this problem could very well be worse than the mortgage crisis, and I believe that it won't be solely confined to just oil. Toxic paper in the oil industry is going to touch everything. It doesn't matter if it's directly tied to oil or not.

This is an investing issue, a price issue, a national security issue, a political issue, and a personal issue.

Volatility is the new lightning rod for the entire energy sector. And as it intensifies in the oil market, determining genuine asset value becomes more difficult. While oil prices will be increasing, the rise will not result in corresponding increases in the genuine value of underlying assets.

This problem has occupied much of my time over the past several years, and the reason is simple - if left unchecked, this gap will result in a global financial bubble far worse than the subprime mortgage meltdown.

But there are ways to protect your wealth. Click here to learn more about one oil industry investment that could turn the coming crisis into a profit opportunity.

Derivatives Drive A New Crisis

The major players straddling the paper barrels (futures contracts) and wet barrels (consignments of actual oil) are designing new, ever more complex, synthetic debt and swap instruments to make the increasingly square pegs of futures fit into the round holes of oil deliveries.

Simply put, the market price for oil futures does not reflect the actual value of the oil itself. What it reflects is the value put on derivatives by traders who need a profit spread on that paper to stay in business.

Sound familiar? This is exactly how the financial crisis started.

With oil, however, the impact will be far more pervasive.

Oil is now a financial asset, not simply a commodity. That means trade in its future prospects attracts a lot of speculative attention bearing little relation to the oil itself.

Much like one can bet on the total number of points scored in a football game (the "over-under") without caring who wins, so we are witnessing growing interest in maximizing the price spread of futures over "real oil."

Both are derivatives - one on a sporting event, the other on a commodity. Neither should be considered reality as such.

Unfortunately, that is what has happened with oil. Investors with little interest in oil deliveries are pouring into oil futures. And they're producing new derivatives to squeeze speculative value out of yet other derivatives. That progressively undermines the market value of the oil itself...

No One Will Escape The Fallout

As these derivatives build on one another, what we are likely to experience is a bigger credit crunch fueled by the inability to value a fundamental asset, oil. Few, if any, international markets will remain unscathed.

This volatility will inflate a new oil bubble - one that will make the all-time highs of 2008 look like child's play. Plan to see $200 oil prices, and even higher, in the near future.

The new reality in the oil markets will revise the playing field of world politics too. Legislative and regulatory decisions impeding free trade... cross-border capital flows... and access to assets.

There is no deliverance from oil volatility. There is nothing government can do to prevent it and much of what it will try is unfortunately only likely to make matters worse.

Luckily, there are a few steps the average person can take to protect himself. Specific things to look for in the months ahead - what to avoid and a few key steps investors can take to profit from oil volatility...

How To Be Prepared

Supply and demand no longer control the oil market. And pundits are grasping at straws to explain the irrational moves we're seeing everyday in oil prices.

Just like the real estate and financial crisis of 2007, the coming oil crisis will have nothing to do with the underlying investments at stake - and everything to do with the inventions layered on top of those investments.

The flood of money into the derivatives oil market - and the creation of new "derivatives on derivatives" - will drive oil prices higher. But getting there is going to be a bumpy ride, with traders on both sides looking to capitalize on the volatility they've created.

As an outside investor, you should be doing the same. Volatility is the major factor driving oil prices in coming months and years. And investors who recognize this will be in the best position to survive and thrive when the bubble bursts.

Look for stocks, ETFs and indexes that play on the volatility of the oil markets. To find specific recommendations, click here for our latest special report.

Over the past 40 years, only one new entry has been added to the Federal Bureau of Investigation (FBI) roster of "Top 10" investment scams - the very broad category of "Internet fraud."

The other financial rip-offs listed are merely new versions of tried and true swindles that have been around for decades or more - from Ponzi schemes and pyramid systems to phony stock offerings and commodity cons.

The big difference is that the one new category - Internet fraud - has greatly increased the frequency, speed and effectiveness of the other types of financial fraud, as well as exponentially increasing the scammers' take.

In 2009, there were 6,062 robberies of physical bank offices and branches, netting the perpetrators a total of $45.9 million in loot, more than $8 million of which was recovered by law enforcement officials. By contrast, there were more than 14,000 reported (and countless unreported) online attacks on banks and bank customers, with the estimated loss exceeding $110 million, almost none of which was recovered.

In addition, where physical bank theft is local, online robbery is global. MSNBC recently reported that a ring of cyber thieves based in Eastern Europe had used a so-called Trojan horse computer program to steal more than $1 million from the accounts of more than 3,000 British bank customers in just four weeks - and, even though the banks had identified the problem, they weren't able to immediately stop the thefts.

That mirrored an even broader rip-off of banks and their customers.

According to the FBI, a highly sophisticated group of thieves using cloned or stolen debit cards, with PINs gained primarily via Internet phishing scams, hit more than 2,100 ATM machines in 290 cities across North America, Asia and Europe, walking off with more than $9 million in cash in under 12 hours. That figure would have been much larger had many of the ATMs not been drained of all their bills.

Banks aren't the only targets, either. Overall, the FBI counted 335,655 complaints of online thieves targeting U.S. consumers, financial institutions, brokerage firms, retailers and other companies that maintain customer accounts, up 22.3% from 275,285 the previous year. The total take in those incidents was estimated at $559.7 million, up from just $264.6 million the year before.

And those numbers will almost certainly increase dramatically in the decade ahead, thanks to the growing use of cellphones, laptops and home computers to access personal bank, brokerage and other types of online accounts.

The National White Collar Crime Center (NW3C) says direct online thievery is just a drop in the bucket compared to all white-collar crime, most of which involves some form of investment or financial skullduggery. Examples include bankruptcy fraud, bribery, credit card fraud, counterfeiting both of currency and securities, embezzlement, identity theft, insurance fraud, kickback schemes, money laundering, price fixing and others.

The total cost of worldwide white-collar crime rose from just $5 billion in 1970 to $20 billion in 1980, $100 billion in 1990 and $220 billion in 2000, according to NW3C surveys and research of global law enforcement and regulatory reports.

But while the technology may have changed, financial scammers continue to rely mostly on the old standards.

* For more financial information to protect your wealth, and help grow it, view the latest special presentation from Money Morning. Click here to get all the details.

Classic Cons

The Ponzi scheme, named for Charles Ponzi who first used it in the early 1900s to fleece investors out of $10 million, continues to head every list of top financial frauds, probably because of its simplicity. The perpetrator merely promises huge returns and then delivers them, using money from new investors to pay off older ones, who praise the investment and draw in more and more new investors - until the operator has built up a big enough cash pool to abscond with all the money. See Bernie Madoff.

The big difference now is that the Internet can bring in money to the Ponzi operator in days rather than the months it used to take. The same is true of pyramid scams, where early investors profit by bringing in new suckers and raking off a share of the new money - until the whole thing collapses.

The Internet is even better suited to more complicated frauds. Using e-mail and/or highly professional-looking Internet Web sites, white-collar thieves can send out hundreds of thousands of sophisticated marketing appeals or official-looking documents in a matter of hours, reaping hundreds or even thousands of responses.

Problem is, the charities are bogus, the investments are phony, and the operators are long gone.

Seniors are particularly susceptible to many of these scams, being sold false charitable gift annuities, viatical settlements, reverse mortgages, or having their pension funds drained.

In 2005, for example, Pennsylvania authorities shut down a well-promoted "IRS-approved, IRA-authorized" investor plan that pulled more than $2 million out of senior pension programs in the state.

Of course, anyone can fall victim to an investment scammer. Following are nine other types of frauds or dubious investment offers you might encounter:

1. Affinity fraud - These scams target groups with common interests, such as alumni associations or religious or ethnic clubs, letting the members sell one another on bad or fake investments.
2. Annuity misrepresentation - These aren't scams so much as failure to disclose hefty sales commissions, huge surrender fees and other things that eat up the buyer's money.
3. Promissory notes - These are short-term, supposedly high-return debt instruments issued by obscure or non-existent companies and sold by unlicensed individuals posing as brokers, insurance agents, etc.
4. "Prime-bank" schemes - These offer small investors high returns by giving them supposed access to the world's elite banks and entry into the exclusive world of the ultra-rich.
5. Brokerage scams - These can range from outright fraud, such as selling phony securities, to "pump-and-dump" promotions of penny stocks, unauthorized trading of customer accounts (known as "churning"), excess or hidden fees and other irregularities.
6. Unlicensed agents - Nearly every financial endeavor is regulated and sales people are required to be licensed at either the state or federal level - but most scammers aren't. Even non-regulated operations usually have professional or business associations you should be able to check with if you have doubts.
7. Pressure tactics - Cold callers operating out of boiler rooms similar to those portrayed in the 1980s film "Wall Street" promote commodity futures, precious metals, penny stocks, coins, and travel and vacation properties. While some cold calling operations are legitimate, many aren't. The bad ones typically offer either "a special one-time deal" or an opportunity you have to "grab now or you'll miss out." Diamond investments are popular among pressure sales teams since they're one of the few commodities not traded on any organized exchange, meaning you have no real way to compare prices to actual market values.
8. False sales premises - These are often used in response to major shifts in public mood, such as the present distrust of Washington. A popular pitch currently being used promotes the purchase of antique gold coins because "the government has secret plans to confiscate all gold and prohibit individual ownership," as it did to a limited degree in 1933.
9. Fake real estate sales or leases - These scams reflect the recent mortgage crisis and collapse of the real estate market in many areas of the country.

Because of foreclosures, weak sales and abandonment, many homes sit empty in places like Phoenix, Las Vegas and California's Central Valley. Scammers fake ownership papers to the empty properties, advertise them for sale or lease at below-market prices and then walk away with the deposits or down payments when they hook bargain-hungry buyers or tenants.

A comprehensive list of potential financial and investment scams would have many more entries, but the ones above should suffice to raise your suspicions any time you encounter an offer that sounds "too good to be true." Don't put your money on the line for anything you don't completely understand - that goes for potential risks, as well as rewards. And always verify that the offering company actually exists and the person presenting the offer is properly licensed, not just a glib talker with a slick presentation.

Where to Turn for Help

If you have reservations about a potential investment opportunity, or if you've been victimized by a financial scam, you might turn to one or more of the following agencies.

Better Business Bureau - With offices nationally, in every state and most large and mid-sized cities, the BBB can alert you to problems with local businesses, work-at-home programs, distributorships, sales routes you can buy and other one-on-one type rip-offs. They usually have lists of current online offers that are suspect or drawing lots of complaints. You can access the national BBB Web site at http://www.bbb.org/us/ and navigate to your home state or city chapter from there.

U.S. Securities and Exchange Commission (SEC) - Information is available on all securities-related fraud issues and investment scams, and you can file your own personal complaints or suspicions online at http://www.sec.gov/complaint.shtml.

Your SEC complaint can be anonymous or you can provide only limited personal data. However, the more information you give them, the more likely they'll be able to help you. Either way, include specific details about how, why and when you were bilked with any contact info you have on the fraudulent person or company involved.

You can also verify financials and regulatory standing on all publicly traded U.S. companies by accessing the SEC's EDGAR Database at: http://www.sec.gov/edgar.shtml.

U.S. Commodity Futures Trading Commission (CFTC) - If the scam involves commodity futures or options rather than stocks or bonds, the CFTC can help at: http://www.cftc.gov/

Internal Revenue Service - Since most scammers don't pay taxes, the IRS tries to keep track of them as well - not only to put them out of business but to prevent having to let you deduct your fraud losses. Check out posted IRS fraud information at: http://www.irs.gov/privacy/ article/0,,id=179820,00.html?portlet=5

U.S. Federal Bureau of Investigation (FBI) - For any kind of Internet fraud, bank-related scams or other interstate criminal activity, check with the FBI or report complaints at: http:// www.fbi.gov/. (Just for fun, you can also review the "10 Most Wanted" list on the FBI home page to see if you recognize anyone.)

Financial Industry Regulatory Authority (FINRA) - A professional association of investment regulators and agencies, FINRA has a Web page where you can check out your broker's credentials and review past complaints: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/.

If you've already been victimized, you might also get some combined help from all of these government agencies and others thanks to a new joint task force coming together right now and designed specifically to investigate and prosecute financial fraud cases.

Take a look at our latest special report for intelligence on new ways to protect, and grow, your wealth. All the details are right here.

Most investors have heard the term "pink sheets" as a reference to stocks. But how many know what they are?

Pink sheets are companies that are traded over-the-counter and that aren't part of any major stock exchange. But that doesn't mean they are any less valuable than traditional stocks, exchange-traded funds (ETFs) or mutual funds.

In fact, expanding your portfolio with pink sheets can be extremely lucrative, but you have to make the right moves to rake in the big profits.

Let me explain...

Pink Sheets Basics

Pink sheets began as listings on an electronic database provided by Pink Sheets LLC, and have their name because the quotes were originally printed on pink sheets of paper.

Companies that are involved in this kind of over-the-counter trading fall just outside of the many regulations that restrict the activities of the major stock exchanges. That means they don't adhere to many of the time-consuming accounting and finance regulations of the U.S. Securities and Exchange Commission or the National Association of Securities Dealers (NASD), which helps the companies run more efficiently.

Also, some companies begin trading on the pink sheets as a first step to getting listed on a bigger exchange. And that alone can result in some price appreciation, as buyers who were previously wary jump into the stock.

And once those stocks do hit larger markets, even higher profits could be in store for investors who stay the course. For details about one small-cap stock with big-time potential, click here.

However, a lack of transparency can leave investors in the dark. These companies do not have to disclose as much about their business, and no one is knocking on their doors asking to see their books.

Of course, that does not mean they are something to be completely avoided. The fact that major institutions do not regulate pink sheet companies can be nerve-racking to some, but it is overly cautious to think of this kind of trading as the "Wild Wild West" of the financial world. Keep in mind that fraudulent misrepresentation of financials is a Federal offense no matter where a company's shares are listed.

To make traders more comfortable, Pink Sheets LLC recently created a new classification system to help investors assess the legitimacy of the companies in their roster. These classifications range from the highest, "PremierOX" - which are priced at least $1 per share and meet the requirements of the major exchanges - to the lowest, "Caveat Emptor" (literally "let the buyer beware" in Latin). The complete hierarchy can be found at the Pink Sheets Web site.

The problem with these stocks is simply that they are not badgered by any institutions to provide financial data on a regular basis. As a result, wise investors approach them like they would shallow water - they never dive in headfirst.

Some Pink Sheet-listed companies still offer limited information on the Pink Sheets website, despite their option not to. And investors should take advantage of this information before buying shares.

After reviewing the company profile on Pink Sheets and the company's own website, it's time to request information directly from the company you're interested in. Whether by phone or e-mail, get in touch with a representative of the business and request any information they can send you - whether it be about their finances, their products or, since many Pink Sheets companies are overseas - the political, economic and social situations in their countries. Risk assessments and future opportunities - anything you need to know to be sure of a company's potential - are also important.

A few of the companies listed on the Pink Sheets may not be very forthcoming with their information, and some have even been reported to be hostile with researchers. Be wary of companies that will not consider treating the interests of their minority shareholders as their own.

If the company you are researching is outside the U.S., you should also research the business laws inside the company's home country.

Often, foreign companies on the Pink Sheets are listed on a regulated bourse in their home countries. If that's the case, it will serve you well to research the securities regulations - or lack there of - in those countries. For instance, a company listed in Frankfurt or London will have near or even more stringent laws to comply with than a regular listing in the U.S. But a Shanghai-listed company is operating under a very unfamiliar and sometimes informal set of rules.

That doesn't mean the Shanghai-listed company won't be exactly what it says it is and make you money. But it is a factor to take into account when buying shares.

Buy and Hold

Once you have thoroughly researched your stock of choice and purchased it through your broker or online, be prepared to treat it as a long-term investment.

These stocks are smaller companies that are not constantly watched by analysts and regulators. They can sometimes go days without even a single share changing hands.

This will no doubt make some of the nail-biters out there anxious, because they won't be able to check their favorite stock at every smoke break. But most intelligent investors find it liberating to be able to forego the short-term roller-coaster ride and focus on growth potential over the course of a company's natural life.

Don't ignore your Pink Sheet investments altogether. Make sure you keep up with the information coming from the company and any third-party news stories - just like you would with an investment on a traditional exchange. But don't sell just because you don't see a change over a few hours or days.

Now that we've given you the know-how to get started with pink sheet stocks, take the time to explore and research them carefully before you buy. And make sure you're prepared before you decide on a purchase.

If you'd like information about a Money Morning-approved small-cap stock - one with incredible growth potential that's already been spotted by industry giants - go here for our latest special presentation.

As a young British banker in the inflation-ridden 1970s, I got used to carrying large amounts of German deutsche marks, Swiss francs and Japanese yen in my wallet - to have some security against the lousy performance of the British pound sterling.

While paying for a pizza in London with this foreign cash was difficult, having those "safe-haven" currencies in hand helped me sleep at night.

We've reached that point again. In light of the debt-ceiling debacle in Washington, the U.S. credit-rating downgrade by Standard & Poor's, and the likelihood that a long stretch of dollar-killing stagflation is headed our way, it's time to take refuge in today's safe-haven currencies.

And I'm going to show you the safest of those safe havens.

The Battle-Damaged Greenback

I know that many of you are extremely worried about what will happen now that Standard & Poor's has downgraded U.S. Treasury debt from its top-tier AAA credit rating.

But I'm telling you that there's a much bigger cause for concern. While I concede that having our federal debt lose its top-tier credit rating isn't good, the bigger cause for concern is what happens to us if the U.S. dollar stops being regarded as AAA - meaning it's no longer good for settlement of all international transactions.

If that happens, you have to ask yourself two questions:

• What would be the impact on the U.S. and world economies?
• And, even more importantly, what would investors like us need to do?

The answer to the first question is clear: The fallout will be worse than you imagine. And that means that, even now, you need to be searching for refuge in the very best of the world's safe-haven currencies.

And you need to have a dollar-busting strategy for your investments here at home, too. My colleagues at Money Morning have developed just such a strategy. It's a perfectly legal "trick" that has passed out $910 million over just the last few years. It requires no work and very little risk (And it's not gold.). Even better, it could double your investments every 12 to 24 months - or sooner. Click here to learn more.

What a lot of folks don't realize is that the fate of the U.S. dollar is closely tied to that of U.S. Treasury bonds. If U.S. inflation takes off to serious levels - as I'm almost certain it will - both Treasuries (except Treasury Inflation Protected Securities, or TIPS, which are inflation-protected) and the dollar will tank simultaneously.

After all, the United States has been running balance-of-payments deficits of $500 billion or more for almost a decade now - much longer than the country has been running $500 billion budget deficits.

The dollar is almost certain to drop when the credit rating downgrade and the vast U.S. budget deficit cause a crisis in the Treasury bond market.

Finally, the advent of modern communications technology has made global manufacturing much easier, lowering the competitiveness of U.S. wage levels versus their emerging-market competitors (that's one reason unemployment has been so stubbornly high this time around).

The easiest way for these wage levels to be equalized again, necessary for U.S. unemployment to fall, is for the dollar to decline sharply against emerging-market currencies.

For these reasons, we can expect the dollar to be generally weak against other currencies. That will unsettle international traders who receive payments in dollars. They will look to get paid for their goods and services in other "safe-haven" currencies.

The challenge, of course, is to determine exactly which safe-haven currencies we're talking about ...

The answers will surprise you.

The Four Real "Safe-Haven" Currencies

So if we're searching for safe-haven currencies, which ones should we look at?

The European euro? That won't do - there's too much of a chance of it splitting in two. That would be either good or bad - good if the weak-sister PIIGS of Portugal, Ireland, Italy, Greece and Spain split off to form their own weak bloc (leaving the euro strong), or bad if Germany and a few stronger countries split off (leaving only the weaker currencies in the euro). Either way, the euro is a risk, and a big one: After a split, the currencies would probably shift by 20% to 30% against each other, to give the weaker countries a chance of exporting their way out of problems.

The British pound sterling? What a very sweet, old-fashioned idea. If this were 1911 - or, better still, 1821 - this would be the ideal safe haven. But it's 2011, and Britain has all the same problems as the United States - only to a greater degree.

The Japanese yen? Japan has a much worse debt problem than the United States, and only the fact that Japan owes all that money to itself is keeping the Japan Government Bond market stable.

The Chinese renminbi (commonly called the yuan)? A fashionable solution, but the reality is that China still won't let its own citizens get their money out freely. What's more, there is a huge glop of bad debts in the Chinese banking system that at some stage will cause big problems - so big, in fact, that the 2008 financial-system crash and collapse of Lehman Brothers Holdings (PINK: LEHMQ) will seem like a springtime stroll.

Such afterthoughts as the Brazilian real, Australian dollar or Canadian dollar? While I'll grant you that Canada is much-better run than the United States, the ugly truth is that Brazil and Australia are no better run than any other country. In fact, all three of these countries had the great fortune to be heavily dependent on commodities at a time when commodity prices happened to soar.

If commodity prices decline, the innate problems facing each of these currencies will become painfully apparent.

As our trip around the world shows, very few safe-haven currencies are a good idea for you to invest in.

There are actually only four clear winners:

• The Swiss franc: Switzerland is the ideal European country - chiefly because it has a large-but-safe banking system. The Swiss National Bank made UBS AG (NYSE: UBS) and Credit Suisse Group AG (NYSE ADR: CS) recapitalize themselves properly and have forced the two to do more wealth management and less investment banking.
  
• The Norwegian crown: Norway has oil, a large trust fund and no European Union membership. That trust fund (actually a very-well-managed, $570 billion sovereign wealth fund) makes this one ideal - even if oil prices collapse.
  
• The Singapore dollar: This is a beautifully run country - the least corrupt in the world, in fact - and is a banking-and-trading entrepôt, to boot.
  
• The Chilean peso: Yes, I'm recommending a South American currency as a safe-haven - my 1970s global-merchant banking colleagues would recoil in horror. All the same, Chile is less corrupt than the United States. It has a commodity economy, but is better run than Australia (and less likely to be undercut by cheaper labor, since Chilean labor is still quite cheap). And it has a trust fund (sovereign wealth fund) to guard against a return of low commodity prices.

Moves to Make Now

Even when you know what currencies you want to be in, buying them is not all that easy. Generally, the currencies themselves can be bought at any major commercial bank, although you may get killed on the rate. However, this will give you a pile of paper money with no yield and a danger of being eaten by mice.

A better alternative is to buy bank deposits. Here our friends at EverBank can help you; they offer a bank-deposit service in a wide range of foreign currencies. Three of our four currencies are on EverBank's list; you can open accounts in Norwegian crowns, Singapore dollars and Swiss francs - but not in Chilean pesos.

Foreign-currency bonds are another alternative, although not all brokerages allow you to buy them. The difficulty here is the minimum amounts are generally large, and there is a substantial bid-offer spread. Still, this is probably your best alternative for Chilean pesos, where the government is currently rated AA for Chilean-peso obligations and 10-year peso government bonds yield about 2.4%.

Safe-haven currencies gave me such a sense of security when I turned to them during the economically tumultuous 1970s that I still can recall the feeling today - nearly 40 years later; now it's time for you to seek out that kind of security.

If you don't have the ability or the buy-in capital for foreign currencies, you may want to consider an investment strategy that can prosper through a crashing dollar. To learn more about one such plan, click here for the latest presentation.