We all know what the Fed wants. They're really hoping that with super low interest rates, more people will be inclined to borrow money, to open businesses, to invest, and otherwise spend.

Europe is smoldering like a fine cigar. It will take a while to burn to the end, but make no mistake, the whole Eurozone is burning.

This is a story about a man who jumped from a 100 floor skyscraper.

With weak earnings from the banks and minimal economic data to embrace, I took a bearish position yesterday.

In order to solve the mess that is the European financial system, a country will inevitably have to leave the Euro zone.

The euro has fallen sharply lower by 3% this week, which has corresponded to a similar rise in the dollar. The rise from the dollar brought havoc to the commodities and stock market alike.

The market hardly budged yesterday and volume was below average, yet I still remain bullish.

We seem to have a short memory for the most painful events of our past - and to completely misunderstand the causes and consequences. 

It's hardly surprising that the banks blasted higher yesterday - the intervention by central banks was directly aimed at helping out big banks.

It just seems strange that central bankers would be hell-bent for leather to continually devalue their currencies.

Are you familiar with Warren Buffett's recent diatribes against gold, specifically this quote which compares gold to other assets...?

Americans have been convinced that all you need to do in order to retire is to shove money into your 401(k) every month, but there are several reason why you should be skeptical.

You wouldn't know it from watching the news or reading the paper - but there's only one data point that deserves your attention.

The real question remains: "What happens to the dollar when they inevitably raise the debt ceiling?" Well, we already know the answer...

The real enemy of every paper currency - or even real money like gold or silver - is a lack of confidence.

When two of the biggest companies in the market miss earnings - and in Apple's case it was the first time in almost a decade it missed - and the market goes higher?

The market took a pause, finally, and declined roughly a percent yesterday. At the open, the indices gapped down by more than 2%, but a last hour surge by buyers recouped a large portion of those loses.

Volume was below average. And the hardest hit areas were financials (that's why we own ProShares UltraShort Financials ETF (NYSE:SKF)) energy and industrials.

I look at the entire global market for everything, and in doing so it becomes perfectly clear that no other market looks as promising or potentially profitable as the commodity market.

The Lisbon Treaty was signed by EU member nations in 2007, as a sort of make-up treaty to correct some of the mistakes from previous EU treaties. Turns out, there's a "no bailout" clause in the Lisbon Treaty. Who knew?

And by the time you read this edition of the Daily Profit, Germany's Constitutional Court will have voted as to whether the EU's bailout fund for Greece et al violates Germany's democratic constitution.

The market was slammed again on Friday. Volume was light, due to the holiday, but the indices slipped by over 2%. Once again financials led the charge lower and the big banks like JPM, WFC, GS and C were down nearly 5% while BAC lost 8.3%. And the worst of the decline is not over.

The FHFA sent lawsuits to 17 banks. And the amount that was sought is in the billions of dollars. But the fear on the street is that if banks pay one settlement for a fraudulent mortgage, hundreds more cases will follow. And with $5 trillion in questionable loans, the banks are on the hook for a large sum of cash.

Right now, Mr. Market is giving you a variety of warning signs. You don't get market volatility like we've seen over the past couple weeks unless there's something very, very wrong with stocks.

You also don't get Italy, Spain, and the United States' debt all downgraded unless there's something wrong in the sovereign debt world.

Gold and silver don't go on decade-long bull market tears unless there's something very wrong with the dollar.

We're in the heart of the summer movie blockbuster season.

My son Beckett is only 3 months old, so I'm not headed to too many movies this summer - although if there's anyone in the central Vermont area this week, my wife and I would love it if you could babysit so we can see the last Harry Potter movie.

Anyway, there's an aspect of cinema that I think sort of applies to what's happening to the gold market right now.

You've probably heard of the notion of "suspension of disbelief."

I am frequently asked by subscribers if there are any possible ways to boost returns on stocks that pay large dividends

My response is always the same - the most common and effective way to boost returns in a high-yield portfolio, without selling the stock, is to use a covered call strategy.

Before you close this email, I want to tell you that most people will never use options. They think they're complicated or risky.

This misconception is simply not true.

The market was destroyed yesterday. Volume wasn't meaningfully high, but it was better than the past few sessions. The market ripped lower yesterday morning following concerns that Italy was near a default. And the indices continued to trickle lower into the close.

Most indices finished 2% lower in yesterday's bloodbath. But even that percentage seemed low since most of the stocks I followed declined over 4%.

I can't argue against the strength of yesterday's decline. The selling pressure was strong and it was a continuation of Friday's sell-off. But I can't believe the selling was due to Italy.

We're all Americans - right? Regardless of how our nation's sovereign debt issue plays out, we still share common values that made this country great, and so shall again allow us to climb from the rubble, and rebuild it again and again.

I'd like to believe this assertion - but unfortunately I've come to realize that this country is divided into two opposed camps, one of which is in direct opposition to the statement above. And these two schools of thought cut across racial, political, religious and socio-economic lines.

Right now the folks in charge in Washington DC overwhelmingly fall into the first camp. While they may sing the national anthem just like you and me, they're only going through the motions. They don't believe it. They don't believe in individual responsibility, liberty, honesty or hard work.

Back in November, I made some predictions about the then upcoming second round of Quantitative Easing, aka QE2.

In short, I predicted that QE2 would disappoint the market. As a consequence, I thought that most asset classes would trend lower as the dollar strengthened.

I hoped that such an action would occur, because I believed, and still believe, that the commodity market still has plenty of upside, but that such a disappointment would create a stellar buying opportunity to load up on my favorite commodities.

I was wrong, of course. Bernanke’s announcement of $600 billion only encouraged the markets higher.

Everything’s more expensive now – which is exactly the type of market movement that’s highly unlikely if not completely impossible under normal circumstances. Normally, if widget X goes up in price, commodity Y and wage Z will fall. Normally, prices don’t all rise at once…

Paper money system default appears at first glance to be an unhappy accident of progressive governments biting off more debt than they can chew.

And while there’s certainly plenty of blame to go around for progressives, conservatives, RINOs, DINOs and moderates alike – if you take notice of who benefits from the devaluation of paper currencies, you arrive at a different conclusion.

You’d think that progressive candidates would spend money in an effort to end poverty. That would get them elected for life by the formerly impoverished.

Similarly, you’d expect the end-goal for hawkish conservative legislators would be world peace. Nothing would be a bigger victory for the world’s greatest military.

But despite decades of entitlement programs at home and billions of dollars spent annually on intermittently bombing and paying our enemies into submission abroad – we still have more poor people in this country than we know what to do with, and our list of enemies only grows longer every year, not shorter.

So if these programs have failed, then who or what is the real beneficiary of inflationary policy-cum-deficit spending?

It’s easy to be cynical about the state of the dollar – after all, it seems as if every bit of news is either terrible for the dollar, or clearly a whitewash attempt from some Pollyanna official or talking head.

When all the real news is bad and all the rest of it is BS, it’s tough to keep a positive outlook.

It’s easy to get angry, frustrated and irritable about the state of this country and its currency – especially as friends, family and acquaintances just don’t “get” what’s going on.

Most people still have no conception of what money really is: a medium of exchange and a store of value. They can’t see that the Federal Reserve Note is an especially poor money unit.

But that’s okay. Even if people in this country have to be pulled, kicking and screaming into gold and silver ownership – they will do so.

Be content with your precious metals ownership and investments. Continue averaging into gold and silver – especially on dips.

My belief as a researcher and an analyst is that undue speculation in not just the copper market - but nearly every market, including the stock market, currency markets, the bond market, etc. - my belief is that this speculation is being fueled predominately if not completely by the actions of the Federal Reserve. 

The Fed has a mandate, for better or worse, constitutionally or unconstitutionally, to maximize employment and keep GDP growth slow and steady. And now we're seeing the breadth of their power to implement those two goals - they can simply transfer "dollars" from out of thin air into the bond market, into the financial system, into the mortgage market. Those dollars have to go somewhere. Goldman Sachs (NYSE: GS) isn't likely to sit on billions of dollars - they'll put it to work speculating. The same is true of all of the Fed's member banks.

As we saw with the oil markets between 2008 and 2010, when the bets turn against the speculators, the price tends to drop to ridiculous lows. Looking at a copper chart, the same thing happened there too.

I have to say, though I’ve predicted much higher silver prices over the past year or so, I honestly was not prepared for anything like what we’ve seen so far.

For the record – and maybe to further cement my status as a hyperinflationist – I’m in the camp of prognosticators who believe we’ll see $100+ silver within the next few years. As I wrote last November, silver (and gold) are due to run higher for the simple reason that:

“Paper currency around the world all suffers from the same chronic, debilitating disease: it has no intrinsic value. Eventually, all currencies will go to zero. In such an event, it won’t matter how many dollars it will cost to buy an ounce of silver. You’ll simply want to hold silver.”

If silver prices keep skyrocketing like they have been over the past 6 months, we’ll see $100 silver within a year, and I’d be surprised if silver didn’t break $50 by this time next year.

In 2001, you could buy an ounce of gold for $250. Today, gold sells for more than $1,400 an ounce. That’s more than 460% gain.

Again, you know this information. You might even be getting sick of hearing it repeated by gold vendors, gold bugs, or talking heads on TV who mention it with the rapt excitement of someone reporting actual news.

So, in an effort to illuminate a different aspect of the gold story that you probably haven’t seen anything about, I’m going to focus on other currencies.

Because I’d be surprised if you’ve heard ANYTHING about gold’s price as expressed in a different currency.

Take a look at the chart below, which shows the percentage gains of gold priced in dollars and six other major currencies.

Listen – I really do wish it was possible to simply devalue a currency to create strong, long term growth, employment and prosperity. The problem is that while there’s no practical limit on how many pieces of paper a government can produce, the actual “stuff” that we all need to live on CAN’T be summoned at will.

The Government is failing itself and its citizens. Every year you and I grow poorer. Every year we pay more for basic necessities. Every year we see our earning power diminish.

And yet, our Government remains steadfastly loyal to the very policies that cause this increasing poverty.

It’s following the EXACT same path as dozens of other failed, defunct states. In fact, the list of failed states would be a short one if it didn’t include those governments who devalued their currencies.

Devaluing a currency might be the best way to destroy a state. War rarely wipes out the state. Disease, famine, rebellion - these misfortunes don’t hold a candle to currency devaluation.

Someone who lives in a remote region, somewhere “off the grid.” This person probably also has a beard and possibly a well-worn prospector’s hat.

Said investor owns a variety of firearms and a stockpile of ammunition for both self-defense and for hunting food in the inevitable apocalypse that will come to pass.

Someone who believes the government is most likely spying on their every movement, and preparing for some kind of wholesale slaughter of the general populace under the auspice of protecting the state from homegrown terrorism.

Such a person also believes that the entire system of trade, manufacturing, agriculture, finance, transportation, energy, and every other facet of civilization will melt down, and come to an abrupt and terrible end.

This person is afraid, paranoid, possibly insane, imbalanced and out of touch with reality.

You might remember that in the late 1970s, early 1980s, gold prices didn’t cease their march until Paul Volcker famously raised the Federal Funds rates to slow down inflation. It’s crazy to think how high he raised rates, but peak rates got up to 20% in 1981.

That pushed Treasuries to yield more than 20%!

I’m certain, of course, that raising interest rates to Volcker levels would result in falling gold prices. I’d love to own an asset that returned 20% a year, regardless of whether it’s called dollars. Heck, if horse manure paid 20% you wouldn’t turn up your nose.

I was referring to the worst case scenario for silver - which, if we’re going to be honest with ourselves, we need to face up to the facts that silver COULD reach multi-decade inflation-adjusted lows of under $6 an ounce.

I really doubt that we’ll see $6 silver - but that’s not the point of this exercise.

Back when I made some predictions about silver in that November article, it was in the middle of a momentous straight-line bull market.

Nobody wanted to hear that silver could go down. In fact, I had many readers write in to tell me that it was completely absurd to even suggest that silver might dip below $22 an ounce ever again.

But my thesis for owning silver is not so rickety as to be shaken by even substantial corrections down to the $16-$18 range. Less than a year ago silver sold for $15 an ounce. I bought silver at that price, as well as at $17, $18 and on up the line.

In yesterday’s edition of the Resource Prospector, I discussed a few things I’m doing to protect myself from the increasing likelihood of food shortages and general fallout from the effects of currency depreciation and energy cost increases.

And I received some excellent additional advice from some readers.

Laura wrote in to say,

“Hi Kevin,

There’s little doubt that the world’s superpowers are now fighting a new war. It’s not a cold one, or a hot one. No tanks, bombs or poison gas. At least not yet.

But open hostility between Europe, Brazil, China, India and the United States blanket the headlines nearly every day.

It’s a long-awaited answer to the question, “Do deficits matter?”

And the answer is a resounding, “Yes of course they do, don’t be silly - why in the world wouldn’t they matter?”

Ask anyone on the street if Europe is in trouble, and they’ll say “yes!”

But ask them exactly why, and exactly how much trouble?

They might answer, “Because of debt problems...and I’m not sure.”

That’s about the most information you’ll get from any mainstream media source. Most news stories about European debt problems will mention the problem, and then immediately quote a bunch of European central bankers and politicians about who’s to blame, and/or why it’s not really that big of a deal.

For instance, this story about the “Euro Crisis” in The Wall Street Journal today doesn’t give ANY specific information about which European countries owe what to whom.

For the record, we have likely passed the point of peak oil production. I know there are some people out there who don’t agree with that statement. Some of them might even be reading this letter right now. But in the oil exploration and production industry, there is little argument. There just isn’t.

If you have any proof that we have yet to hit peak oil production (in other words, you have oil production numbers that are on the rise, not on the decline) then I’d love to see it.

With peak oil production in our rear-view, we will necessarily produce less oil in the future - until eventually oil is too expensive to bring to market.

Right now, oil and natural gas prices are stretched to their limits.

Rarely before in history has oil been so expensive while at the same time, natural gas prices so cheap.

You can see this price differential in effect by looking at this chart, which divides the price of one barrel of oil by the price of one million british thermal units (mmbtu) of natural gas:

Irish debt problems are sending shockwaves through the rest of Europe today.

Yields on Italian bonds jumped nearly 0.25% today alone even as Ireland's bailout barely had time to shore up debt woes there.

According to UK newspaper The Telegraph, "Italy's public debt is over 2 trillion euros, the world's third-largest after the U.S. and Japan."

Before I get in trouble - I want to make it crystal clear that I don't have a letter from Federal Reserve Chairman Ben Bernanke.

What I do have is the letter that I would need to see him write in order to convince me to sell my gold and silver and hold dollars instead.

Seeing this letter is not the only condition under which I would sell my precious metals, of course, but since Bernanke is the dollar's Commander in Chief, he certainly has the sway to pursue the types of policies that would turn me dollar bullish.

Without further ado, here's the letter I'm waiting for:

"Dear America,

I'm sorry. I was wrong.

I remain super bullish on gold - I just bought some more last week. Yesterday I talked about how to buy gold and silver, and how to make sure you don't get ripped off.

I also remain totally engrossed with the price movement of several major commodities, the most important being oil. I've talked recently about the all-encompassing importance of oil with regard to every single investment and asset class. If you don't know how oil supply and price affects every single one of your investments, then you might not be in a good position.

Unfortunately, I also have a good amount of cash on hand. I say 'unfortunately' because like many investors, I feel like I've fallen into the trap of being fearfully inactive. I have little faith in the broad stock market, but I do like some companies in the commodity sector. I've talked at length about owning Exxon (NYSE: XOM), Archer Daniels Midland (NYSE: ADM), and a handful of others. I like companies like Exxon and ADM because they will survive a currency crisis. They have pricing power, they have international reach, and they have products that everyone needs.

Do you own the world's biggest oil company? Of course I'm talking about Exxon (NYSE: XOM) - and odds are if you've invested in a mutual fund or broad index, you do own Exxon.

But what if you could go back in time and buy Exxon in 1996, at under $20 a share?

Nearly 15 years ago, Exxon had yet to merge with Mobil, the largest industrial merger ever.

But they were still a huge company with a long track record of profits.

Buying Exxon Mobil at $20 a share would let you lock in a near-triple at the company's current share price of nearly $60. Okay, so a triple over 15 years isn't going to sail any ships.

Given that my job is to focus on investments based on tangible assets, it's somewhat outside of my area of expertise to wade into the muck of foreign exchange. You might say that trying to lever your capital and make gains on the price swings of currency fluctuations would be the opposite of resource investing.

Resources need to be produced by the sweat and sometimes blood of someone's brow, whereas world currencies, for the most part, are based on nothing but a government's ability to print them. Ben Bernanke doesn't shed a single drop of sweat, and certainly no blood, when he prints another $1 trillion into existence. And you can bet he doesn't shed a tear for those folks unfortunate enough to hold dollars when he turns on the printing press.

So I'm somewhat loathe to discuss currencies - but they do have a real effect on the price of resources - so I must.

And to prod me along, I received a very relevant and tough question yesterday after my long-winded self congratulatory issue on my correct natural gas call.