Unlike the broad market, natural gas has had a wild session. Over the past month the price of natural gas has both risen 25% and fallen 33%.

Did natural gas just bottom?

Today, the price of natural gas is as low as it's been since the middle of 2009, so what should you do?

The best deal in the commodity markets today currently yields a Treasury-beating 2.1% dividend... but it's so hated right now that very few people will buy today.

This natural gas company has very little debt and has producing wells throughout North America.

Here’s one bit of good news amid all the talk of European debt fears and high unemployment rates: The U.S. is about to regain its status as the world’s top oil producer.

Many investors have been tricked into thinking the United States Natural Gas fund (NYSE: UNG) is designed to closely track the price of natural gas.

For income-deprived investors, the oil and gas sector is a great place to search for dividend stocks.

In 2002, the United States Geological Survey (USGS), America's authority on natural gas, (among other stuff you need to dig up, drill, mine or quarry), released a report saying that the Marcellus Shale of New York and Pennsylvania then had 2 trillion cubic feet of natural gas.

Then in July of 2011, the Department of Energy (DOE) upgraded that estimate to more than 400 trillion cubic feet.

But yesterday, the USGS revised its initial estimate up to 84 trillion feet - or down to 84 trillion feet, depending on which estimate you were looking at.

Do you own gold and silver?

Do you have investments in the stock market that give you the potential to profit from higher priced oil, natural gas and coal?

What about agriculture: do you have access to the inevitable sustained interest that people seem to have in eating food?

I hope you do. If you don't, it looks like you'll have an opportunity to buy some of these assets at sale prices during this broad-market down turn.

We got a decent reversal off the lows yesterday. But it wasn't enough to get investors bullish for today.

It's clear that the stock market is not happy about the debt deal and the potential for spending cuts. On the other hand, without tax hikes to raise more revenue, spending cuts have to happen, as the current rate of spending is not sustainable. Spending cuts are probably a good idea even if more revenue can be raised.

One reason we are in this mess is because government stimulus intended to boost the economy has been largely ineffective...

Concerns over limited future oil production in the Middle East point to the growing importance of domestic energy production. The Obama administration, just like every administration before it, appears adamant that domestic energy production must grow.

While there remain concerns about the future of offshore oil exploration in the wake of the BP (NYSE: BP) disaster, land-based drilling for oil and natural gas is a sector likely to see continued growth.

One standout contender is Patterson UTI Energy (Nasdaq: PTEN), a Texas-based company that drills onshore wells for other companies that explore for oil and natural gas.

Natural gas is so laughably cheap right now and yet most investors are completely clueless about it.

How cheap is it?

Well, right now a barrel of oil costs about $95.

For the equivalent amount of energy, you'll pay just $24 for natural gas.

On an inflation-adjusted basis, oil has NEVER been as cheap as $24 a barrel. Obviously, natural gas is an inferior fuel, but on an energy-to-energy basis, it's almost impossible to find an instance in modern history when fuel was this cheap.

To wrap up this week, I decided to respond to some reader mail…

Cato asked: For a while I have been loading up on Bakken companies like BEXP. I was surprised about 6 - 8 weeks ago when oil price went up and BEXP went down. How can it be? I think a lot of your readers are puzzled so perhaps you could explain it in your newsletter?

Let me start by saying I am bullish on Bakken oil companies. Especially the small ones that are still ramping up their production.

The most important thing to remember about oil stocks, and oil in general, is that they are seasonal. Institutional investors buy them at certain times of the year, and sell them at others, regardless of what's going on with oil prices.

Natural gas eventually will take a more prominent role in the lives of the world energy consumer.

In the mean time, we’re still in the infancy of natural gas adoption. And that means there’s plenty of room for growth.

Before I get into some of the more interesting aspects of the IEA’s Natural Gas Report (which you can click here to read for yourself), I’d like to quickly tell you about an incredible opportunity in European natural gas investing that you’re not likely to hear about anywhere else.

My colleague Tyler Laundon is one of the best analysts I’ve ever worked with, and he’s done a truly excellent job at finding the next big natural gas discovery and the companies that are taking advantage of it. You can read all about this discovery by clicking here now.

Okay, now for one of the more interesting, and potentially profitable data points from the IEA report.

The International Energy Agency (IEA) recently released a report titled “Are We Entering a Golden Age of Gas?”

Fortunately, you can actually read this report for yourself. I’ve included the link to the report at the bottom of this email. (Warning: the report is nearly 130 pages long.)

I haven’t read the entire report myself, but I thought I’d go over two of the most interesting themes presented.

For one, the IEA projects that natural gas could rival oil usage on a Metric Tonnes of Oil Equivalence (MTOE) by 2035.

Take a look at this chart that plots world demand for different energy fuels:

Finding oil out in the Bakken shale in North Dakota is a hot topic for many energy exploration companies.

The Bakken formation is known as a dependable supplier of crude oil and natural gas, but there's another lesser known region that promises to become the next big thing in the U.S. for oil and gas explorers.

Today, I’ve invited my esteemed colleague Tyler Laundon to speak out and share his perspective on an emerging investment opportunity in energy. Tyler is the Lead Research Analyst for Small Cap Investor Pro and follows small caps, as well as commodities, on a daily basis.

Thanks Kevin.

Tyler here. Recently the Wall Street Journal reported that Gazprom's 2010 net income surged by 24 percent in 2010.

At 6:00 am this morning I read in the Wall Street Journal that Gazprom's 2010 net income surged by 24 percent in 2010.

This increase didn't come as much of a surprise to me since I've been following the 'Russian Giant' for a while. But for those of you who aren't aware of Gazprom, this headline should make you sit up and think.

That’s because Gazprom is the world's largest supplier of natural gas. Not one of the largest - it is the single biggest natural gas entity on the entire planet. And in 2010 its net profit, not revenues, totaled more than $35 billion.

Today I’m going to talk about some very compelling natural gas investments. My colleague Tyler Laundon has asked me to mention an excellent new research report that he wrote on small, growth-oriented American natural gas companies.  You can read about this report by clicking here now.

Oil might be hugely important to world energy needs, but it’s not the only game in town. If oil is the NFL (huge, popular, unstoppable and pervasive and vital in the United States) then natural gas is soccer (small, underutilized, unloved, but pervasive and vital in Europe).

And say what you will about hydraulic fracking and other natural gas drilling techniques and how they may or may not poison the water table or cause a rash of flipper babies or cancer or whatever else the environmentalists may have you believe.

The fact is, new nat-gas drilling techniques are bringing a literal ocean of new energy resource to the markets. You’ve probably heard about massive supplies of gas in places like the Marcellus shale of Pennsylvania and New York. Or the Barnett shale in Texas. The Haynesville shale of Louisiana. The Bakken shale. The Gammon shale. The Green River shale. The Williston, Anadarko and Michigan basins. The United States now sits on more readily available, cheap natural gas supply than any other country besides Russia.

A barrel of oil contains 42 gallons, and has the energy equivalent of about 7 million British Thermal Units (BTUs).

Not to get into too much of a science lesson, but one BTU is enough energy to heat one pound of water from 39F degrees to 40F degrees.

So we don’t care about whether that oil is in a barrel, in a pipeline, whether it’s black and sticky or light and sweet. We care about those 7 million BTUs. The energy is what we’re buying when we fill up the oil tank ahead of a long winter, or we gas up our cars to drive to work. It’s the energy that matters – and although oil, a stable liquid, tends to be a more convenient form of energy than say, a pile of electrons, a campfire or a bowl of oats – it’s the energy that we’re paying for.

I don’t know what kind of premium we pay for the convenience, but at some point, that convenience premium will get superseded by a variety of other, inarguably cheaper energy sources.

Japan's nuclear disaster probably set back the world's push toward nuclear-powered electric generation by years. Instead of huge nuclear energy expansion, which had been planned, we're likely going to see more nations stick with tried-and-true coal-fired electric plants, along with further expansion into natural gas.

Today we'll look at Helix Energy Solutions Group (NYSE: HLX), a contracting company that provides services to offshore energy companies. Helix Energy Solutions Group isn't a dividend payer like Carbo Ceramics, but it's attractive for an entirely different reason - its services should help get America's deepwater drilling in the Gulf of Mexico back on track following the 2010 oil spill by BP (NYSE: BP).

One of my favorite ways for regular investors to invest in the agriculture commodity boom is to buy the Market Vectors Agriculture ETF (NYSE: MOO).

This fund is liquid, meaning that anyone can easily buy shares at or near the prevailing ask price. With average volume of nearly 2 million units traded daily, you won’t ever have a problem buying or selling a large block of shares. This type of liquidity can be a problem for some stocks and ETFs. More on liquidity issues in a minute…

On August 6, 2010, I recommended this ETF to readers of Global Commodity Investing, a research service I help write and edit.

Since then it’s returned a respectable 26%, which is about twice as good as the return you would have received from just buying a broad market index fund like the SPDR S&P 500 ETF (NYSE: SPY).

Most investors won't connect the dots between unrest in Libya and higher natural gas prices in Europe.

But those that do are likely to profit from their specialized knowledge.

You see, Libya produces around 2 percent of the world's oil. That's not an insignificant amount, and the supply disruption is spurring headline after headline of 'Welcome back $100 a Barrel Oil' knock-offs.

Income investors are frequently looking for high yield investments in the energy sector, and the master limited partnership (MLP) is one of my favorite structures to help investors meet that goal. An MLP is a common organizational structure for oil and natural gas producers and offers investors a way to reap the benefits of higher energy prices, but without a lot of risk. Perhaps the best reason to consider a master limited partnership is the cash distributions, which are similar to stock dividends. But often the yield is better than what a stock can offer.

I don’t like making serious predictions about commodity prices. It’s generally a losing proposition, so understand that I’m writing today’s article to provide in-print edification of my views.

I’m going to give a specific number in a minute, but the general diagnosis for oil fits into my overarching thesis: nearly all commodities will scream ever-higher in price as world governments treat their currencies like a red-headed rented step-child.

To arrive at my hasty oil-price prediction, I’m going to use a well-worn technical pattern extrapolation known as a contracting triangle.

Forgive my artwork, (I never was a color between the lines kind of guy) but take a look at the chart below to see what I’m working with:

There are lots of things to talk about today, but I want to focus, laser-like, on one extremely small company in the commodity sector.

It’s a company that should benefit from higher energy prices as well as any corrections in the broad market.

On that subject: right now it’s vital to keep an eye on your short-term holdings. I’m not a trader by any means, but it doesn’t take a technical master to look at the 200-day simple moving average of the Dow Jones Industrial index, and see that the broad market is about as stretched as it’s been - ever.

The point is that it’s tough to get excited about buying stocks on a fundamental basis when they’re much more expensive than they were a year or two ago. With unemployment near multi-decade highs, the price of nearly every commodity on the rise, and a concerted effort to devalue the dollar, the American consumer is getting pinched on all sides. It’s only a matter of if, not when, stocks will correct.

We know that when the broad market falls, many other un-related sectors get creamed as well. Junior gold mining stocks, for instance, typically fall dramatically when the broad market dips.

That’s because many investors pull their riskiest capital out the market soonest. They’ll let the money ride on blue chips, but not on risky micro-cap resource companies.

If Exxon Mobil (NYSE: XOM) catches a cold, you can bet that tiny oil exploration companies will get pneumonia and some will die.

As you can see, Arkansas, Montana, North Dakota and Alaska are the only states that will have a balanced budget this year.

Why is that? What makes those four states so special?

The first reason is demographics. There are fewer people, fewer cities, less infrastructure and fewer state employees in these states. Also, these four states tend to be Republican strongholds, so there are fewer entitlement programs, and generally, less popular demand for spending programs.

But those reasons are actually minor in comparison to the second, biggest reason.

You see, all four of these states produce more fossil fuels and resources than they consume.

Today there are two huge trends that are about to benefit one small sector more than any other.

First I’ll tell you the trends so you can connect the dots - and I’ll give you one way to invest.

The first trend is somewhat well-known. It goes like this: when interest rates in the United States begin to rise, the Japanese stock market tends to outperform.

You can see this trend in action in the somewhat complicated table below:

The week is not getting off to a good start for European stocks. Portuguese bonds ticked above the “bailout threshold” of 7%. Readers may recall that both Greece and Ireland requested aid once their bonds breached 7%. For its part, Portugal says it doesn’t need to tap into the EU’s emergency fund. But it’s not always about need. Sometimes it’s about appearance. That was the motivation behind the Treasury’s force-feeding of TARP funds to U.S. banks. And if Portugal can get its rates down, and ease fears that its problems will spread to Spain by taking some loans, it will do so.

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:

Forget for a second, my ongoing thesis which posits that easy money policy from world governments will continue to find itself headed increasingly towards commodities, especially money-commodities such as gold and silver.

I still believe it to be true, but I also want to buy things that are still relatively cheap. It’s tough to make the case that gold and silver are still “cheap” - at least from a cynical point of view.

That’s why I’ve been telling you to keep your eyes open for compelling natural gas investments.

Natural gas is still cheaper than it was a year ago. In fact, it’s generally cheaper on average than it has been over the past decade.

Today I’m going to discuss three main reasons why natural gas prices (in the United States) haven’t participated in the commodity boom of 2010.

The first reason is that natural gas prices are loosely tied to oil prices.

Yes, oil prices rose over the past year, but only by about 10%. In order for oil prices to significantly buoy natural gas prices, we’ll need to see another huge ramp up like we did in the summer of 2008. Those higher oil prices (above the $100 mark - as an estimate) bolster demand for natural gas.

Why? Well, natural gas is an input in some oil production. Natural gas is pumped into oil wells in order to sustain pressure to bring oil out of the ground. It’s used to power machinery and produce oil in non-conventional oil production.

Higher oil prices are going to make everything more expensive.

They’ll also tend to enrich oil companies. So I recommend casting your lot with theirs.

Today, I’m going to briefly discuss two of the best dividend-paying oil companies in the stock market.

These are two of the biggest oil companies in existence. They’re both trading for less than 11 times trailing earnings (cheap!) and they both have a history of raising their dividends. And they should both continue to pay healthy dividends with frequent increases in the world of rising oil prices.

The problem isn’t that Ben Bernanke talks over our heads with his arcane banker vocabulary - where you say “quantitative easing” instead of “printing money.”

The problem isn’t even really the idea that being a Central banker is all that complicated. It certainly doesn’t have to be.

The problem is that Bernanke, and other central bankers cram so many lies, half-truths, obfuscations and red herrings into every single sentence they utter that making sense out of their words is like trying to sort out fact from fiction in a 10 car pileup - with 10 drunken drivers!

Seven months ago, this indicator flashed telling me that it was time to buy one specific energy commodity above all others. I recommended buying one simple investment to take advantage of the impending uptrend.

If you bought that investment then, you'd currently be sitting on a 25% gain and you would have collected an additional 4.2% in dividends.

The good news is that this indicator is flashing AGAIN, and I believe that if you buy this investment now, you'll be in a good position to capture similar gains over the next 6-9 months.

What am I talking about?

Well, on April 5, 2010 I wrote to you saying it was time to buy natural gas. Natural gas had just bounced off of year-to-date lows just under $4 per thousand-cubic-feet (MCF).

We saw a nice reversal for stocks yesterday. Interestingly, it came on the heels of the lowest consumer confidence number since February. If you remember, stocks sold off hard at the end of January. By mid-February, the S&P 500 was hitting 1,050.

A low consumer confidence number makes some sense when it's viewed in the context of a sharp decline for stock prices. But how do we account for yesterday's negative reading?

Basically, we don't. Just between you and me, the "consumer" is crazy. I don't know exactly what kind of questions are used to come up with the consumer confidence number, but there's pretty much zero correlation between what consumers think and the economy or stock market is doing.

The next payment will go out to shareholders of record as of September 30^th, with the actual check going out on October 15^th. So you still have a few days to pick up shares if you're interested in grabbing the dividend.

As I said, it's a monthly dividend, so if you want to wait for more of a dip, you won't miss out on the income by waiting a few weeks. But with these monthly players, I'd recommend averaging in each month so you collect dividends all the way along. And reinvest those dividends to enjoy the miracle of compounding interest.

I'm still bullish on this stock. The reasons are the same they were six months ago - the downside for a company like this one is somewhat limited when natural gas prices are this low.

We might quietly scoff at the Toyota (NYSE: TM) Prius drivers - after all, the car only gets slightly better mileage than the average car in its class, so it's not all that special as far as environmentalism goes.

But don't scoff too hard, because it just might be that we'll all be driving hybrid cars in the not-so distant future.

You might be thinking that we simply don't have a model of fuel-source change for automobiles - so we really don't know what the future will hold - and whether our cars will be powered by natural gas, lithium-ion, or even solar power - or perhaps some combination.

And you're right - there's basically no model for automobile fuel conversion.

But there is a very robust model for home heating conversion.

Today there are at least as many heating technologies as there are fuel types, but 100 years ago, most people used coal and wood.

For months, former George Soros partner and famed resource investor Jim Rogers has been trumpeting natural gas and silver investments. I've been doing the same in the Resource Prospector newsletter since launching back in March. If you've been sitting on the sidelines, there is still time to take action before these investments run away from you.

Jim Rogerswrote the book on resource investing: Hot Commodities. I urge anyone interested in the topic to go out and get yourself a copy. Right now there are 29 new and 17 used copies of this book on Amazon.

When Jim Rogers said to buy natural gas and silver three months ago, I was already urging you to do the same. Natural gas prices have since risen by more than 25% - and some of the stocks in that sector have done far better.

I've also been pounding the silver drum. Silver is now up almost 10%, but I still think there's much more upside. You can read more about silver's potential in this past issue of the Resource Prospector by clicking here.

Rogers is still bullish on silver, but he recently mentioned another cheap commodity. It's something that Americans use everyday in great quantities - over 160 pounds per person every year.

Lithium! As a newsletter editor, I'm bound by law to type an exclamation point after lithium at least once anytime I talk about the topic.

That's because people are rabid about lithium and lithium stocks - and for very (seemingly) good reasons. With hybrid and zero emission vehicles in the news every day, it's hard to imagine that lithium stocks won't continue to experience fantastic growth forever and ever. Just take a look at this gorgeous new lithium powered car that hybrid car manufacturer Tesla motors is selling for $109,000.

I've seen one of these cars driving through Stowe, Vermont a few times, and when you see one zip by it's hard to argue against the idea that lithium is awesome.

Incidentally, Tesla is going public next Tuesday. It could be a huge sentiment-driven profit opportunity. I haven't done too much digging into the fundamentals of Tesla, but if you have any insight into this company, please send me an email at editorial@resourceprospector.com.

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.

Natural gas prices have risen 25% since I started urging my Resource Prospector readers to buy natural gas stocks almost three months ago. While the early gains have already been made, it’s still not too late to profit from this long-term trend.

On April 1^st I told readers,

“today, you can buy natural gas companies for extremely cheap. I’m talking cheaper than you’ll likely ever see them again.”

And I recommended picking up some shares of Hugoton Royalty Trust (NYSE: HGT) a company that collects royalties from natural gas production and sales from XTO Energy Inc. (NYSE: XTO) - one of the largest natural gas companies in the United States.

Since then, the stock is up 26% and it has paid two monthly dividends to folks who bought before April 30^th. And the company is still paying an 8.8% dividend. Compared with what you’ll earn in your money market account or a CD, the yield is pretty attractive.

I’m generally suspicious of “green” energy investments - mostly because they seem to be political constructs rather than actually good opportunities. To differentiate: a good investment doesn’t require huge subsidies from the government in order to succeed. Right now, there are precious few alternative energy companies that can turn a dime of profit without massive subsidies from governments around the world.

For me, the investment implication of green energy has been to leave it out of my portfolio entirely.

But then yesterday, I received a very good question from reader Bill M. who brought up an interesting idea about actually shorting such companies:

“I have a question for you. Governments are spending a ton of tax dollars supporting all manner of "green" initiatives: wind, solar, ethanol, electric cars, curly-cue light bulbs, green roofs, LEED certifications, housing insulation, etc. etc. Governments have passed all sorts of quotas for renewable energy. All sorts of companies, from start-ups to GE (NYSE: GE), have attracted billions in government dollars and private investment to capitalize on this green wave. How does a cut-throat, uncaring, capitalist monster (like me) make money off what I expect to be the balloon popping on these over-inflated green companies who, when forced to compete on their own without their government sugar daddies, are going to sink like a rock? Are there funds out there making contrarian bets?”

Yesterday’s huge move took the S&P 500 above 1,105 to close right at 1,115. TradeMaster Daily Stock Alerts’ Jason Cimpl told his readers he’s bullish going into next week. And yesterday’s close at 1,115 will keep him from selling his latest round of upside trades.

That’s good news for TradeMaster readers, because one stock they bought on Friday made a 50% move in just two days. Jason’s bullish stance suggests there are more gains ahead for this little beauty.

Jason is looking for a move above the next resistance of 1,120 sometime in the next few days.

While I would love to tell you that I’m bullish on stocks, the fact is that we remain in a secular bear market. For this reason, investors should heed caution, avoid speculation, and focus their investments on great companies in the commodity sector at cheap valuations.

Why? It’s very simple: commodities tend to do well during a bear market for stocks.

So what are the big certainties as far as I can tell? Sovereign debt problems aren’t going away, and the world’s politicians and central bankers are dedicated to the idea that they’d rather inflate their currency than default on that debt. They’re staking their currencies on the reputation that their currencies are still sound money. It’s a losing bet for central bankers and a boon for folks who trade in paper currency for real money: gold and silver.

But I’ve talked about gold and silver plenty over the past few weeks, and I’ve been neglecting a commodity that my father-in-law Ron Blackwell calls “the king of all resources.”

Today I’m going to blow the lid clean off of what I consider to be the biggest tar-pit for individual investors in the market today.

Exchanged Traded Funds – (ETFs) have been sold to the public as easy ways to buy into specific sectors in the stock market. They’re billed with attractive descriptors like “low-load mutual funds” or “poor man’s hedge funds” - or any of a variety of warm, fluffy names depicting them as “easy” ways to capture huge profits.

I’m reminded of an axiom known as the Designers Triangle, which states: a project can be done fast, cheap or good. Pick two.

I’ll amend this axiom for investors. The Investors Triangle states: an investment can be profitable, easy, or fast. Pick one. The obvious choice you’ll make is “profitable” – and these types of investments are rarely easy or fast.

Remind yourself of this axiom the next time someone tells you that a prospective investment has all three characteristics. Most of the best investors in the world made lots of money over a long period of time, and I don’t think any of them would tell you it was especially easy.