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

The market did not do much yesterday. The indices started the day moving higher, but around noon they fell back and closed in the red.

The decline was entirely expected and needed. Many indices had moved up 6% in two days, so it was natural that they consolidated yesterday, especially with no news.

Now that an actual, much-needed, $450 billion American jobs bill is here, it will be interesting to see how it's treated in Congress.

The market blasted higher yesterday and the bulls recovered a lot of lost ground. The volume yesterday wasn't all that strong, but the bulls were able to overcome resistance zones. SPX blasted 3% higher, which put it way past 1175 and took the index all the way up to 1197 resistance.

Now that 1175 has been reclaimed that area needs to be support. I didn't like that SPX went below the 1175 level on Tuesday, but it recovered fast enough to give the bulls a second chance at 1250.

President Obama's upcoming jobs proposal just might be the final piece of the puzzle to guarantee a huge upswing in gold prices and silver prices.

The market rebounded in a strong way last week. Over the past three weeks, I cautioned against going short - it's not because I wasn't bearish or that I am super bullish. I had a long bias because the indices were oversold at strong historical levels of support.

While the indices did not sink lower. I really cannot say that the indices jumped higher until last week. And even now, although I expected another ride to 1197 there isn't much of a chance of a sustainable break out past that. The 1250 resistance will be a beast, and barring any stimulus plan or political intervention (as if those idiots could act fast) there really is not much of a reason for SPX to blast any higher.

For the U.S. economy to sink back into recession, or for corporate profits to make a meaningful decline, consumer spending must contract. It really is as simple as that.

And the simple fact is: the American consumer has been steadfast since the financial crisis.

We see the results of consumer confidence polls swing wildly. Respondents can be ecstatic one month, and despondent the next. The last University of Michigan survey showed the worst number since November of 2008.

It's always nice to know that stocks can actually rally. And seeing stocks build on their gains throughout the day is a bonus.

Yesterday's rally appears to be a mix of relief and short-covering. For instance, I suspect the move for Citi (NYSE:C) was helped along by shorts saying "enough is enough" and covering their downside positions.

You'll notice that Bank of America (NYSE:BAC) finished in the red, though off its' early lows. Investors are still bearish on banks.

I'm a little surprised by how high QE3 expectations have risen. Given how much flack the Fed took for QE2, and the commodity inflation it sparked, I expected the market to be opposed to another round of liquidity-pumping.

But that's the semi-psychotic nature of the stock market, at times. Investors might complain about the spending, about the monetary expansion and the rising commodity prices.

Still, stocks like liquidity, even if it is inflationary, and even if it creates imbalances and potential bubbles in the economy.

President Obama's upcoming jobs proposal just might be the final piece of the puzzle to guarantee a huge upswing in gold prices and silver prices.

Why? Well here's what we know so far:

1. He plans on spending money to create more jobs.
2. He plans on tackling the deficit.

What do we know about his first goal...

Bad news from Germany this morning. Europe's one economic bright spot reported lower than expected GDP growth for the second quarter.

This shouldn't be too big of a surprise, though, because we've known that Europe has been struggling with debt, and austerity measures are causing big slowdowns in the afflicted countries. Greece, for instance, saw its economy shrink 6.9% in the latest quarter.

On the upside, industrial production expanded more than expected. The 0.9% gain was the biggest jump this year and the first increase since March. This is related to the earthquake/tsunami that Japan suffered earlier in the year...

Two services-related companies and a little-known Chinese coal miner were among the best-performing small-cap stocks on Tuesday. The day marked by President Barack Obama signing off on a bill resolving the federal government's debt ceiling crisis. Wall Street's response was negative, indicating disfavor about the nation's economic health.

There was little to cheer about for stocks, as the Dow Jones Industrials fell for an eighth straight day. The Standard & Poor's Small-Cap 600 has closed lower for the same number of trading sessions, while the Russell 2000 Index is on a seven-day losing skid.

The market activity could not have gone worse for the bulls yesterday. On high volume, the indices slumped lower from the open and into the close. The dollar rose, which added pressure to the energy sector and the technology sector displayed weakness as well.

Most of the big U.S. banks held up well in yesterday's decline, but those petty gains could not turn the market back around.

The worst part about yesterday's decline is that the market was supposed to finish higher. Over the weekend policy makers worked-out the framework for a successful debt deal. Many investors believed that the large decline last week was the result of a potential U.S. default...

I know I've spent the last two days resisting the temptation to discuss the debt ceiling.

But I can resist no longer.

Monday night, President Obama went on TV and said something that made me very angry...

Another day, and still no agreement on a 2011 budget in Congress. Surprisingly though, the stock market is not really being affected by the impasse. Sure, the major indices are down slightly again today, but I think we can all imagine that it could be much worse.

Treasury bond prices have been choppy, with big $3 price swings on the chart of the iShares Barclays 20+ Year Treasury Bond ETF (TLT) in July. But overall, bonds are holding up well, and this tells us clearly that no one expects the U.S. government to default on its bond payments.

Congress and the Obama administration are at it again. Talks broke down over the weekend, which is a familiar development. The impasse is certainly weighing on the stock market.

Precious metals are rallying, bonds and stocks are down. Of these assets, it's the move in bonds that are most telling. Bond prices are falling, and yields are rising, because failure to pass a budget opens the door for a downgrade of U.S. debt from the ratings agencies. That, in turn, raises borrowing costs (interest rates) because repayment is suddenly less certain.

Raising the debt ceiling now is like throwing another few squirts of gasoline on the bonfire. Sure, it will make us feel warmer, but we're already on fire.

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.

Sovereign debt issues continue to roil the markets. Contagion from Greece has officially bled into Italy as shares of Italy's two largest banks, Unicredit and Intesa San Paolo, were halted amid the pressure.

Growth in the United States is anemic, if not completely stalled. And now on the eve of the end of the greatest monetary stimulus program ever, the program Ben Bernanke calls "Quantitative Easing," President Obama has recklessly and perhaps desperately announced he plans to tap into the United States Strategic Petroleum Reserve (SPR).

The thing is, this reserve is supposed to be used during emergencies. So where's the emergency? If there is an emergency, maybe Obama should tell us about it. If there's not an emergency, then you have to wonder what's going on with our President.

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.

In a speech at George Washington University today, President Obama outlined his proposal to cut the federal deficit by $4 trillion in the next 12 years.

And with $65 trillion in current unfunded liabilities for Medicare, Medicaid and Social Security, it should be no surprise that cuts to these programs are in the works.

Medicare and Medicaid spending alone amount to $12,000 a year per recipient right now. At the current rate, that amount will balloon to $44,000 a year by 2040.

Indeed, according to a study done by Mary Meeker from Kleiner Perkins Caulfield & Byers, the Congressional Budget Office reports that if nothing is done about entitlement and debt, "...entitlement and net interest payments combined will equal all federal revenue by 2025, just 14 years from now."

For over a year now, I’ve casually mentioned that the leadership in the West, including the United States and Europe is not just unwilling to take the steps needed to nurse the economy back to health, but that they’re increasingly incapable of understanding what needs to be done.

Case in point: you can’t turn on your TV, open your email or look at a newspaper today without seeing headlines about the impending United States Federal Government shutdown.

But as I’ve noted, the amounts of money being quibbled over are pretty insignificant.

You can do the math for yourself. The total outstanding Federal deficit is now over $14 trillion.

Divide $33 billion or $40 billion by $14 trillion and you get 0.0023 or 0.0028. Multiply those decimals by 100 to get the percentage.

So, $33 billion and $40 billion amounts to 0.23% and 0.28% of the total Federal deficit. Even with these cuts, the deficit will grow because they’re not even close to the amount of spending reduction we need to actually put the Feds back in the black.

The U.S. Strategic Petroleum Reserve is an estimated 727 million barrels of oil sits in salt caves along the coast of Louisiana and Texas. And now that unrest in the Middle East has spiked oil prices close to $107 a barrel, President Obama is reportedly considering releasing some of that oil into the market to help control rising oil and gasoline prices.

Of course, no one is certain that more oil supply will help reverse prices. Saudi Arabia has already increased production, and oil prices are still rising.

Oil prices continue to rise because investors are becoming increasingly worried that unrest is spreading to major oil producers like Iran and Saudi Arabia, which so far had been relatively immune to turmoil in northern Africa and around the Arabian peninsula. Clearly, any supply disruptions in Saudi Arabia and oil prices will go sky high.

Energy analysts like the well-respected Charles T. Maxwell of Weeden & Co. rightly issue dour warnings about our inability to maintain and/or increase oil production:

“Currently, we are utilizing about 98% of our world crude oil-producing capacity. The system should be considered stressed at a 95% utilization rate. We are no longer investing enough to lift capacity additions above the level of future demand growth on a consistent basis.”

That’s a big problem, because as he says, the demand for oil doesn’t stay still. Each year, oil demand from the developing world increases total demand by 2%. We don’t have very many months left of that kind of oil demand growth.

So, that’s bad.

I didn’t pay much attention to President Obama’s State of the Union address on Tuesday night.

Most of my colleagues in this business use these types of major news events as a pump-primer for sales efforts.

But to be honest, I just can’t get myself psyched for this type of marketing opportunity. I see these State of the Union addresses the same way I see the cheerleaders at football games: nice to look at, but really of not much material importance.

Our Federal Government is beyond broke, and they have no coherent plan to either cut spending enough to allow current taxation to start paying down deficits, nor do they have any stated plan to raise taxes to the sky-high levels that would be necessary to fund deficits.

Chinese President Hu Jintao meets with President Obama today in Washington DC.

The two presidents are supposed to have a private lunch and then discuss a variety of topics including trade, military, North Korea, Iran, human rights, the dollar, the yuan and the weather, no doubt.

As the east coast is being hammered with a wintry mix of sleet, freezing rain, snow and ice, you might expect the topic of coal to come up.

After all, a majority of electricity in the United States and China is provided by coal. And for the past few years, China has started to import coal - mostly from Australia.

As a result, China’s domestic coal companies are practically minting money. They can’t produce coal fast enough, because no matter how much coal they bring to market, there’s a near-guarantee that they’ll be able to sell it for top dollar.

They don’t have to worry about anything except for increasing production.

And now, with floods in Australia, the amount of coal being shipped to China has decreased substantially.

With President Obama extending the Bush-era tax cuts for at least two more years, dividend investors can breathe a sigh of relief.

Taxes on dividends were slated to increase from today's 15% rate up to as high as 40% if the current tax rates were allowed to expire.

While some investors are waiting for the seal of approval from the United States Congress to make the tax relief official, many dividend investors are already taking advantage of the good news and are loading up on their favorite dividend stocks.

The Federal Government is even more clueless than I previously suspected.

I’m speaking specifically about a White House commission’s Federal Deficit Reduction plan.

Surprisingly, the White House released this plan earlier this week.

I say “surprisingly” because the plan is so weak, so obviously ineffective - that anyone with the intellectual capacity to know how to read should be completely outraged at this plan.

They should have never let this plan see the light of day.

The Wall Street Journal outlined the underlying problem implicit to this plan:

“Overall, the plan would hold down the growth of the federal debt by roughly $3.8 trillion by 2020, or about half of the $7.7 trillion by which the debt would have otherwise grown by that year, according to commission staff. The current national debt is about $13.7 trillion.”

There's a hidden tug-of-war happening right this minute. On one side stands a massive and hugely popular contestant, with millions of fans and groupies.

And this contestant gets bigger every day, every moment, even. He's closely acquainted with President Obama. He's best buds with Nobel Laureate economist and New York Times columnist Paul Krugman. He and John Maynard Keynes go way back.

You might know him as 'debt' or maybe 'deficit' if you want to get formal about it.

He's currently facing an opponent that no one really pays too much attention to. Sure, they'll pay some token lip service to debt's opponent - but c'mon; who is kidding who? Debt is WAY bigger and more robust than this puny shrimp.

I firmly believe that Ben Bernanke and I share a common viewpoint. We both have no idea what he's going to do four months from now.

There's simply too much uncertainty. We don't know what's going to happen with the multitude of economic indicators and whether they'll spell success or failure for his policies.

So let's back up and look elsewhere for certainties. I think I've found some bullish news for commodity investments.

Why?

As of this writing, there seems to be little chance that President Obama and his colleagues in the Senate and Congress will extend the Bush Administration's tax cuts.

Personally I think taxes as well as government, both state and Federal, should be cut to the bone.

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.

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 I wrote about the prospect of the U.S. Federal Government seizing or outlawing the private ownership of gold bullion.

In short, my conclusion was that it would be too difficult and unconstructive for the government to seize or outlaw gold.

And perhaps I simply don’t have the remarkably creative mind of a revenue-strapped politician - but some readers wrote in with some other scenarios that I hadn’t considered.

Assaf K. wrote:

“Governments don't have to seize gold to make it an unpalatable investment. They can increase taxes on gains from precious metals transactions. Alternatively, they can impose various fees and commissions on any such transactions. I wouldn't disparage the creativity of Obama et al. when it comes to capital controls.”

That’s definitely a realistic scenario. Already, capital gains from gold and silver are taxed at an individual’s personal income tax rate, rather than at the lower capital gains tax rate. With income taxes due to rise next year, it wouldn’t surprise me if President Obama and his Democrat led Congress saw fit to raise taxes on gains made in gold and silver, and otherwise introduce a variety of Orwellian measures to stymie the lure of investing in precious metals.

Today’s topic might seem somewhat oblique to general investment strategy, but I think the ramifications of this issue are kind of an 800 pound gorilla in the room.

Some very intelligent, highly successful, amazingly talented gold investors routinely suggest that the end-game for the dollar will be preceded by the seizure of gold assets by the Federal Government.

If there’s a significant likelihood that gold will actually become illegal, then all my suggestions and research intended to help you find compelling gold investments are completely off course. It won’t matter if I help you find your next 10-bagger gold stock if the government seizes gold assets and halts trading on such companies.

So I want to tackle this issue head on.

This undercurrent of worry in the gold investment community may be born from the fear that history sometimes tends to repeat itself. Gold investor’s prudence in holding gold may be punished by President Obama’s administration, should he choose to replicate the policy of President Franklin Roosevelt and outlaw the ownership of gold. There’s no doubt that as the 'Godfather of liberal thought' that Obama looks up to FDR, and certainly wishes to follow in the footsteps of one of America’s most popular presidents.

I received some great emails from readers yesterday – notably a message from Mark I. who suggested buying puts as a way to profit from the tendency for the United States Natural Gas Fund (NYSE: UNG) to do nothing but lose money.

(For those readers unfamiliar with options, a put is a type of option that, to put it simply, goes up in value as the underlying asset decreases in value.)

It’s hard to argue with a strategy that could have yielded greater than 100% percent gains, month after month for the past year. I’m not exaggerating either. Options prices can surge by multiples as they approach the strike price.

Take a look at this table showing put prices for July expiration on UNG.

I hesitate to write about gold in today’s article. If you’ve been a reader of Resource Prospector for more than a few days, you’re probably already sick of hearing about it. And if you haven’t built a position in it, you probably feel like it’s too late to start now.

And with gold near its all time nominal highs (it still has a way to go for inflation adjusted highs) you’d think I’d be cheering. But I’m reluctant to tell you to buy things when they’re at any high. That’s not the way to build a position in any investment. So before I go on to talk about gold and why I think it’s so neat, let me recommend waiting for a dip before you pull the trigger. A dip could be a minor hesitation in gold’s price, or it could be a major decline - but basically, the idea is to try to buy the asset for less than what it was going for yesterday.

Don’t get me wrong, I’m still super bullish on gold. What’s not to like about it? It’s the perfect way to protect your nest-egg from irresponsible politicians and central bankers. So long as the Federal Reserve is backstopping the EU, and the EU tries to fix its currency problems by blaming speculators and telling Greece to raise their sales tax to 23%... Well, you get the idea.

The spill in the Gulf Coast near Louisiana is nothing short of a tragedy.  And for certain, it’s a man-made phenomenon.  There’s really no telling how bad this leak will be.  There’s concern that it will severely damage fisheries along the Louisiana coast.  It’s already disrupted shipping in the area.  And there’s no doubt, it’s not a good thing. 

Some analysts estimate this leak will cost BP (NYSE: BP) upwards of $3 billion in cleanup costs alone.  BP owns the drilling rig that exploded and caused the leak. That’s baked into the cake – BP stock fell nearly 10% last week and another few percent today.

President Obama was quick to blame BP.  They deserve the blame, but I think it’s a bit disingenuous of the President to angrily point his finger. On March 30^th, less than a month before this leak, President Obama announced his desire to allow additional offshore oil and natural gas exploration and drilling in the Gulf of Mexico.

There are always at least two sides to every commodity story, the biggest being supply and demand.

In yesterday’s issue of the Resource Prospector, I talked about demand for uranium. After following and untangling the threads, it seems like demand is slated to rise. That’s according to two of the biggest authorities on the subject, the World Nuclear Association, and the Nuclear Energy Agency.

Today, I’ll tackle the supply side of the equation – and I’ll show how current annual production of uranium falls well short of annual consumption.

I unearthed a WNA chart to better show this contrast, which I believe will be the real catalyst for higher uranium prices.

Coal is awful. When the black rock burns it pollutes, spewing metric tons of carbon dioxide in the atmosphere every day. Most investors will tell you it’s a dead resource: “we’re moving towards renewables,” they’ll say. Coal is an anachronism; a blight. It’s an atrociously dirty energy source that will soon be relegated to the same place we put lead paint, asbestos insulation, and shoe-store foot x-rays – buried deep down in the ground.

In the news this week alone, there are two stories about coal miners trapped in mines – one coal mine in China, and one in West Virginia. There’s also a story about a coal tanker that ran aground on Australia’s Great Barrier Reef. My point is that coal is largely hated.

Not by me, of course. I like having a warm house during cold winters. I like air conditioning in the summer. I like cheap goods produced so cheaply, in part, thanks to inexpensive and plentiful coal. I also like the idea of buying stock in companies that mine such a cheap, hated commodity.

My Washington DC office has been vacant all week. It's amazing to me that record snowfalls have turned my DC staff into shut-ins (and closed the government for the third day) while life goes on at its normal pace here in Vermont.

The snowstorm that's crippled the mid-Atlantic region will certainly have an impact on 1st quarter GDP. I would expect that 1st quarter retail numbers will be pretty bad. But there could be some good numbers for restaurants coming. The rally in the dollar over the last few weeks has lowered food costs. And I also think that once we see a thaw on the Eastern seaboard, people will shake off their cabin fever with a night out. I know I would...

I'm really on the fence with this one: did the Obama administration purposefully wait to attack the unemployment situation? Or is it just dumb luck?

I ask because it's clear to me that now is the time to strike. If stimulus money had been used at this time last year to help the unemployment situation it wouldn't have worked. Corporations were still in the process of cutting costs to meet lower demand. And at the time, demand itself was a moving target.

Now that the economy has stabilized, demand is returning and corporate earnings are on the upswing. So corporations are starting to hire again. New jobless claims are down again, as are continuing claims. The unemployment rate has dropped, and on-line employment ads are increasing.

The Conference Board, a non-profit global business organization, reported that online job demand is rapidly rising. According to the Conference Board, the total job vacancies advertised online today is over four million, or the same level as November 2008.

Seems to me, the added perk of government incentives, like a payroll tax holiday or tax credits for new hires, could give companies the final push needed to add employees.