Taipan Daily’s Justice Litle review the current trends of gold, the U.S. Dollar and small caps. Finding suprising strength in the dollar in the short term, he finds greater strength in gold and gold stocks for the long term.

Justice Litle, Editorial Director, Taipan Publishing Group Gold, small caps and the U.S. dollar have had a stable three-way relationship for the better part of the 2009 rally. Now the three could be parting ways.

Dr. Marc Faber is one of the few market wise men whose thoughts are worth pondering. His monthly “Gloom, Boom & Doom Report” is always a good read. He is an active, Asia-based investor with decades of experience, hundreds of millions under management, and many prescient calls under his belt.

Faber has stated firmly and clearly what he thinks of the U.S. dollar. As you might expect, his opinion is not too flattering.

In the long

Gold didn’t do a whole heck of a lot in the Far East yesterday. A smallish rally into the London a.m. fix [5:30 a.m. in N.Y.] got smacked, but managed to gain that back and a bit more by 9:00 a.m. on the Comex in New York. Then the usual not-for-profit seller[s] showed up, and that was it for the day. The low came in after-hours electronic trading…shortly after the Comex trading pits closed. After that, it managed to tack on a few bucks before Globex trading closed in New York at 5:15 p.m.

Volume was so-so. Only 99,266 contracts were estimated to have traded, including a switch effect of 8,734 contracts.

Silver’s action yesterday was similar to gold’s…with the exception that the ‘low’ for yesterday [such as it was] occurred in early morning trading in

The news for US retailers is grim to say the least. But Justice Litle says investors can still make profits by shorting the most vulnerable firms in the industry. He picks three retail stocks that look overvalued in today’s climate.

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At market extremes (where fortunes are most often won and lost), the wild outliers get closer to reality. Such is the case with the “mega-mall ghost town” scenario.

In the past two weeks, the financial press has been chock-a-block with headlines like “Commercial Property Loses Shelter” and “Struggling Retailers Press Struggling Landlords on Rent.”

“U.S. retailers are expected to begin a wave of post-holiday bankruptcy filings,” the Wall Street Journal writes, “altering the landscape at malls and on main streets across the country.”

One mall store manager – who requested his name not be mentioned – told the WSJ he expects more returns than sales on some days.

A great business will always have clients and will always get paid, says Justice Litle. That’s why Key Energy Services (NYSE:KEG), the world market leader in maintenance of oil and gas wells, is in a great position. The company is growing rapidly and has a healthy balance sheet. Best of all, it is hugely undervalued at today’s price, meaning a chance for investors to triple their money.

This from Taipan Daily:

Key Energy Services (NYSE:KEG) is the largest rig-based well service company in the world.

You could say the main job for a company like Key is to “keep the oil & gas flowing.” Once a well is drilled, that well has to be maintained and serviced throughout its life. This is what Key does.

It’s a great business

Make no mistake: we are in uncharted territory. Hank Paulson wants $700 billion of taxpayer’s money to buy up bad debt and ‘rescue’ the markets.Some lawmakers strongly opposed to the plan.

“The free market for all intents and purposes is dead in America,” said Senator Jim Bunning, Republican of Kentucky, on Friday.

Justice Litle says the plan is a minefield for investors. He says there are five things you need to know about the government bailout and what it means for your portfolio.

This from Taipan Publishing:

1) The bailout is one of staggeringly massive proportions.

As I write to you in the wee hours of Monday morning, prior to my transatlantic flight, the number being bandied about for the size of the bailout is $700 billion. Keep in mind, too, that this is an opening number. It doesn’t necessarily include relief for upside-down homeowners, strapped consumers, foreign banks or many other potential “extras” that …

– Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS), the two last major investment banks left standing after the carnage Wall Street, have ended the era of investment banking by changing their status to bank holding companies. The change means the two firms can now create commercial banks that will be able to take deposits.

– The move marks a sea change on Wall Street 75 years since the Glass-Steagall Act that separated them from deposit-taking banks. The Federal Reserve will now take over from the Securities Exchange Commission as regulator of the two banks.

– “The decision marks the end of Wall Street as we have known it,” said William Isaac, a former chairman of the FDIC. “It’s too bad.”

– Concern is growing that Hank Paulson’s vast rescue plan for Wall Street may “crush” the dollar. According to Bloomberg: “The combination of spending $700 billion on soured mortgage-related assets and providing $400 …

The headlines are dramatic. Short selling banned for 799 financial institutions. $50bn injected into money markets. Plans for a massive bailout fund to clear the system of bad debt and stabilize the housing market.

The Unholy trinity – the Federal Reserve, SEC and Treasury – has pulled out all the stops this time. But while US stocks soar, Justice Litle says the government’s bailouts are a death blow for the dollar.

This makes real, tangible assets highly attractive. Justice says the most profitable investments going forward will be energy, infrastructure, hard assets and non-US growth plays.

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In the short run, it’s not clear how things will play out – the markets are an absolute circus right now. (As if you needed someone to tell you that.) In the long run, though, we are seeing the reality of the Austrian Endgame unfold, here and now, right before our eyes.

I’ve been pounding …