The Hottest Investments in 2010: I’ve been a long-term precious metals bull since 2002 and continue to accumulate gold and silver on intermediate corrections. Despite rising fourfold since its low in 1999, gold prices will probably double from current levels and hit a nominal high of at least $2,500 an ounce before peaking in this cycle. Silver should reach at least $75 an ounce.

The credit crisis continues and as it spreads, infecting sovereign government debt and weaker credits the price of gold will continue to rise. I also believe the United States will legislate a second series of bailouts or possibly extend “quantitative easing” as a second recession or double-dip economic contraction unfolds over the next 24 months.

The United States will continue to print money like never before in order to defeat price deflation – a major consequence of the real estate “bubble” and the ongoing gap in credit intermediation since 2008. At some point we will have a major inflation problem, not unlike the 1970s. The odds the Federal Reserve will drain its monster-sized liquidity from the financial system to avert inflation is highly unlikely. A bungled policy response is the endgame. The Fed has been an absolute failure protecting the dollar’s purchasing power since its creation in 1913 and this time won’t be any different. Gold and silver should remain in a secular uptrend in 2010 and might even possibly rise even if the dollar posts a cyclical bear market rally, not unlike what happened in 2005 when the Fed was tightening.

I’m also very bullish on agricultural commodities over the next ten years – namely the grains. There’s no doubt that we’re outgrowing the Earth’s food supply as populations continue to rise. The annual rate of growth in agricultural yields was 2% between 1970 and 1990 while the rate of population growth was 1.7%; but since 1990 yields have been declining relative to population growth and will continue to decline from now until 2017 with the world’s population expanding at 1.1% annually against agricultural yields rising just 0.8% per annum, according to Nestlė’s chairman, Peter Brabeck-Letmathe, the world’s largest food company.

Over the next decade we’ll suffer some sort of food crisis, probably within the grains complex. Harvests have been exceptionally low over the last decade amid rising demand and declining supplies, namely because of volatile weather patterns causing pervasive droughts. Also, emerging market nations are increasingly boosting crop imports as their respective economies boom. Rather than buy an emerging markets fund, I’d rather own a basket of the grains and several of the world’s best-managed fertilizer companies. This trend has barely begun and offers huge upside.

Alternative energy is another area I’m excited about because things like solar energy, wind and uranium have all tanked since 2008 and remain 50% or more off their all-time highs.

The biggest economies in the world, including China and the United States, are dramatically boosting tax subsidies for clean energy projects. As oil prices remain elevated governments and consumers alike will turn to cheaper sources of alternative energy. Some of the best companies in this sector are German, Chinese, French, Canadian and American; I want to own these stocks.

How to Invest for Success in the Age of Market Volatility: One of the greatest lessons I’ve learned after almost 20 years of global investing is to diversify. It’s amazing but most investors still think that holding 50% of their portfolio in a hot sector is proper portfolio diversification: It’s not!

The recent crash in 2008 resulted in broad-based losses for most growth investors. But my portfolios, which have always been heavily diversified across asset classes, including alternative investments, declined about 5% in 2008 versus 40% for world benchmarks. It’s simply not true that too much diversification will hurt your long-term performance. The fact is that a portfolio is like an army; the more divisions you mobilize into battle the greater the chances for military success because you will lose several battles in any conflict. But you’ll probably win the war if you diversify across assets that exhibit a low-to-negative correction to stocks amid market dislocations. Sadly, most investors still fail to embrace this concept and think a 50% allocation to stocks and 50% to bonds will save their portfolio in a crisis – it won’t.

Use Short-term Rallies to Dump U.S. Dollars: Since Nixon broke the gold standard in 1971 the dollar has plunged in value against most currencies and gold. This trend is likely to continue until markets resolve the situation with another violent crisis – perhaps a debt crisis or a currency crisis. But unless the United States comes to terms with its profligate spending soon, the odds are high that lenders will increasingly balk at holding American paper. For all intents and purposes the global exchange-rate mechanism established under the post-WW II Bretton-Woods agreement is now largely dysfunctional as more currencies devalue or revalue constantly. The endgame in this environment is a series of repeated financial shocks and long-term inflation.

It seems rather ridiculous to me that China, which holds about 37% of all Treasury supply, will continue to fund America’s external deficits forever – especially if the dollar continues to fall. At some point, China and other U.S. creditors will begin selling dollars to pare down their heavily weighted dollar-based foreign exchange reserves. This trend has already started and more central banks – especially the emerging market central banks like China, Russia, India, Brazil – will continue to reduce their dollars in exchange for EUR, CAD, YEN and especially, gold.

The dollar, however, is cheap today vis-à-vis other currencies. But it is cheap for a good reason. The U.S. is spending out of control and bogged down in two protracted overseas military conflicts. I would use any intermittent dollar rally as another opportunity to sell U.S. currency for gold and stronger currencies that harbor positive budget and trade surpluses accompanied by responsible economic management.

What are Your Hobbies? I love airplanes and anything tied to commercial aviation. Since I was 5 years old I’ve been fascinated by aviation. I truly believe modern aircraft is one the most incredible engineering feats of our lifetime. I fly often for work (mostly to Europe and the US) and relish every moment in-flight – mostly takeoffs and final approach. Airports are not fun these days but once onboard, I’m in Heaven! I also enjoy exercising. I have a great trainer. Twice per week I’m working out with him – Bobby was the top-ranked male basketball player in his age group in Quebec several years ago and he’s giving me the best cardio and weight workouts ever! I highly recommend regular exercise – you feel great after you’re done.

What are Your Favorite Cities in the World? I love Europe. I’m obsessed by the culture, the food, wine and just adore spending time on a quiet beach with good friends to relax. My favorite cities in the world include Zurich, London, Barcelona, Tokyo and Milan. For R&R, you can’t beat the Greek Islands and the Costa del Sol in the south of Spain. I also enjoy Miami and South Florida in the winter since I’m a Canadian and it’s darn cold up here!

Who are Your Mentors? By far my greatest teacher is my step-father, who I consider my dad since he’s my best friend and raised me since I was 13. He’s extremely wise, smart and has taught me to diversify my assets. He’s been the biggest influence in my career and taught me to appreciate gold and understand why paper money is a pathetic store of value over time. The Sovereign Society’s late founder, Robert Kephart was also a strong influence – a tremendous guide and teacher in my career. I miss him terribly. I also have two great publishers – Erika Nolan and Justin Ford, whove taught me invaluable lessons on how to become a stronger writer and a more effective communicator.

Recommended Reading for Investment Success: Every morning at 5.30 I spend about 90 minutes reading The Wall Street Journal and The Financial Times. An investor can’t dispense without these fantastic publications. The editorials and statistics are invaluable to an investor. I also subscribe to many monthly advisories, including Montreal-based Bank Credit Analyst, Richard Russell’s Dow Theory Letters, Grant’s Interest Rate Observer and Louis Yamada. My favorite books on the subject include Seth Klarman’s Margin of Safety, The Intelligent Investor by Ben Graham, David Dreman’s Contrarian Investment Strategies and George Soros’s The Alchemy of Finance.