A Dangerous Extreme in Precious Metals
Doc Eifrig: You must get in by 4 p.m. tomorrow... Trump's 'big' tax reform plan is coming... A dangerous extreme in precious metals... What to do with silver now...
Tomorrow at 4 p.m. Eastern time...
Our colleague Dr. David "Doc" Eifrig says that is the final deadline to take advantage of his brand-new income recommendation... and begin collecting its massive income stream immediately.
As we mentioned last week, this recommendation offers regular folks the rare opportunity to invest alongside the most-successful private-equity investors in the world. Doc says you could conservatively see returns of 150% over the next few years, including gains of 40% this year alone. And you'll collect annual income payments of up to 11% or more while you wait.
The next big payment goes out to investors on May 8... But Doc says you absolutely must buy shares before the market closes tomorrow, Wednesday, April 26, at 4 p.m. Eastern. You can get all the details right here. (This link does not lead to a video.)
Tomorrow could also bring new details about tax reform...
Over the weekend, President Donald Trump tweeted that he is planning to announce his "big tax reform and tax reduction" plan on Wednesday.
The White House is reportedly working on a plan to cut taxes even further than the one introduced earlier by the Republican Congress. According to the Wall Street Journal, Trump wants to slash the corporate tax rate to just 15%, even if it means bigger deficits...
During a meeting in the Oval Office last week, Mr. Trump told staff he wants a massive tax cut to sell to the American public, these people said. He told aides it was less important to him that such a plan could add to the federal budget deficit, though that might make it difficult to sell to GOP lawmakers who are wary of such a large tax cut. Mr. Trump told his team to "get it done" in time to release a plan by Wednesday, the people said.
Mr. Trump's willingness to let deficits run higher also could hinder the passage of tax cuts that are permanent. Congressional Republicans plan on using a procedural tool known as reconciliation that would allow the tax legislation to pass with a 51-vote majority in the Senate, instead of the usual 60 votes. Under those rules, changes can't add to deficits beyond a decade.
We'll reserve judgment until (or unless) more details emerge...
As we've discussed, tax reform is one of the "big three" policy proposals – along with regulatory reform and infrastructure spending – that have driven expectations of higher economic growth and inflation. The markets will likely cheer any positive news on this front.
On the other hand, even if the details are true, it's not yet clear Congress would support the plan. As the Journal noted, under the reconciliation process Congress plans to use, any deficit-financed tax cuts would expire after 10 years. And this could negate many of the economic advantages of cutting corporate taxes to begin with...
Some White House advisers have warned that changes that aren't permanent would undercut the rationale for a corporate-tax cut, which is to boost business investment. Businesses are "making long-term capital decisions. People are deciding to move this to the United States, and... they need some permanence of the tax code," [National Economic Council Director Gary] Cohn said at a conference last week.
Traders are "all-in" on silver...
Regular Digest readers know our colleagues Steve Sjuggerud and Brett Eversole like to follow the weekly Commitments of Traders ("COT") reports published by the U.S. Commodity Futures Trading Commission.
In simple terms, these reports show what traders are doing with their money in a wide range of markets. And they can be a useful measure of market sentiment. When traders are all making the same bet – when they're all super-bullish or super-bearish – it's a sign that the trade is "crowded," and a reversal is likely.
As we've discussed in recent Digests, Steve and Brett have used these COT extremes to predict the rally in Treasury bonds and the decline in crude oil this year.
In the latest issue of their True Wealth Systems Review of Market Extremes, they highlighted a similar extreme in an unexpected market: silver. From the issue...
Precious metals are booming, once again, in 2017. Gold is up double digits and silver is up almost 15%. But silver could be getting ahead of itself...
Futures bets on higher silver prices are at an all-time high based on the COT report. This is a warning sign precious metals investors should pay attention to.
Today, futures traders are all betting on higher silver prices. Take a look...
As you can see in the chart, the only other time futures traders were this bullish on silver was August 2016...
And silver went on to decline 24% over the next four months. While they don't expect another 20%-plus decline today, they believe investors should be prepared for a double-digit correction...
Futures bets on higher silver prices are at an all-time high. As a contrarian, this is not what we want to see. I will be more interested when the script is flipped and futures traders are all making bearish bets on silver.
We aren't recommending to short silver today. But if you own the metal it might be time to take your gains off the table.
Again, Steve and Brett don't recommend shorting silver... and this is NOT a reason to sell all of your long-term holdings of physical metals.
But if you're holding significant speculative positions in silver or silver stocks, consider taking some profits or tightening your stop losses. At the very least, consider holding off on making new purchases until traders become less bullish.
We also note that futures traders aren't nearly as excited about gold. Bullish gold bets remain well below last summer's extreme... so gold prices may hold up better than silver over the coming weeks.
But remember, gold has a challenge of its own: It's testing important long-term resistance. And gold and silver rarely move in opposite directions for long. Don't be surprised if the gold rally takes a breather, too.
New 52-week highs (as of 4/24/17): Tencent Holdings (0700.HK), American Financial (AFG), Aflac (AFL), AMETEK (AME), Allianz (AZSEY), Alibaba (BABA), Cheesecake Factory (CAKE), Quest Diagnostics (DGX), iShares MSCI Italy Capped Fund (EWI), Facebook (FB), Barclays ETN+ FI Enhanced Europe 50 Fund (FEEU), short position in GGP (GGP), Alphabet (GOOGL), PureFunds ISE Mobile Payments Fund (IPAY), JD.com (JD), Nuveen Preferred Securities Income Fund (JPS), KraneShares CSI China Internet Fund (KWEB), McDonald's (MCD), 3M (MMM), Microsoft (MSFT), Naspers (NPSNY), PowerShares S&P 500 BuyWrite Fund (PBP), ProShares Ultra Technology Fund (ROM), iShares MSCI India Small-Cap Fund (SMIN), Sanofi (SNY), Tencent Holdings (TCEHY), and Two Harbors Investment (TWO).
In today's mailbag, one of the best subscriber notes we've received this year... And the feedback on Porter's Friday Digest is still rolling in. Send your comments and questions to feedback@stansberryresearch.com.
"Dave Lashmet, Doc, Porter and all of the Stansberry Staff, I was diagnosed with Prostate Cancer. To make a part of a long story short, I couldn't go under the knife and ignored that suggestion from two doctors who seemingly were not very open to other treatments.
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"Finally, the most important thing I learned is that somewhere within all of us is the ability to choose the right treatment for ourselves. You will be presented with options on treatments, opinions from family, friends, etc. Then dig deep inside and you can find the treatment that is right for you. The doctor and even loved ones can't make that decision for you. Only you can and only you should as it is your life!!!! Thanks for hearing my short story and thanks for helping out more than what you probably could have known." – Paid-up subscriber Mike C.
"Porter, your Digest was stunning. But nothing new about that. I've been reading them since 2006. You have a talent for what you are doing... If someone can't explain something well, that means they don't understand it completely. It's clear you know what you are writing about. How do you know all this? I don't know. You just have a talent for it. Gifted I would say. Thanks." – Paid-up subscriber Allen W.
"I have bought every recommendation in your Stansberry's Credit Opportunities that sold for less than your recommended buy up to price. They have all been big winners! I am doubling my money on the NRP bonds in less than 2 years. Patience is important. Looking forward to another dip in bond prices and more recommendations. Thank you." – Paid-up subscriber Jim W.
"I noticed that you solicited feedback on the Stansberry's Credit Opportunities service and I am pleased to offer my experience. I have entered many of the suggested positions and several have done astoundingly well, but what I really appreciate about these positions is their steady quiet progress upward. I fully expect to experience a dramatic loss on a position or two, but I could not have asked for better initial returns to validate the thesis. I currently hold four bond positions, and three of the four are in the green and [one] is only underwater by $11.
"I know that you were quite explicit that we would likely have to make telephone contact with bond brokers and be persistent, but I have entered all my bond positions through the ZacksTrade interface to InteractiveBrokers. It has sometimes taken quite a long time to get filled but I'm okay with that – I enter a GTC order at the price I would like to pay and I just check it every week or so until it fills. I aim to get filled a couple of percent below the limit price you suggest and so far that has worked quite well.
"I have definitely seen the distressed bond opportunities dry up in the short term but now that I have the methodology for managing this portion of my portfolio in place, I just sit back and wait for the fat pitch while pursuing other opportunities. Traditionally I have done quite well with iron condor options trades but for the past few months, that has been a dead trade due to the consistently low volatility but with volatility starting to warm up again, I am starting to find reasonable risk/return ratios. So the idea that certain strategies will trend in and out of favor is not foreign to me and is one reason that the breadth and depth of the Stansberry offerings are so important to me.
"So if I could offer a thought to my fellow subscribers (and perhaps potential subscribers), it is that the type of investments found in Credit Opportunities is well worth checking out, but realize that some patience might be required as the default cycle plays out. For those who have not already subscribed, now would be the perfect time to start the subscription, learn the necessary skills and logic and populate your toolbox with the means to execute the trades. That way, when the credit cycle finally heads in the right direction, you'll be ready. I think it is fair to say that it took about six weeks for me to work out all the snags with buying bonds online and to populate my Rolodex with brokers I could use if I could not find the bonds on-line.
"I was extremely fortunate that I was present at the launch and a few of the initial positions were such big winners. New subscribers today might not have the same experience as I did with the immediate success, but I fully expect that the initial success I experienced will be far eclipsed by what is coming in the next year or two." – Paid-up Stansberry Alliance member Paul W.
Brill comment: We couldn't have said it better. Interested readers can learn more about a subscription to Stansberry's Credit Opportunities right here.
Regards,
Justin Brill
Baltimore, Maryland
April 25, 2017