Compounding at market-beating rates with World Dominators...

The best place to hide your assets (and yourself) from the taxman...

 I (Porter) have been talking a lot lately about the tidal wave of inflation that's bound to result from printing trillions of dollars of paper money. I also advocate buying foreign assets to keep money out of the government's grubby paws.

If you're like me and favor free markets and increased per-capita gross domestic product, you probably know that the recent flood from the printing press is going to swamp your financial boat. And you're not happy about it. Perhaps you've considered some up-close-and-personal oversight of your foreign assets. Maybe you've thought about leaving the U.S. altogether. I know where I would go…

 If you know the right lawyers, you can still buy a Swiss passport and citizenship.

Switzerland is a confederacy, an almost forgotten form of government. Each of its 26 cantons is sovereign. You can pay a flat annual fee in lieu of income taxes, a spectacular idea in its own right. It's a great deal for the citizen. It seems much more rational.

 Of course, that would never work in America. The government here has become a "People's Socialist Republic" where the government claims unlimited authority to take what it wants from you. And it's not just the idea that's scary. That Americans support it is what's so shocking.

It's no surprise that the government would argue it has the power to tax on an unlimited basis or to take away our privileges. It's a huge surprise that the overwhelming majority of Americans back such initiatives and believe they can live happily at the expense of their neighbors.

 Often when I walk our streets or read our newspapers, I don't recognize my neighbors anymore. They've become a mob for the most part – a hungry, raging horde that wants me and my blood. They'd get half of it if I chose to emigrate and submit to the 50% exit tax.

However, there are ways around that kind of attempted robbery. Many of the best portable assets are hard to value. What's the worth of that painting on the wall? What does that rare gold coin cost? What's the price of your wife's jewelry collection?

Accountants and lawyers can help minimize the impact of that tax. And taxing all your assets once may be preferable to handing over half your income for the rest of your life.

I'm 40 years old. I've been accumulating assets for about 20 years. But I've got 40 more years of income ahead of me, if I'm lucky. So why wouldn't I take that 50% hit now in exchange for 40 years of freedom?

 I would fight and die for the idea of America. And I would never renounce my citizenship in the idea of America. However, I'll say it again: The America I have pledged allegiance to – and dearly miss – is so far dead and buried.

 I'd probably have to renounce my U.S. citizenship if I moved to Switzerland. Even if I didn't, I'd still love to go to a place where everyone is equal under the law... that stands for freedom... that's a beacon of prosperity and tolerance.

America is none of those things. We live in a country that tells people what they can do in their bedrooms. It's none of my business what you do in your bedroom. We live in a place that claims the right to send troops abroad to tell people how they should live. It's absurd.

I saw on 60 Minutes that we have military advisors in central Africa, chasing warlords with child armies. As if we don't have enough problems here, we have to send our armed forces across an ocean to chase these criminals. There's no question, these warlords are a terrible problem. But it has nothing to do with us. I don't want my tax dollars involved in that mess.

– Porter Stansberry with Sean Goldsmith

 Longtime Extreme Value favorite ExxonMobil (XOM) continues to reward investors. The energy giant boosted its quarterly dividend again this week, its 11th such move in the last 10 years.

You can almost set your watch by XOM's dividend increases. The most recent, to $0.63 a share, was an 11% gain over the previous amount. That's almost triple the $0.23 a share it was paying in 2003. News of the higher payout was released with the company's first-quarter earnings, which beat market expectations on gains in its chemicals business.

Profit for the period was up 5.3% to $9.5 billion compared with $9.45 billion in the first quarter last year. ExxonMobil also said it will buy back $4 billion in shares in the second quarter after repurchasing 63 million shares in the first quarter.

  I (Dan Ferris) first recommended ExxonMobil in Extreme Value in July 2006. Dividends and buybacks were a big factor. As I wrote at the time...

Readers who followed my recommendation are up 58% since then. They've compounded their money at around 7% a year, compared with less than 4% per year with the S&P 500 over that span.

ExxonMobil wasn't the only Extreme Value World Dominator raising dividends today...

 Health care World Dominator Johnson & Johnson (JNJ) also raised its quarterly dividend 8.2% from $0.61 per share to $0.66. I first recommended J&J in the October 2010 issue of Extreme Value. It's compounded subscribers' money at about 16% a year since then, compared with the S&P 500's 13%-plus compounded annual rate over the same time.

Many investors won't buy mega-cap stocks like XOM and JNJ because they think these companies are too big to grow. That's a classic investor myth. Clearly, you can compound your wealth at market-beating rates with these giants.

 I was reminded of this myth a few months ago, as I sat sipping some excellent local wine on a friend's outdoor deck, overlooking the mountains and valley below. He casually mentioned he wouldn't buy Coca-Cola because it was "too big to grow."

I let the comment pass. But that kind of thinking is a mistake. Steady, reliable growth and consistently high returns on capital are much more important than high growth.

 Coca-Cola is one of the best businesses on the planet. It sells 1.8 billion servings per day of more than 3,500 different beverages. Brand valuation experts at consultancy Interbrand have named it the world's most valuable brand 11 years in a row. Other Coca-Cola products, like Diet Coke and Sprite, are also on Interbrand's Top 100 list of valuable brands.

The company routinely earns more than 20% on shareholders' equity. If you could earn 20% on every penny of earnings you retain, you'd get rich pretty fast. Coca-Cola has compounded investors' money at 10.5% per year over the last five years. The S&P 500 as a whole compounded investors' wealth at 2.5% per year during the same time frame.

I could write the same sort of thing about any World Dominator: Huge, global brand... fantastic brand-name value... steady, long-term growth... high returns on capital. It's all there with ExxonMobil, Johnson & Johnson... and every other World Dominator. And if you find a World Dominator that's really undervalued, you can double your money pretty fast. Constellation Brands, the World Dominator of premium wines, is up 126% since our June 2011 recommendation.

Consistently high returns on capital and steady long-term growth are the all-time greatest formula for turning a little money into a lot with little risk. Extreme Value subscribers and others who bought dirt-cheap World Dominator stocks over the last several years are now reaping the benefits of excellent compounding with relatively low risk.

 But what about the next seven years? What's cheap now? And what will create the best returns going forward?

In Extreme Value, I'm recommending a small group of stocks I call "Undiscovered Gems." They're small companies with huge upside potential and excellent downside protection. For example, one of them trades for less than $5 a share, but has $1 per share of gold bullion and less than $0.01 per share of debt. Another has nearly $6 per share in cash, zero debt, and trades for less than $10 a share.

Right now, the best Undiscovered Gems are in the natural-resources sector. A lot of natural-resources stocks are down. But these are different. They've treaded water as the small-cap mining stocks have been crushed – probably due to their huge downside protection.

They also have huge upside potential. One of these little businesses invested less than $1 million some years ago and realized a $200 million gain. Another turned $55 million into $240 million in less than a year. Each one is loaded with multiple opportunities for these returns... plus the safety of owning huge amounts of cash and gold bullion.

You could easily make five to 10 times your money with these stocks over the next few years. Right now, nobody cares about them. I bet a lot more people will care once they've gone up a few hundred percent.

They're extraordinarily well-managed, too. One has made more than 50 investments in the last few years and made a profit on all but one. That's better than 99.9% of all the money managers in the world.

If you want to find out how to make up to 10 times your money while taking low risk with Undiscovered Gems, you must read Extreme Value. It's the only place you can get that information.

 Extreme Value isn't for everybody. I only recommended three stocks last year because there weren't many compelling, safe, cheap opportunities. If that bothers you, Extreme Value isn't for you.

But if you want limited downside coupled with the potential to make five to 10 times your money in the next few years, I don't know where you'll get a better chance to do it than with our Undiscovered Gems list.

If you sign up and decide Extreme Value isn't for you, you can cancel and get your money back, minus a small processing fee. We want you to be happy. That's the only way we'll do business.

I'll publish the Undiscovered Gems in my next weekly update on Monday. Click here to sign up for Extreme Value without sitting through a long promotional video.

 True Wealth recommendation Blackstone Group, the private-equity behemoth, is still buying up U.S. housing...

Blackstone recently paid more than $100 million for 1,400 properties in Atlanta. Government-assisted "Section 8" housing made up about 16% of that portfolio. The firm has spent more than $4 billion on 24,000 rental properties in the past year, making it the biggest buyer in the U.S. market.

Jonathan Gray, Blackstone's global head of real estate, said it's getting more difficult to buy properties for a profit as competition intensifies. "If I had to guess, over the next six to 12 months, it will be difficult for us to continue in our current setup in terms of deploying capital," Gray told Bloomberg.

 Blackstone is just one of the big institutional buyers purchasing single-family homes in the United States... Private-equity firms – including Colony Capital, Starwood Capital Group, and Waypoint Real Estate Group – are also "making the trade." Even JPMorgan is purchasing single-family homes for its high net-worth clients.

 True Wealth editor Steve Sjuggerud has been bullish on housing for more than two years. And he still believes it's a good investment.

 The European monetary union is still facing headwinds...

Spain announced today that unemployment hit 27.2% for the first quarter. That's the highest since 1976, the year after dictator Francisco Franco died, according to a Bloomberg report. That represents about 6 million Spaniards without a job.

Adding to Europe's woes was the first downturn in Germany's private-sector output since November. Financial research firm Markit released a report this week saying the country's commercial output is at six-month lows. Both manufacturing and service sectors contracted during April. Manufacturing dropped the most and the fastest.

 Japan's monetary policies aren't helping Europe, either. Since July last year, the yen has lost about 35% in value against the euro. One euro bought around 95 yen on July 23. Today, you get close to 130 yen for your euro. That makes it tough for car manufacturers like Daimler of Germany or France's Peugeot Citroen, which compete with Japanese firms like Toyota in the U.S. and China.

European Central Bank (ECB) officials indicated only last week they would consider a rate cut if things didn't improve. Executive board member Joerg Asmussen told Bloomberg that rates could fall if necessary. And his colleague Vitor Constancio promised the ECB "is ready to act."

Bloomberg also reports "Bond King" Bill Gross, who manages the $289 billion PIMCO Total Return Fund, expects an ECB rate cut soon but doubts it will lead to real growth. Earlier in the week, CNBC quoted Gross saying...

 New 52-week highs (as of 4/24/13): WisdomTree Japan Smallcap Fund (DFJ), WisdomTree Japan Hedged Equity Fund (DXJ), iShares iBoxx High Yield Corporate Bond Fund (HYG), SPDR International Health Care Sector Fund (IRY), SPDR Barclays High Yield Bond Fund (JNK), SPDR Utility Sector Fund (XLU), V.F. Corp. (VFC), Automatic Data Processing (ADP), Dominion Resources (D), Brookfield Asset Management (BAM), Enterprises Products (EPD), and Target (TGT).

 In today's mailbag, a couple of subscribers write in with warnings… for Goldman Sachs' "customers" and the soon-to-be wealthy. Send your e-mail to feedback@stansberryresearch.com.

 "Although a fan of yours, I fail to understand why you continually talk about Goldman's 'clients'... as their head made clear to Congress not that long ago, Goldman doesn't have 'clients.' It has 'customers' for which there is only one bit of advice – 'caveat emptor.'" – Paid-up subscriber Peter Borromeo

 "I just finished yesterday's Premium Digest. I believe you are right on target. Heck, I am a CPA and me and one of my partners were laughing about the 'nontaxable Roths' when they were created. We know they will eventually get taxed just like every other thing we were told would not be taxed is now taxed.

"But there is one other way in which the limits mentioned ($200,000 per year or $3,000,000 set aside to fund retirement) will come to impact those that currently fall below those levels. Inflation!

"To the extent that wages increase following price increases related to the flooding of money, you can bet that those with current under-the-limit amounts will get pushed over those limits and become unwittingly 'wealthy.'

"I believe that your scenario is most likely, but to the extent that we might be a decade from the s**t really hitting the fan, inflation may place many of the people not included in the crosshairs directly into the crosshairs as they are allowed to put more and more away. Quite an ingenious plan, even if completely evil.

"The question is, Once the 'wealthy' have been 'punished' and/or have fled, as you posit, and they come for 'less-than-wealthy' who became 'wealthy-through-inflation,' who will the masses wish to skewer then?

"Thanks for all of your writings." – Paid-up subscriber Jeff

Regards,