Many people accuse me (Porter) of being a "perma-bear." After all, I'm the "End of America" guy. It's true that I recently turned bearish again... But remember, I'm not always bearish...
If you will go back and read my letters that I wrote between November 2008 and March 2009, you'll see I was unbelievably bullish. In fact, I explained it was the greatest opportunity in my entire life to buy stocks. I was buying hand over fist.
I didn't pull back from that ultra-bullish mode until 2011, when the problems in Europe cropped up. But once the European banks started printing money that December, I was back to being bullish... I knew those actions would lead to higher stock prices. And we saw the same scenario play out in the U.S. And I remained in full "bull mode" until about a month ago.
Why did I turn bearish? Well, I've been predicting for years that the ultimate outcome of the central bank money printing would be a collapse of the entire fiat money system.
The dollar has the most to lose because it is the world's reserve currency. So if the system breaks, America will lose the privilege it has had since World War II – of being able to legitimately pay off its debts in the money it prints. We're the only country in the world with that power... so we have the most to lose.
We'll eventually see if my thesis is correct. But the world can't continue to function this way.
My bet is that the central banks overdo it. That's what's happened throughout history. If you study the history of paper money, you'll find that in every case, the people in charge of controlling the money supply give in to the temptations to inflate and print. By doing so, they lose control of inflation, they lose the confidence of the population, and the people abandon the money.
The sure sign of that today would be a collapse in the 10-year U.S. Treasury rate, the benchmark interest rate for the entire world. It's what all fixed income is priced off... And if we continue to see rates soar from all-time lows, you'll see people begin to abandon our monetary system.
As you can see in the chart above, last week, yields on the 10-year Treasury had their largest one-week jump in 10 years. While I don't believe this move signifies the end, it's emblematic of more than a simple correction in price. It's a move that indicates a change in the secular trend... People are beginning to lose faith in the dollar.
– Porter Stansberry with Sean Goldsmith
Why Porter became ultra-bearish this month...
Earlier this month, Porter declared "the global bond market collapse is here." In today's Digest Premium, he explains why he turned from bullish to bearish... And what the sudden jump in Treasury yields means to the economy...
To continue reading, scroll down or click here.
Why Porter became ultra-bearish this month...
Earlier this month, Porter declared "the global bond market collapse is here." In today's Digest Premium, he explains why he turned from bullish to bearish... And what the sudden jump in Treasury yields means to the economy...
To subscribe to Digest Premium and access today's analysis, click here.
Obama starts thinking like a capitalist... 16 LNG export applications outstanding... Gold miners lose $17 billion... Badiali: 'I don't think this is the bottom'... Do you trust your bank?... What do we mean by 'hold'?...
President Obama just took a step in the right direction...
Yesterday, Obama announced he'd approve the construction of the Keystone XL pipeline – which would run from Canada to Mexico – if it didn't excessively contribute to global warming...
Our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution. The net effects of the pipeline's impact on our climate will be absolutely critical to determining whether this project is allowed to go forward. It's relevant.
Our thoughts on global warming aside, this is a step in the right direction for Obama's sanity. Keystone XL is an obvious economic benefit for America, since the oil it carries would be refined by U.S. companies. It also shows Obama is accommodating the oil and gas industry. As we've written many times, surging U.S. oil and gas production will give the economy a huge boost... if politicians don't choke it off with regulations and bans.
As longtime Digest readers know, we believe the country's ability to export energy around the world is one of the most important steps we can take to improve our nation's economy.
The government has already granted approval to two companies to start exporting. And additional U.S. liquefied natural gas (LNG) export facilities might be imminent.
LNG exporter Cheniere Energy won the first export license and construction of its Sabine Pass facility is underway. The company says it expects to start exporting in late 2015. And last month, the Department of Energy (DOE) granted an additional license to Freeport LNG to build export facilities on the Texas Gulf Coast. Sixteen applications are still awaiting approval.
According to Bloomberg, Obama's new man in charge of the DOE, Ernest Moniz, says he's begun the process for approving additional LNG export licenses. He didn't say when – or how many – he would approve, stating he's evaluating each application on a case-by-case basis. However, the report says he told the House Energy and Commerce subcommittee he would act "expeditiously."
Meanwhile, Australia, Canada, and Africa are about to start exporting LNG to cover growing demand in Asia and Europe.
Among the applicants Moniz will review is one from Stansberry's Investment Advisory recommendation Dominion Resources... The company's Cove Point, Maryland facility is sitting third in line, according to the DOE's latest list. Porter recommended the stock back in July 2011. His subscribers are up 25%.
In today's Growth Stock Wire, Matt Badiali, editor of the S&A Resource Report, discussed the problems with gold miners today...
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Matt pointed to Australian-based Newcrest Mining as one of the biggest "write off" offenders... The $6.8 billion company announced it would write off $5.75 billion this month. The company had six producing mines, three of which are not profitable at gold's current spot price. The write-down is one of the largest in mining history. This month, Newcrest's shares are down more than 40%.
But Matt says it isn't time to jump in yet... The industry will lay more people off and dump more assets that aren't economical at current gold prices. Today, he told me through e-mail...
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Yesterday, Porter called James Altucher's Choose Yourself one of the most important books he's read in some time... From the June 21 Digest...
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We had a huge response yesterday when we revealed more details about this book. In fact, we may run out of copies in the next day or two. (We only ordered a small amount.) So if you'd like to learn how you can receive a copy of this book, click here... and act quickly.
Research consultant Gallup recently released its annual poll on bank sentiment. Only 26% of those interviewed said they had a "great deal" or "quite of lot" of confidence in banks. While this is a slight improvement over the last four years, it's still far below pre-recession levels.
And yet, despite this lack of confidence in our financial institutions, only an estimated 8.2% of U.S. households operate without a bank account.
So what should you do? Here at the Digest, we've long endorsed the virtues of gold as a proven store of value and hedge against the Fed's current inflationary regime. But unfortunately, gold doesn't pay interest.
That's why the new research recently released by Tom Dyson, publisher of our corporate affiliate, The Palm Beach Letter, is so intriguing. Tom has brought to light what he calls "the most underground savings account on Earth."
Even though this type of account has been around for more than 100 years – and has been used by several U.S. presidents, including Franklin Delano Roosevelt and John F. Kennedy – only one in 1,500 Americans is taking advantage of it today. That's because the government heavily restricts the advertising of these accounts... even though they're 100% legal.
Tom has put together a presentation to share what he's learned about this investment. You can watch this video by clicking here.
New 52-week highs (as of 6/25/13): Ligand Pharmaceuticals (LGND) and short position in iShares Lehman Brothers 20+ Year Treasury Bond (TLT).
A light day in the mailbag... One subscriber asks one of the questions we frequently receive. Send your notes to feedback@stansberryresearch.com.
"IF you have a stock on hold and a person does not own the stock, is it advisable to buy the stock? What is your present buying price WRB?" – Paid-up subscriber G.B. Dawson
Goldsmith comment: A "hold" rating on a stock means if you already own the stock, you should continue to hold it. That's it... It should not be misconstrued as a "buy if you don't own the stock" or a "sell the stock" recommendation. As for the buy-up-to price for W.R. Berkley, that information is available for Stansberry's Investment Advisory subscribers only.
Regards,
Sean Goldsmith
Miami Beach, Florida
June 26, 2013
Why Porter became ultra-bearish this month...