S&A Digest: Another billionaire backs wind power

Another billionaire backs wind power... Private equity targets regional banks... Home repos soar... Wachovia CEO loads up...

Goldsmith comment: Porter had to take care of some personal business today. He'll return on Monday.

 T. Boone Pickens isn't alone... Alternative energy just got a strong new backer. Billionaire James Tisch, CEO of holding company Loews, wrote an op-ed piece for the Washington Post in support of wind and solar power. He said two factors will drive the shift to alternative energies – the high price of traditional fuels and cheaper alternative technologies. According to Tisch, wind energy is economic at about 7 cents per kilowatt-hour, down from 15 cents to 20 cents a few years ago. It costs 12 cents per kilowatt-hour to build a gas-fired power plant.

And with retail electricity prices set to rise as much as 30% this year, we should see a "liftoff" in solar energy. Tisch says a rooftop solar panel will pay for itself in 10 years, a 10% return on capital. Compared with the less-than 5% yield municipal bonds pay, that represents an extraordinary investment. Finally, Tisch believes hybrid cars will soar in popularity. It costs 2 cents per mile for a hybrid versus 20 to 25 cents per mile in traditional fuels. Read the full article here...

 "It's amazing what 10 days will do. People are feeling like they don't want to miss the bottom," said an investment banker who specializes in the financial-services industry. The Dow Jones Wilshire index of bank stocks is up almost 30% since July 15. And private equity is getting antsy. On Tuesday, Carlyle Group invested $75 million in Boston Private Financial Holdings, a wealth-management firm that also owns five banks. Two private-equity firms, MatlinPatterson and Kelso & Co., are considering investments in the regional bank BankUnited Financial in Coral Gables, Florida. MatlinPatterson is also considering investing in mortgage-finance company Downey Financial of Newport Beach, California.

 Banks repossessed 220,000 homes in the second quarter, nearly triple the number from the same period in 2007. In total, there were 739,714 foreclosure filings, up 14% from the first quarter and 121% from the second quarter of 2007. That means one in every 171 U.S. households received a filing, which includes repossessions, auction sale notices, and default notices.

 New Wachovia CEO Robert Steel is voting his bank is fine after its $8.9 billion second-quarter loss. On Tuesday, Steel bought 1 million shares of Wachovia for $16.1 million. "Wachovia is a great company," Steel said. "I made the investment because I believe in the core strengths of the organization and that it is an excellent investment."

 Short positions in Fannie Mae and Freddie Mac soared on Treasury Secretary Henry Paulson's recent announcement, as concern grew that shareholders would be destroyed despite a government bailout. Short interest on Freddie rose 28% to 105.9 million shares between June 30 and July 15. Short interest on Fannie was up 11% to 154.4 million shares.

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 In the mailbag today... Lots of gold and silver questions. We also got a lot of questions about Fannie and Freddie. Porter will handle those upon his return. You've got the whole weekend to think up juicy mailbag material... feedback@stansberryresearch.com.

 New highs: Anheuser-Busch (BUD), Novartis (NVS).

 "Ok. Now you have me worried. If the government would declare owning gold bullion illegal and possibly seize it from our bank boxes as Porter suggests, what good would all that gold buried in my backyard do me, if when I try to convert it into cash or goods I'm arrested for 'dealing in contraban'? What happened the last time gold was made illegal? I've done well since buying gold and silver in 2001, but are we all doomed to become mini Al Capones dealing in illegal gold underground as he did in booz and other things? Call me picky, but being on the wrong end of an FBI dragnet doesnt fit into my picture of a 'secure future' or 'preservation of my monetary assets.'" – Paid-up subscriber Jim

Goldsmith comment: If it gets that bad, we'll send out a mass e-mail letting you know where to meet up with our militia. We'll take back Washington by force.

Porter claims Doug Casey is wrong about one thing regarding the current situation in America. One of Doug's most popular quotes is: "It's too late in the game to change things... and it's too early in the game to line the bastards up against a wall and shoot them."

Porter says no way is too early... Go ahead and shoot them. Just joking... but we can dream, can't we?

 "What happened to SLV? One day it's at 171.90 and the next at 17.13? Did it split? What's up?" – Paid-up subscriber David K.

Goldsmith comment: Barclays, the British bank that created iShares, split 15 of its funds yesterday. It split iShares Silver Trust (SLV) 10 for one. Porter said the company did this so its funds will have thinner price spreads... With more shares trading, the bid/ask spreads will shrink.

 "I wanted to apprise you of a situation regarding David Hall Rare Coins.

"On September 22, 2006, at the recommendation of Stansberry Research, I bought ten 1924 St. Gaudens coins at $2495.00 each. I must have been overcharged, because these same coins on their website are valued at $3300.00, however, in a telephone conversation today I was offered $2500.00 per coin. Now, I am aware of the retail/wholesale concept, but the price of gold has more than doubled in these past months. So they will offer me a $5.00 profit (which, by the time I pay shipping and insurance costs will be a loss).

"As an Alliance member I have made well over two million dollars in cash profits and another three million in unrealized gains from the combined recommendations of your staff in the time frame of my membership. Sure, I've had some losers, but these were from my own ignorance or the market going against us. This is the first time I've been outright taken advantage of since my relationship began with the Alliance. The words 'pariah' and 'charlatan' come to mind.

"I highly encourage Stansberry Research to reconsider their recommendation of this company. They have certainly besmirched your reputation by proxy.

"Otherwise, I am grateful for your continued commitment to thoughtful, high quality research and recommendations." – Paid-up subscriber Ron Tourville

Van Simmons (of David Hall Rare Coins) comment: I apologize for what you consider to be a low offer on your coins. I have written in my monthly newsletter on the gold coin market and have mentioned over 12 times in the last two years how gold coins have not been moving up in price with the price of gold. I have said repeatedly that the prices of gold coins are lagging the bullion price and it may take a year or two for the prices to start moving up. The rarer coins do not track the price of gold bullion coins.

The price you are seeing of $3,300 on my website is the average retail price on the coins that the PCGS price guide puts up. This is not the price that I charge for the coins. You may go to my website and see that I have the coins for sale at $2,950. I hardly consider that markup a rip-off. Plus, I will be lowering my retail price if I continue to buy back more than I feel like I can sell within a short period of time. The price of gold has been coming down this week, and with that we have bought back over 100 coins like yours. I currently have very few buyers for the coins, so where I was paying $2,675 for the coins in the early part of the week, the market has forced me to lower my bid price to $2,500. Please let me know if I may answer any questions for you.

 "I think you've made the right call on Silver Bullion. The US banking system is a Huge Spider Bomb with fuses lit from every leg. I've adjusted my portfolio and put 25% into silver bullion and buried it in the back yard... No one get any ideas... I also put 10% into guns and ammo. One a side note... I'll personally refund 'Anonymous' his money if he promises to quit his bitching about S&A trying to sell more subscriptions." – Paid-up subscriber M.L.

Regards,

Sean Goldsmith

Baltimore, Maryland

July 25, 2008

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