Signs of a Bottom in One of the World's Most Hated Assets

A special offer on our new 'Golden Triangle' research... The 'Bond God' agrees... 'If you ever thought about buying commodities, maybe you should buy them now'... Signs of a bottom in one of the world's most hated assets...

Thanks to everyone who joined us for last night's big event...

If you were there, you heard Stansberry Research senior analysts Mike DiBiase and Bryan Beach unveil their remarkable "Golden Triangle" research to the public for the first time.

In short, while researching bonds for our elite Stansberry's Credit Opportunities earlier this year, Mike discovered something amazing: A rare pattern with near-perfect accuracy in identifying stocks with triple-digit upside potential over the next 12-24 months.

This pattern is triggered by an unusual divergence between a company's stock and bond prices. In simple terms, the Golden Triangle forms when the bond and stock markets "disagree" about a company's prospects... or more specifically, when the stock market becomes incredibly bearish about a company but the bond market disagrees.

Again, this pattern is incredibly rare. Mike estimates it occurs less than 0.3% of the time among publicly traded companies. But when it does occur, it's as close to a "holy grail" of investing as anything we've ever seen...

Mike's extensive research shows the Golden Triangle has produced average returns of 215% – with zero losing trades – as far back as reliable data is available. More important, it even worked through the 2008-2009 financial crisis, one of the worst market declines in history.

As attendees learned last night, this means Golden Triangle stocks aren't just a lower-risk way to speculate on a continued "Melt Up"... they should also dramatically outperform the broad market when the "Melt Down" finally arrives.

If you weren't able to join us, you can read a brief recap of Mike's presentation right here.

But this wasn't the only big news we announced last night...

You see, we would typically publish new research of this caliber in its own standalone service. But this time, we're making an exception...

Because the Golden Triangle discovery is intimately tied to our bond-market research, we've decided to include all of this research as part of our existing Stansberry's Credit Opportunities service.

This means all current Stansberry's Credit Opportunities subscribers will have access to our Golden Triangle research. (In fact, you should have already received an e-mail with your first report.) It also means that anyone who signs up to try this new research today will get access to all of our elite bond research at no additional cost.

Best of all, because Porter believes this research is our most important and exciting to date, we're making a special one-time offer to enable as many folks as possible to take advantage...

For a limited time, you can get access to both our elite bond research and our new Golden Triangle research for LESS than the usual cost of Stansberry's Credit Opportunities alone.

Click here for the details on this special offer.

'If you ever thought about buying commodities, maybe you should buy them now'...

So said Jeffrey Gundlach, founder and CEO of investment firm DoubleLine, in his latest investor webcast on Tuesday.

As regular readers know, Gundlach's primary expertise is the credit markets – he's widely known as the "Bond God," after all. But he has also made a number of astute "macro" calls over the years, including calling the exact bottom in interest rates last year. In short, when he speaks, we always listen.

Gundlach is bullish because of the rare extreme between the prices of stocks and commodities today. He noted that each has dramatically outperformed the other for significant periods of time over the years. For example, he showed that stocks trounced commodities during the 1990s and the dot-com boom. Commodities then beat stocks from the early 2000s through the 2008 financial crisis. And stocks have been leading again ever since.

Today, he believes commodities are set to take the lead once again. As he explained...

The fascinating thing about where we are today is that the [commodity trend] line is no longer moving down [relative to stocks as it has since 2008]. So it's not a value trap.

[Commodities have] actually bottomed out and are no longer underperforming and... are at the level where historically they've been a good buy. If you've ever thought about buying commodities... you should buy them now, because commodities look to be, on a historical basis, in a very interesting kind of price point.

Regular Digest readers know we agree...

We pointed out the historic extreme between stocks and commodities earlier this year. As we wrote in the June 7 Digest...

As you can see, this ratio has now fallen to an extreme rarely seen over the past five decades... In fact, it is now even lower than either of the previous two bottoms...

Some of you may recall the first... It was just before President Nixon took the U.S. dollar off the gold standard. Over the next several years, inflation shot higher... commodities soared... and stocks entered a brutal bear market.

The second bottom occurred just before the final run-up in the dot-com boom. Again, over the next decade, commodities dramatically outperformed stocks. The broad GSCI Commodity Index rose nearly 300% from January 1999 through the end of 2007, while the S&P 500 gained less than 30%.

These historic lows suggest "real" assets could once again be set to beat financial assets over the next several years.

Today, we're happy to report one of Wall Street's brightest minds agrees.

'Something has got to give'...

Speaking of the commodities markets, our colleague Ben Morris is incredibly bullish on one cheap and hated resource in particular: uranium.

After a brutal bear market that saw prices plunge more than 90% from their peak, Ben believes prices are finally headed higher again.

You see, contrary to popular belief, uranium's role as an energy source remains as important as ever. As he explained in yesterday's issue of DailyWealth Trader...

Uranium is one of the world's most important assets. After it's refined, the metal fuels nuclear power plants. And nuclear power plants generate about 11% of the world's electricity... and about 20% of the electricity in the United States.

One day, the world may run solely on sustainable energy sources like wind, water, and solar. But we're not anywhere near that point yet. So for now, if we want electricity, we need uranium.

While demand fell significantly following the 2011 Fukushima disaster, it has been slowly rebounding since.

All that was needed for a sustainable bottom in prices was for supply to fall back into balance. And this was inevitable.

You see, uranium prices had fallen to less than $20 per pound...

Yet, the average cost to produce a pound of uranium is at least $60. This meant producers were taking a huge loss on every pound they produced.

As Ben noted, "Businesses can't stay afloat selling their goods for $5 when it costs $10 to make them. And if their 'goods' are critical to the developed world, this sort of situation can't last."

In other words, it was simply a matter of time before producers began to "throw in the towel." And last month, they finally did. More from Ben...

On November 8, major Canadian uranium producer Cameco (CCJ) announced that it will halt production at its McArthur River and Key Lake locations in January. The company cited continued oversupply in the uranium market as the reason. This is a significant development...

The McArthur River mine is the world's biggest uranium mine. By some estimates, the two closures will decrease global uranium production by about 9%.

And you can't just flip a switch to shut down or restart production. It will likely be years before these mines start producing. Uranium prices jumped 11% the following day to nearly $23 per pound.

But Cameco wasn't alone for long. This week another major produced joined in...

On Monday, Kazakhstan – the world's leading uranium producer – announced its plans to cut production by 20% for the next three years. This will reduce global uranium production by about 7.5%.

The pain got to be too much. The world's largest uranium producers are finally starting to slow production.

On Tuesday, the price of uranium jumped to $26.40 per pound... an eight-month high. And uranium stocks are starting to climb, too.

As Ben noted, this price action is an incredibly bullish sign...

The price of uranium still needs to rise at least 130% to catch up to the price of production. And this could be the start.

Uranium and uranium stocks are starting to climb. This could be the beginning of a massive bull market... And gains of 100% could just be the start.

New 52-week highs (as of 12/6/17): Boeing (BA), McDonald's (MCD), and short position in Sprint (S).

In today's mailbag, several readers weigh in on last night's "Golden Triangle" reveal... and the "boo birds" return. How have we disappointed you? Let us know at feedback@stansberryresearch.com.

"[Your Golden Triangle research] is just an absolutely phenomenal addition to Stansberry's Credit Opportunities, and it makes perfect sense! Together with Stansberry's Big Trade, you are positioning for some very big gains in the years just ahead.

"I continue to be repeatedly delighted with my decision to become a full Stansberry Alliance member in early 2016. Just in the short time since then, your research has expanded in value in amazing ways! Porter has said many times that he wants Stansberry Research to be the best service in the industry, and I have to say he is more than measuring up in that commitment in ways I never imagined!" – Paid-up Stansberry Alliance member Shawn Stewart

"Porter – I missed the show [last night], but read the [new research]. (Thanks for including Stansberry's Credit Opportunities in the Alliance membership.) Damn. I hope your analysts/quants who discovered the Golden Triangle (Holy Grail?) got a big, fat bonus (or better, a cut of the future increase in subscriptions). It seems so simple, but the best ideas usually are.

"Your life's work continues to add value way beyond expectations (as in, chart it on a logarithmic scale). Looking forward to cashing in (again). Thanks for proving (again) that mutually beneficial business relationships begin in Baltimore. You give capitalism a good name." – Paid-up subscriber LAF

"I was sorry that Porter didn't lead the live discussion this evening. If this was a lie just to get more people to tune in I will be less trusting of what your business promotes. I am a very unhappy subscriber." – Paid-up subscriber Carol H

Porter comment: It wasn't a lie. My 10-year-old son's beloved black lab, Ringo, was hit and killed by a car yesterday morning.

Unfortunately, it happened right in front of our home, just as I was taking the kids to school. Our main gate at the end of our driveway was malfunctioning, opening and closing. We didn't know. And Ringo was able to get out of our front yard.

He died right in front of my 10-year-old and my 6-year-old. Many of my children's classmates, who also loved this wonderful dog, saw the accident on their way to school, which is just down the road from our home.

That you think I'd use a terrible family tragedy as a ploy to avoid my responsibilities to my subscribers is the worst false indictment I can recall anyone making about me.

I hope you will take your business, and your horrible negative energy, somewhere else. We've suffered enough this week.

"So you guys say that this long term/short term interest rate situation causes recessions and stock market decline. But you don't say WHY. That's bull s*&^. Like when the researchers say barbequing causes cancer because they talked to a bunch of cancer victims and they all said they like to barbeque. So my question is: WHY does this [inverted yield curve] situation cause recession/decline? How about you guys apply some economic principles and come up with the reason." – Paid-up subscriber Gary Kessinger

Brill comment: You mean something like this?

"[You wrote:] 'After months of debate and speculation, the Republican Congress is inching closer to a deal on tax reform...' WHAT debate? The senators had just a few hours to read 500 pages and then vote. There was NO debate! The tax scam is being crammed down our throats with attachments like ACA destruction and Alaska oil giveaways. Republicans are bypassing all normal procedures for passing bills. Tell the WHOLE truth for a change Stansberry." – Paid-up subscriber Larry Hill

Brill comment: We were simply referring to questions about whether Congress would even be able to come together to get a tax bill passed, not the substance of the bill itself.

While we're often accused of being partisan, the reality is we're no fans of politicians on either side of the aisle. In fact, while we would welcome tax relief, we share your concern.

We assume you were equally outraged when the Affordable Care Act was "crammed down our throats" in 2010? You know, when House Speaker Nancy Pelosi herself said, "We have to pass the bill so that you can find out what is in it"?

"While you're busy talking up your big webinar for Wednesday night, all of your gold recommendations are tanking. Care for a wager on how many of the Stansberry Gold & Silver Investor recommendations will stop out by the end of the month (most with losses)?" – Paid-up subscriber Chris C.

Brill comment: It's true that gold and silver have not performed as well as we had hoped this year. Just like our "Big Trade" put strategy that has disappointed so far, gold and silver look like foolish bets today. But make no mistake, we remain incredibly bullish on their long-term potential. The reasons to own precious metals are as valid as ever... And the day is coming when you'll be glad you own them.

In the meantime, despite the poor recent performance of the entire sector, our recommendations have held up relatively well. A quick look at the Stansberry Gold & Silver Investor portfolio shows that more than half of the recommendations in gold and silver stocks remain in positive territory, including seven with double-digit gains. Only two of the seven in negative territory are anywhere near their stops today. And this doesn't include the 35% allocation to physical gold, which is still showing gains.

Most important, if you followed our position-sizing advice to limit precious metals to only a small percentage of your total portfolio – and to then limit small gold and silver stocks (small producers and explorers) to no more than one-third of your total precious metals allocation – the cost of holding this "insurance" has been minimal.

Regards,

Justin Brill Baltimore, Maryland December 7, 2017