The Most Damning Evidence of Central-Bank Failure
Big news for Stansberry's Investment Advisory subscribers... The world's most dangerous bank... And the most damning evidence of central-bank failure... Brexit has 'unleashed' the next financial crisis... The 'Metropolitan' predictions are already coming true... An urgent announcement about our best gold and silver research...
We'll begin today's Digest with a little "breaking news"...
This morning, Mondelez International (MDLZ) – the maker of Oreo cookies and Cadbury chocolate – announced a bid to acquire Stansberry's Investment Advisory holding Hershey (HSY).
As longtime subscribers may recall, the Hershey Trust holds most of the company's voting rights and will have to approve of any deal. The Trust has long been opposed to selling the company, and has denied offers in the past. But according to the Wall Street Journal, Mondelez is going all out to convince it this time...
Mondelez hasn't disclosed the terms of the offer. But the Journal says it includes some big concessions. It promised to protect Hershey's employees... move the new global headquarters to Hershey, Pennsylvania... and even keep the Hershey name.
Hershey shares soared 17% on the news. Stansberry's Investment Advisory subscribers are now up 214%.
Porter and his team will provide a full update for subscribers in the July issue of Stansberry's Investment Advisory, out tomorrow.
It is the most dangerous financial firm in the world...
Last night, the Federal Reserve released the results of its latest annual "stress tests" for big U.S. banks. The Fed said all but two of 33 institutions passed the tests and were given permission to increase dividends and share buybacks.
The two losers? U.S. banking units of Spanish "bad bank" poster child Banco Santander (SAN)... and German finance giant Deutsche Bank (DB).
Unfortunately, that wasn't even the worst news of the past 24 hours for Germany's biggest bank...
In a report released this morning, the International Monetary Fund ("IMF") called Deutsche Bank "the most important net contributor to systemic risks." It also warned that the German banking system poses the "highest degree of outward contagion." In other words, if Deutsche Bank fails, it could take down banks around the world.
The news could come as a shock to some. Germany has a reputation as one of the strongest economies in Europe... and Deutsche Bank was long considered among the world's elite banks.
But regular Digest readers aren't surprised. We've been following the poor performance of big European banks for months.
Back in February, we noted that shares of Deutsche Bank and a handful of others had fallen below levels seen during the worst of the 2008 financial crisis.
This was a big deal – banks are the engine of the modern economy, taking deposits and making loans to businesses and individuals. When their share prices plummet, it's an ominous sign.
And some of the world's biggest banks were trading as if we were already in crisis. As "Bond God" Jeffrey Gundlach put it at the time...
We see the price of major financial stocks, particularly in Europe, which are truly frightening... Do you know that Deutsche Bank is at a lower price today than it was in 2009 when we were talking about the potential implosion of the entire global banking system?
But it hasn't gotten any better since then. Shares plunged to a new 30-year low this morning. You can see the long-term downtrend in the following chart...
This chart bodes poorly for other European banks... Europe itself... and the entire global paper-money system.
And it is perhaps the most damning evidence we have that central-bank policies have failed.
We'll ask again: If everything is so great, why are these massive financial institutions imploding?
Legendary trader George Soros appears to be asking similar questions...
The 85-year-old Soros came out of retirement earlier this year to return to the helm of his private family office – Soros Fund Management.
As we mentioned earlier this month, Soros was "lured" back into trading by opportunities to profit from "coming economic troubles." And he personally oversaw his fund's big bets on gold and gold stocks and its short position on U.S. stocks.
Leading up to last week's Brexit decision, Soros warned that a "leave" vote would cause the British pound to plunge against the U.S. dollar. As our colleague Sean Goldsmith wrote in Friday's Digest...
In a piece for the British newspaper The Guardian, Soros said if the Brexit referendum passed, "the value of the pound would decline precipitously." The drop would be bigger and more devastating than the 15% fall that happened in the wake of 1992's Black Wednesday.
So far, Soros' call has been spot-on...
As we've mentioned, on its worst day in September 1992, the pound fell 4.05%. Last Friday, the pound declined as much as 13%, to its lowest level in 31 years. This was the pound's largest one-day decline in history.
But you might be surprised to learn Soros himself didn't profit from the move. He was long the pound before last week's vote. According to a spokesman, Soros "did not speculate against sterling while he was arguing for Britain to remain in the European Union."
But that's not to say that he didn't make money...
In addition to his massive long positions in gold and gold stocks, it turns out Soros was also holding a big short position on Deutsche Bank. According to regulatory filings, Soros had shorted nearly $100 million worth of the bank's shares.
As of today's trading, Deutsche Bank is down nearly 30% from just its pre-Brexit levels...
Of course, he has likely made even more money with his bets on gold.
In the first quarter, he disclosed a $264 million stake in the world's largest bullion producer – Barrick Gold (ABX). It's the firm's single-largest position. He also bought another $124 million worth of the SPDR Gold Trust (GLD).
While global markets have recovered some of their recent losses, Soros doesn't think these problems are over...
In a speech to the European Parliament in Brussels this morning, Soros warned that last week's vote has "unleashed" a new debt crisis that has quietly been building for years...
This has been unfolding in slow motion, but Brexit will accelerate it. It is likely to reinforce the trends that were already prevalent.
Soros' warnings aren't the only bullish news for gold today...
Regular readers know Porter's "Metropolitan Man" recently updated his startling prediction. As we shared in the June 23 Digest, he believes we're likely to see three tangible events before the run on the U.S. dollar begins...
1. Japan's central bank begins directly buying U.S. and European financial assets in an effort to further weaken the yen. The Bank of Japan has already been buying tons of Japanese stocks. It's a top-10 shareholder in nearly every company on its major stock exchange. It's soon likely to expand its purchases into U.S. and European markets.
2. China follows the Japanese by devaluing the yuan substantially. China has already been testing these waters... The People's Bank of China devalued the yuan by 2% last August – creating the biggest one-day change in its currency since 1993. It followed that move with a smaller devaluation in January, and another last month. The yuan is now trading near five-year lows versus the U.S. dollar, but it will likely only get much worse from here.
3. More and more mainstream newspapers and political leaders will call for pegging currencies to gold in order to stop the world's increasingly chaotic currency fluctuations.
As we mentioned, we've already seen signs these events are beginning. But even we have been surprised by just how quickly they're coming...
For example, just this morning we learned that some Japanese central-bank officials now believe the country's stimulus efforts aren't working, and something else must be tried.
The Bank of Japan is already buying up tons of Japanese stocks and bonds. That "something else" could be foreign assets.
But that's not all... according to S&P Chief Global Economist Paul Sheard, Japan is most likely to try so-called "helicopter money." That's right, Sheard says Japan could become the first country to print money and inject it directly into the economy.
In related news, we see Europe may not be far behind... European Central Bank ("ECB") President Mario Draghi announced today that the bank is considering "looser" rules for its quantitative easing bond-buying program.
Why? Because it has been buying so many government and corporate bonds each month, it's running out of eligible bonds to purchase.
Expect to hear news that the ECB is expanding its program to include lower-quality debt, stocks, and who-knows-what-else soon.
Meanwhile, as we discussed on Monday, China devalued its currency again this week, by the most since last August.
This morning, news service Reuters reported more devaluations could be coming soon.
Citing unnamed "policy sources," the report said China's central bank – the People's Bank of China ("PBOC") – is willing to let the yuan fall to at least 6.8 per dollar this year. This would match or exceed last year's record decline.
The report also confirmed our suspicions that China is trying to devalue more gradually, to avoid a repeat of last August's panic.
Shortly after the Reuters report was published, the PBOC issued a statement denying the accuracy of the story. As Bloomberg reported...
China's central bank said in a statement late Thursday that certain news outlets constantly publish inaccurate information about the exchange rate. This has misled investors, disrupted the market, and encouraged speculative short-yuan trades, the PBOC said, adding that the nation will push ahead with reforms in the currency market.
Perhaps China's statement is true, but we couldn't help but think of the classic political adage: Never believe anything until it has been officially denied.
Finally, as we noted yesterday, former Federal Reserve Chairman Alan Greenspan is now publically calling for a return to the gold standard.
Granted, Greenspan was known as a "gold bug" prior to leading the Fed, but it's still worth noting that he's now on the record for being in favor of the gold standard.
We can't know when these problems will come to a head. But anyone who is paying attention can clearly see a crisis is coming. Will you be prepared?
Three months ago, Porter launched a brand-new product to help you do just that.
For the first time in his career, he put his own name on a gold-research service, Stansberry Gold Investor. And the early returns have been incredible...
When we launched the service in April, gold was trading at $1,231 an ounce. Since then, it's up about $100 an ounce... or around 7%.
But Stansberry Gold Investor subscribers have done much, much better...
Every single position is up double digits... including gains of 93%, 94%, and even 131%... with ZERO losers. And the total portfolio – which includes substantial positions in gold bullion – is up a remarkable 36%.
That's more than five times better than gold performed over the same period.
Unfortunately, this early success came with a downside...
Many of our early recommended positions ran up so much, they were no longer in "buy range." But that's no longer the case today.
Because gold has also rallied significantly since we launched Stansberry Gold Investor, the companies that own and sell gold are worth much more money today.
So, for the first time since launching the product, we're officially raising our "buy up to" prices today... For every position in the model portfolio. Porter just issued a special alert this morning detailing everything you need to know about the best positions to buy now.
If you weren't able to join Stansberry Gold Investor the first time around, you no longer have an excuse... and you can't afford to wait any longer.
Because we believe every subscriber should be reading Stansberry Gold Investor, Porter has agreed to make you a special offer... BUT IT'S ONLY FOR TODAY.
In short, if you sign up for Stansberry Gold Investor before midnight tonight, we'll give you one year of Stansberry Resource Report, written by our in-house geologist Matt Badiali, absolutely free.
Matt is also super bullish on precious metals. And in the Stansberry Resource Report, you'll get even more gold- and silver-stock recommendations... along with all of Matt's best insight into the energy, agricultural, and mining markets.
Again, this offer is only good until midnight tonight. And because this is an urgent opportunity, we won't be asking you to view a long sales message. Simply click here to get instant access to all of our best gold and silver research.
New 52-week highs (as of 6/29/16): Franco-Nevada (FNV), VanEck Vectors Junior Gold Miners Fund (GDXJ), Welltower (HCN), Invesco Value Municipal Income Trust (IIM), Johnson & Johnson (JNJ), Kaminak Gold (KAM.V), Mid-America Apartment Communities (MAA), Nuveen Premium Income Municipal Fund 2 (NPM), Nuveen Municipal Value Fund (NUV), OceanaGold (OGC.TO), Pretium Resources (PVG), Spectra Energy (SE), Silver Standard Resources (SSRI), AT&T (T), Vanguard REIT Fund (VNQ), Wells Fargo – Series W (WFC-PW), and ExxonMobil (XOM).
A quiet day in the mailbag. How have you benefited from our gold advice? Let us know at feedback@stansberryresearch.com.
Regards,
Justin Brill
Baltimore, Maryland
June 30, 2016
|