When All Trust Is Lost
More cases, deaths tick up... When all trust is lost... Bet on what people do, not what they say... A juiced market... The value of digital air and gold in the ground... The numbers that don't lie...
It's not the same story everywhere...
COVID-19 cases, collectively across the country, continue to rise... And overall, the U.S. death rate from this sticky virus has started to tick up over the past week.
Yet you can't paint everything with the same broad brush...
Some areas of the country – like Arizona, Alabama, Georgia, and Florida – are at dangerous "ICU full capacity" situations, while other places are moving closer to being "in the clear."
We recently read the disturbing story of a man in his 30s who attended a "COVID party" in Texas. Before the man died, he told a nurse, "I think I made a mistake. I thought this was a hoax, but it's not."
At the same time, I (Corey McLaughlin) visited a beach on Long Island, New York, over the weekend. And I'd say that it was "safely crowded" with people. The instructions included...
Set up your towels and blankets 10 feet apart. Stay six feet away from other people, even in the water. And wear a mask if you can't do either.
But there was plenty of room to spread out. The parking lot was only half full, an orange cone separating every car...
Car traffic wasn't quite back to normal levels – in a couple of different ways...
So many people were trying to get to the beach that a normal 10-minute drive to get there took about an hour.
Yet going the longer distance from my house here in Baltimore to my family's place on Long Island and back again only took 3 hours and 30 minutes each way... That's record time for anyone who knows this stretch of the Interstate 95 corridor.
In a way, these two anecdotal data points may say a lot about where the economy is at right now.
Demand for all things local – like going outside, eating food, or ordering things to your house from Amazon (AMZN) – is high... while demand for longer-distance activities – like interstate travel, hotel stays, and gasoline – is still lower than we used to know.
'COVID is still a risk. Wear a mask'...
That's the message we saw on one of those electronic highway signs on New York City's Belt Parkway – which, in a sign of normalcy, had traffic yesterday – as we drove beneath it.
To me, the word "still" in the sign indicated the widespread attitude in New York... that many folks believe the worst of the virus is behind the former poster-child city for the outbreak.
But at the same time, a friend who manages commercial real estate in New York told us about a company with 600,000 square feet of space that had just reopened the office to only 60 employees last week. It's already shut down again after one of those folks tested positive for COVID-19.
And this all happened after the company spent $56,000 just to clean the place.
The point is... even in places where the virus isn't killing people by the hundreds every day anymore, it isn't gone completely. Maybe it never will be.
As Retirement Millionaire editor Dr. David "Doc" Eifrig has written repeatedly over the past few months, he believes the virus that causes COVID-19 is "seasonal."
In other words, we better get used to living with it. And investors like you and I ought to consider preparing our portfolios accordingly for the long haul.
Bet on what people do, not what they say...
This might be the best idea for these "unprecedented" times – and any other time.
We've written about this before, how watching the behaviors of 70% of the American economy – you and I, the consumer – can tell you a lot. Back on April 22, we wrote...
There's a reason 22 million more Americans are unemployed today than a month ago... and that many more folks are looking for jobs now than during the financial crisis.
The pandemic has touched literally every part of our economy. But at the same time, this should also serve as a fresh reminder that the everyday behaviors of "We the People" actually matter...
Be it binging on Netflix (NFLX), riding Peloton (PTON) bikes in our homes, or eating out at fast-food restaurants like McDonald's (MCD)... and not flying on airlines like Southwest Airlines (LUV) or United (UAL) or doing anything else that requires burning oil.
In a world where fake news is believable... fake Federal Reserve money is supposedly worth as much as anything else... countless Americans already distrust many of our institutions... and the president retweets the idea that "everyone is lying"... we can know a few things for sure...
What's actually happening in front of our eyes.
And after a few days out of my house recently, a round of golf on an A.W. Tillinghast-designed course, and a visit to an in-demand public beach, here's a hopefully salient analysis of the day that others might find helpful...
First off, people are still getting sick.
COVID-19 is a dangerous enough disease that I know I don't want to get it... or infect any other person who might be at higher risk of a severe reaction than me. But the U.S. death rate had been doing down for months until the past week. Overall, that's good news.
To me, the amount of prolonged exposure someone gets to the virus seems to be the least-discussed important point about the pandemic in all the mainstream media.
In other words, sitting next to people in a crowded bar in Michigan increases your chances of "getting it" if there's an infected person breathing in there. Yet outdoor protests in cities across the country after George Floyd's death evidently didn't start significant outbreaks.
We need to get back to normal, or close to it.
Based on how other countries – and even states within our country (just ask Stansberry Venture Technology editor Dave Lashmet about how successful Hawaii has been) – have done things, the path has already been proven.
The quickest and yet most counterintuitive way is with small decisions, discipline, and patience.
Be a human – if you're healthy, go out and talk to people. But be sure to social distance, wear a mask indoors with people who you don't know... don't host a "COVID party"... and if you want, hold out hope for a safe and effective vaccine.
A lot of people are going about their daily lives...
What else is there to do?
The talking heads on TV can shout all the opinions they want and scare everyone into submission. But what we do, think, and see ultimately matters the most for public companies.
Certain areas of business – like cloud-based platforms and software (pretty much any letter followed by an "aaS" after it) – that are impervious to a physical virus and make life easier at the same time are thriving in the pandemic's digital-focused economy.
Yet certain industries where strangers gather in groups and share circulated air (like airlines, hotels, and sporting events) have a long comeback road ahead of them. Just today, Daniel Smoot of our Stansberry NewsWire team reported on the latest piece of bad news for the airline industry...
U.S. airlines saw 89% fewer passengers in May compared with the same period in 2019, the U.S. Department of Transportation reported on Tuesday...
According to the report, the 20 largest U.S. airlines saw 7.9 million passengers in May versus 74.8 million in May 2019.
Stansberry's Big Trade editor Bill McGilton told Daniel that the airline industry "will likely see smaller fleets and growing levels of debt, a bad combination for shareholders" banking on the industry's rebound.
Meanwhile, the Fed has clearly 'juiced' the market...
And in the process, the central bank has made gold cool again with its digital money-printing activities... which have turned more investor eyes to hard assets like gold, as we've been urging Digest readers to consider for months.
Gold Stock Analyst editor John Doody and associate editor Garrett Goggin believe the price of gold is headed above $3,000 per ounce.
You see, the amount of gold on Earth is finite. As Garrett put it in yesterday's Gold Stock Analyst issue, "Only when stars explode into supernovas, once every million years or so, is gold created. Gold is extremely rare and expensive to mine."
Yet the amount of schemes that Congress, the Treasury Department, and the Fed can dream up to maintain the illusion of economic stability is infinite.
So the value of gold and other "hard assets" like it is going up while more money floods the world's computers. You can read our most recent dispatches featuring gold here and here.
DailyWealth Trader editors Ben Morris and Drew McConnell just covered the bullish case for gold from another angle...
Over the weekend, Ben and Drew revived a piece that they first published back in February 2016 – about the best way to value gold.
With the precious metal breaking out to new highs recently and with more room to run as our gold analysts predict, the essay remains as relevant today as ever...
In short, Ben and Drew said that most investors tend to inadvertently ignore an important point when gauging gold's value... and this one indicates to them that the bullish case for gold is even stronger today than most folks realize.
It comes down to what they see, and how they measure it...
For instance, it's a given that most investors measure the U.S. dollar relative to other currencies, even if they don't know it... The widely used U.S. Dollar Index measures the dollar's value against the euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc (in order of weighting).
Yet most folks in the U.S. who are interested in gold measure its value only relative to their native currency, the dollar. This is "a limited view," according to Ben and Drew, because...
When you only measure gold in U.S. dollars, a change in the dollar shows up in the price of gold. When the dollar gets stronger internationally, it can buy more gold... So it looks like the value of gold goes down. When the dollar gets weaker internationally, it can buy less gold... So it looks like the value of gold goes up.
Looking at gold only in dollars 'can mask what's happening with the metal on the international stage,' they said...
For example, back in 2016, the U.S. dollar had risen sharply over the previous two years, so a lot of people didn't realize that the value of gold had been on the rise internationally the whole time.
Ben and Drew recommend looking at the Kitco Gold Index, which you can find for free on Kitco's website. As they wrote in their essay on Saturday...
It makes a point to show how much of an asset's price change is due to changes in the dollar... And how much is due to fundamental factors like supply and demand.
The Kitco Gold Index measures the price of gold against the same basket of foreign currencies that the dollar is measured against in the U.S. Dollar Index.
You can find an updated, long-term chart of the Kitco Gold Index (the blue line) and gold priced in dollars (the red line) right here. Just scroll down and click on "10 Year."
As we've reported over the past few weeks, gold is hitting multiyear highs in the U.S. And in the meantime, the Kitco Gold Index is also soaring to new all-time highs. Ben and Drew say this is a big sign of strength for gold... one that most U.S.-based investors and gold owners don't understand.
This is just one example of 'trading what you see, not what you hear'...
The truth is scarce these days. So we're always on the lookout for opportunities to trade what we trust...
And right now, for instance, we're sharing one such unique opportunity that we recently found from our friend Joel Litman over at our corporate affiliate Altimetry.
Joel is a renowned finance professor who has developed a form of "forensic analysis" that neither Wall Street firms nor the U.S. government has been able to duplicate.
The FBI actually hired him to develop a way to see which CEOs mean what they say during their earnings calls... and which ones don't.
Joel has used what he calls his "truth detection" method to expose 50 companies that later crashed or plummeted... He has also used it to identify big winners, too – like chipmaker Advanced Micro Devices (AMD) before it shot up 2,000%.
Now, Joel is sharing his newest discovery for a limited time only. It's a rare investment that appears after every crisis... with 10-bagger potential if you get in immediately. Click here to see more right now.
The Details About Valuations
You've heard it before... The market is overvalued. But what does that actually mean?
Retirement Millionaire senior analyst Matt Weinschenk explains why valuations matter to the broad stock market and individual companies in this video with our colleague Jessica Stone.
Click here to watch this video right now. For more free video content, subscribe to our Stansberry Research YouTube channel... and follow us on Facebook, Instagram, and Twitter.
New 52-week highs (as of 7/13/20): Sprott Physical Gold and Silver Trust (CEF), DB Gold Double Long ETN (DGP), Green Thumb Industries (GTBIF), KraneShares Bosera MSCI China A Fund (KBA), KraneShares MSCI All China Health Care Index Fund (KURE), Trulieve Cannabis (TCNNF), TFI International (TFII), Tudor Gold (TUD.V), and Vanguard Inflation-Protected Securities Fund (VIPSX).
In today's mailbag, feedback on Alan Gula's Monday Digest and Doc's options-trading strategies. Do you have a comment or question? E-mail us at feedback@stansberryresearch.com.
"You should have saved yesterday's Digest for a Friday. Seriously one of the best pieces I have read anywhere in quite some time." – Paid-up subscriber Mike P.
"Dear Dr. Eifrig, I had sold a few covered calls before I discovered Stansberry Research (years ago). It has been a fabulous learning process for me... trying every new letter, etc. However, I kept coming back to selling options...
"Selling calls on good, safe recommendations by the Stansberry team is my focus for now. It is fun and exciting, but something I don't have to watch every day. It also helps me to stay disciplined.
"Love using your recommendations in Retirement Trader and all the Stansberry letters that I receive." – Stansberry Alliance member Camilla M.
All the best,
Corey McLaughlin
Baltimore, Maryland
July 14, 2020