A Huge Night at Stansberry Research

A huge night at Stansberry Research… What to do if you missed our Emergency Briefing… Why gold has been soaring… 'Everything I want to see in an investment'… And P.J. O'Rourke's three principles for success in investing and marriage...

It was the largest event in Stansberry Research history...

A special thanks to everyone who tuned in for our Emergency Briefing on gold last night.

We had a record turnout. And based on the feedback we received (some of which you'll see below in today's mailbag), it was a huge success.

Although, we do have to apologize for some of the technical difficulties we had last night. Not only was our own site down for a period of time, but the company we use to host our online events couldn't successfully handle the volume – even though we specifically requested and paid for extra bandwidth and support.

If you missed last night's event, don't worry. We cover all the same details in this new presentation, which you can view right here.

Also, if you signed up for Stansberry Gold Investor last night, you can find the first issue –"The Gold Decade: How to Prepare for the Coming Bull Mania in Gold" – on our website right now.

Frankly, we're not surprised so many folks decided to join us last night...

In all of our years working with Porter, we've never seen him so concerned. And if you've been following the Digest, you know why...

As Porter explained over the last several days, he recently attended a private dinner with one of the most powerful men in the world... a meeting that convinced him we're about to watch the world's system of paper money completely fall apart. It left him speechless and shaken.

When Porter got back to the office, he shared the details of the meeting with Stansberry executives. He told his analysts to drop everything... And we immediately got to work creating a new product that would show our readers the absolute best way to profit from what could end up as the biggest bull market for gold in history.

We called mining CEOs, professional investors in the precious-metals space, rare-coin and bullion specialists... We even sent two of our top analysts to Vancouver to set up face-to-face meetings with the biggest names in the gold sector.

In short, we put all of our resources into hunting down the best mining stocks in the world. In the mining business, more than any other we know, it's "who you know" that counts. And after nearly 20 years in this business, hardly anyone refuses our calls.

The result of this work is our latest service, Stansberry Gold Investor. It just may be the most important – and timely – research we've ever published...

Regular readers know gold has been on an absolute tear. It rose more than 16% through the first three months of the year.

This move marked gold's best quarter in almost 30 years... And it could be the first sign that the crisis Porter was warning about has already begun.

The last time gold had a quarter like this was in the summer of 1990, when anxiety surrounding the buildup to the first Gulf War helped drive investors to it as a "safe haven."

What do you think could be pushing gold so high today? We're not in the middle of any wars...

This time around, it's not geopolitical turmoil that's primarily driving gold... it's monetary turmoil. The spread of negative interest rate policies (or "NIRP" for short) around the world has "lit a fire" under the price of gold. As Porter explained in his recent Digest series...

You might have heard about this new kind of monetary policy. It's like capitalism turned upside down. Instead of being paid to save capital, you're forced to pay just to keep the money you've already earned. Negative interest rates are nothing more than government theft. Its banks literally steal from you every day that you keep your money in dollars, yen, or euros.

NIRP has already been adopted by the central banks of the Eurozone, Japan, and several other smaller European countries. And according to Porter's "host," the U.S. will join them...

Our host began the meeting by describing discussions among senior policymakers in the U.S. about the possibility that the U.S. will follow Europe and Japan into negative interest rates. You probably haven't noticed, but despite the big rebound we've seen in the stock market, sovereign interest rates (as measured by the yield on the U.S. 10-year Treasury bond) have continued to fall. In the first quarter of the year, the yield fell from 2.27% to 1.77%.

According to our host, among U.S. policymakers it was becoming a foregone conclusion that since Europe (one of our major trading partners) and Japan were both using negative interest rates to weaken their currencies and to avoid deflation, that it was only a matter of time before the U.S. would do the same.

Why does this matter? Because negative "real" interest rates – nominal interest rates minus the rate of inflation – have always been bullish for gold. As Porter explained, the reason is easy to understand...

Gold is the ultimate hedge against the loss of purchasing power in paper currencies. If governments can't offer a real rate of return for holding their bonds, then investors aren't being protected against inflation. And as a result, they flee to gold.

Negative interest rates would greatly exacerbate this logical market preference... and that's exactly why gold has been soaring lately.

Sooner or later – as more and more folks wake up to these risks and flee to gold – a "tipping point" will arrive. A massive, global "run on the bank" could occur as the general public rushes to hoard currency and gold... and that's where the "Metropolitan Plan" comes in. More from Porter...

Our dinner host explained what would happen to this gold if NIRP policies caused a global run on paper money. And that's when I got genuinely afraid...

The only way to re-establish credibility and regain control of the financial system in the event of a global run on paper currencies would be to re-establish the U.S. dollar's convertibility into gold. Our host described the means for accomplishing this goal. The Fed, he said, could offer to swap all of the Treasury bonds it holds (about $2.4 trillion) for all of the gold owned by the U.S. Treasury. When you do the math, you come with a new dollar-to-gold ratio of $9,677. Roughly $10,000 an ounce.

This would represent a gain of approximately 690% for investors who simply buy gold at today's prices.

But folks who own the best gold stocks and other select gold investments could do much, much better. Returns of 20, 30, or even 50 times your money are possible. And this is not hyperbole.

Our colleague Steve Sjuggerud agrees...

Steve is incredibly bullish on gold today, but for a totally different reason. He says we have the perfect setup in gold right now. In addition to negative "real" interest rates, Steve says gold meets his classic "cheap, hated, and in an uptrend" criteria as well. As he explained in the March 15 issue of DailyWealth...

Gold is cheap, down $700 from its highs. It's hated, as everyone gave up after 2013, and nobody is back in yet. Lastly, the uptrend has returned this year. We have everything I want to see in an investment.

Best of all, now is the optimal time to own gold... Remember, when both gold and paper money pay zero-percent interest, investors prefer gold over paper.

Right now, paper money is paying you zero... it's time for people to own gold... Make sure you get your money there first.

Longtime readers know Steve doesn't find "perfect" investment situations like this often. But when he has, they've led to some of the biggest gains of his career.

This is an incredible buy signal... And it's one more big reason to buy gold today.

Again, if you missed last night's event, it's not too late to take advantage of this opportunity.

We've put together a full presentation of all the important ideas Porter discussed during the briefing, including more on the "Metropolitan Plan"... the four critical steps every investor should take immediately... and how you too can become a charter member of our new Stansberry Gold Investor service. Click here to access.

New 52-week highs (as of 4/6/16): Automatic Data Processing (ADP), Johnson & Johnson (JNJ), Altria (MO), Prestige Brands (PBH), Procter & Gamble (PG), Reservoir Minerals (RMC.V), Seabridge Gold (SA), and Constellation Brands (STZ).

In today's mailbag... a flood of feedback on last night's emergency gold briefing. What did you think? Send your questions and comments to feedback@stansberryresearch.com.

"Porter, your Q&A session was so great and wholesomely candid, it even exceeded your personal reports. You are amazing!" – Paid-up subscriber B.H.

"GREAT presentation! Loved Porter's rant of truth!" – Paid-up subscriber Howard M.

"Thank you, Porter, for a great evening! Thank you for the tips you gave us all tonight. I am a little guy on Social Security, but have been telling people to buy the metals. They think I am crazy... But we know different." – Paid-up subscriber Larry L.

"Porter, this was the best presentation re: anything financial that I ever have sat through, and well worth staying to the very end. Thank you, sirs." – Paid-up subscriber Charles C.

"Great presentation. You are right on the mark. I am already substantially invested in gold and gold stock. Thanks so much." – Paid-up subscriber Larry W.

Regards,

Sean Goldsmith and Justin Brill
Baltimore, Maryland
April 7, 2016

Adam Smith Weighs in on the 2016 U.S. Presidential Election

By P. J. O'Rourke

The formula for progress is simple... we've known the three steps for 240 years...

Last month, I wrote about the idiotic beggar-thy-neighbor "mercantilist" trade policies being advocated by the front-runners for the 2016 presidential nomination.

In The Wealth of Nations, Adam Smith (1723-1790), founder of the science of economics and champion of free enterprise, showed how "trade wars" are ludicrous.

It's a great book, although I don't recommend reading the whole thing. It's 1,000 pages and will bust your lap or fry your Kindle. Smith is, after all, inventing economics. If you do read all of Wealth of Nations, you're pretty much holding his hand through the entire process (which took him 10 years). Also, Smith wrote it an 18th-century English so convoluted, digressive, and slow-paced that it can produce a coma in the 21st-century brain.

But as I said, while I was berating our mercantilist pols (and as I've said before in The Stansberry Digest, because this is something I tend to go on about), The Wealth of Nations can be boiled down to one sentence: "Wealth is created by pursuit of self-interest, division of labor, and freedom of trade."

Trade wars don't just oppose free trade, they invade and conquer it.

Which got me thinking about just how important Adam Smith's three principles are. For instance, they're great analytic tools for value investing. Is this business pursuing self-interest? (That is, will it make a profit?) Is the business practicing division of labor – dividing responsibilities so that management, workforce, and capital resources are allocated wisely? And in a free market, how does the business stack up against its competitors?

Smith's principles are also great tools for deciding whether to "invest" in supporting a political candidate. Does the candidate believe that people trying to better their economic conditions is a good thing? (Bernie Sanders – no.) Is the candidate a know-it-all who doesn't value the knowledge, skills, and opinions of others? (Hillary Clinton – yes.) Does the candidate really believe in a free market? (Donald Trump – maybe, sometimes.)

Adam Smith's three principles are even great tools for a happy marriage. Are the nuptials in the best interest of both parties? Is one partner expected to do all the housework, cooking, child-raising, and also be the principal breadwinner while the other partner flops on the couch watching ESPN? (Let's leave free trade out of this. Swapping husbands and wives is rarely a good idea.)

In The Wealth of Nations, Adam Smith's first insight was that nothing is inherently wrong with a person pursuing his or her own self-interest (by honest means, of course).

No matter how altruistic you are, your first duty in life is to take care of yourself as well as you can. You can't take care of anybody else if you don't. This seems obvious to modern Americans (except for a few who are still living in their parents' basements and voting in Democratic primaries for you-know-who).

But once upon a time it didn't seem obvious that it was a good thing for people to try to better their economic conditions. In the Middle Ages, religious leaders, philosophers, and the nobility used to tell everybody to suck it up – subjugate your ego, bridle your ambitions, sacrifice yourself, your family, and everything you own to the church or the feudal big shots.

And we bought it. Because we didn't have any control over our self-interest anyway. We didn't live in a free country. And if we were slaves or serfs – and most of us were – we didn't even have a self to call our own and be interested in. Somebody owned us. In the doghouse of ancient and medieval existence, thinking that poverty was a virtue made us feel less like dogs.

But by Adam Smith's time, in 18th-century Britain, ordinary men and women were beginning to have some control over their own destinies. This did not please a lot of religious leaders, philosophers, and political elites. And the fact that the upper classes weren't happy about the well-being of regular folks made Adam Smith angry and sarcastic.

He said: "Is this improvement in the circumstances of the lower ranks of the people to be regarded as an advantage or as an inconveniency to the society?"

In the 18th century, prosperity for poor people was not yet considered a self-evidently good thing. Why? Because nobody had bothered to ask the poor people. (In many parts of the today's world, nobody has bothered to ask them yet.)

Smith was pointing out that it is never a question of religious sacrilege or philosophical folly or political treason to better your material circumstances. The question is how to do it.

The answer was Smith's second insight: division of labor – what we'd call "specialization." Nobody before Adam Smith seemed to have realized how vitally important to economic progress division of labor is. (Adam Smith invented the term.)

Of course (and I've said this before, too), division of labor has been around since caveman-times. The wily little fellow with the big ideas chips the spear points. The courageous oaf spears the mammoth. And the artistic type does a lovely cave painting of it all.

And this leads naturally to trade. One person makes a thing. Another person makes another thing. And everybody wants everything.

That was Adam Smith's third insight: All trades, when freely conducted, are mutually beneficial by definition. A person with a "this" got a "that," which he wanted more, from a person who wanted a "this" more than the "that" he had.

What kind of trades people make (as long as they're honest, transparent trades) is none of our business. Unless, of course, we make it our business by electing politicians who want to replace the free marketplace with a marketplace controlled by government regulation.

Regulation can't be effective without coercion to enforce it. So suddenly, instead of free trade, you have coercive trade. Let me define coercive trade. A coercive trade is where I get the spear points. And the mammoth meat. And the cave painting. And the cave. And what you get is killed.

Coercion is, very simply, the lack of individual liberty. Coercion destroys the mutually beneficial nature of trade, which destroys the trading, which destroys the division of labor, which destroys progress.

You can have pursuit of self-interest, division of labor, and freedom of trade. Or you can have North Korea.

Regards,

P.J. O'Rourke