A look inside Stansberry & Associates...

A look inside Stansberry & Associates... The 'Holy Grail' of trading... Personal details on Jeff Clark... A 'pound the table' opportunity…

 Yesterday, our resident supertrader – Jeff Clark – sent out a "watershed" e-mail.

In it, he identified what he thinks is one of the ultimate trading opportunities of 2012... maybe the best trading opportunity of 2012.

We're confident people who read Jeff's e-mail will make a great deal of money this year.

I'll share the contents of this e-mail in a moment. But to fully understand its context, I need to take you "inside" Stansberry & Associates for a moment. It's very important for readers to know a few personal details about Jeff Clark...

 I've known Jeff for seven years. He's one of the smartest people I've ever met. His mind works about five times faster than the average person. He's that guy at the dinner party who always has the right line in the right situation. He's a great public speaker. And he's also extremely competitive. He could turn a walk on the beach into a contest. Jeff's quick mind in the market has brought him the kind of financial freedom most people can only dream about.

People who are as smart, competitive, and successful as he is are often pushy and boastful.

But not Jeff.

 Despite his accomplishments, Jeff is a humble person. You won't hear him brag about his track record. He doesn't aggressively tout his ideas or his successes. He's not a, "Hey! Look at me!" kind of person. The truly successful don't need to act that way.

You could call Jeff "reserved." Great traders – who must control their emotions or go bankrupt – usually are.

 It's with this in mind that I read his latest e-mail to subscribers of his S&A Short Report.

It's aggressive.

You see, Jeff has found a trade that's worth "pounding the table on."

Over the years, I've learned that whenever Jeff aggressively recommends a trade, I should pay attention. I've missed out on too many gains by not acting on his top recommendations.

Jeff likens this opportunity to one that allowed people to make a fortune in Cisco Systems in recent years. Jeff told his readers that his biggest regret of 2011 was not buying huge amounts of Cisco Systems when it traded for less than $14 per share.

If you're not familiar with Cisco, it's one of the world's dominant technology companies. It dominates the market for routers... which is like saying it dominates the "Internet plumbing" market. The stock is a holding in Dan Ferris' Extreme Value... where it enjoys the prestigious status as one of his "World Dominators."

Jeff recommended Cisco to readers of his Advanced Income newsletter in April 2011. At the time, Cisco traded for around $17 per share. He used the stock to set up a covered call trade... and called it the "easiest covered call trade ever." (Please read this essay if you're not familiar with the income-producing strategy of covered calls.)

Here is Jeff's regret, in his own words:

 By taking a position in Cisco after this cheap stock became even cheaper, an investor would have owned an extremely safe stock... while setting himself up for huge potential gains.

This is the investing and trading equivalent of the Holy Grail: A position that has tremendous upside potential and a tiny amount of downside risk.

Investors and traders should always be on the lookout for "huge upside potential, little downside risk" positions. These are the positions you can put "real money" into. If an investor or trader takes ONLY these kinds of positions, getting rich is almost inevitable. You virtually can't lose.

 Jeff goes on to note that the same conditions that allowed investors to make safe, huge gains in Cisco exist today in the mining sector...

Now... we know many Stansberry & Associates recommendations in the gold mining complex have lost in the past few months. Losing on trades is part of the game. If you can't handle losing on trades from time to time, you shouldn't even be near the market.

Before you send us hate mail about gold stocks declining over the past few months, hear me (and Jeff) out. This decline is part of the story...

Jeff notes that other than the financial collapse in 2008, gold mining stocks have never been this cheap. He points out that many of the elite mining names are trading for less than 10 times earnings and pay dividends near 2%. Many junior mining stocks are trading for around the value of the cash on their balance sheets... meaning you can buy a pile of cash and essentially get the gold projects for free.

Jeff argued the same point nearly four months ago. Gold stocks have done nothing but fall since then. But remember... Cisco was bargain priced at $17 per share in April 2011. It fell over the next four months and became an even better bargain. Buyers in April made money despite the correction. Buyers in August "cleaned up."

"Mining stocks today are the same situation. Anyone who bought gold stocks in January is suffering a short-term loss right now," Jeff says. "But I expect they'll be profitable within a few months. Buyers of gold stocks are about to clean up."

Jeff isn't suggesting the gold stock complex can't move lower. In the volatile world of mining stocks, anything can happen. But there's a margin of safety to buying stocks when they are priced well below normal historic valuations... when they are discounted to the S&P 500... and when they pay above average dividends.

Jeff sums up his thesis...

 Please understand... Jeff isn't telling anyone to put the rent money in gold stocks. They can move lower from here, for sure. But he believes that "buying the average gold stock now is like buying CSCO below $14 per share last August."

Again... Jeff is selective with his "pound the table" trades. He sends out maybe two or three "pound the table" ideas per year.

He's so bullish on gold stocks at these levels because they are extremely cheap... and extremely out of favor with investors. This condition has set the table for a big rally in gold stocks. (But we state again: In the volatile world of gold stocks, anything can happen... You don't want to stick your whole 401(k) in the idea.)

 Readers of Jeff's S&A Short Report have access to his gold sector trades. These trades involve using the options market. But we know many of our readers won't touch an option.

For people in this camp... who would like to buy a handful of high-quality gold stocks but don't want to touch options... we recommend checking out John Doody's Gold Stock Analyst advisory. It's the single best resource in the world for finding high-quality gold stocks to buy. It's read closely by almost every analyst at S&A. It's been quoted in Jim Grant's prestigious Grant's Interest Rate Observer. And it's read by some of the world's top money-management firms. When a gold stock gets a "seal of approval" from John Doody, it's a big deal in our industry.

As Porter noted last week, John's approach is simple... yet brilliant.

John takes the largest gold-producing stocks in the world and uses a proprietary approach to value the gold they produce on a per-share basis. He also assesses these stocks on the value of their gold reserves on a per-share basis. This robust model allows John to pinpoint the absolute best values in the gold sector. By sticking with stocks John recommends, you're buying the world's cheapest gold production streams... and you're buying "gold in the ground" as cheaply as possible.

 As Porter mentioned last week, over the last 10 years, during the gold bull market, Doody's list of the top 10 gold stocks made 40% a year – more than 1,000% cumulatively. John says he's made $10 million investing in gold stocks using this same methodology. Porter noted that he "doesn't know any investor, anywhere, who's made more money on a percentage basis over the last decade than John Doody."

 If you want to take advantage of Jeff Clark's "pound the table" recommendation on the gold sector – but don't want to touch the options market – John Doody's current recommended list is an incredible value. I know some sophisticated investors who simply buy John's recommendations "sight unseen." If John says "buy," that's what they do. His track record and research is that exceptional. (Of course, we encourage everyone to do his own due diligence, as always.)

As Porter mentioned, once you learn John's system – and see his performance – you may never buy another gold stock unless it's on his recommended list. And for folks who buy now, safe gains of 50%-100% over the next year are easily possible.

John is currently offering a great deal on his research. You can learn about this deal, and how to sign up for his service here. (This does not go to a long promotional video. You can learn about the letter in 15 seconds.)

You can also watch a video about one of John's top recommendations – which is set to pay dividends in gold bullion – here. Or you can read a written copy of the video transcript here.

 New 52-week highs (as of 5/8/2012): Berkshire Hathaway (BRK-A), WR Berkley (WRB), Hershey (HSY), and Texas Pacific Land Trust (TPL).

 Our "Common Sense Guide to Technical Analysis" seems to have struck a chord with subscribers... Several have written with praise for the report we linked to in the Digest yesterday. If you haven't had a chance to read it yet, we encourage you to check it out here. And as always, you can send your feedback e-mail to feedback@stansberryresearch.com.

 "Porter, This doesn't have anything with investing, but your constant writings about the gov't and where we are headed as a country seem to be happening. A recent article in the local paper, The Dayton Daily News ran a article on Wed, the slowest day of the week, about how Homeland Security is taking over all drivers license departments and everyone has to show proof with five identifications to prove who they are starting in 2014. We have all already done this when we applied originally for our licenses.

"Most people didn't see the article so I have kept a copy. I live in Ohio and was wondering if any other people have seen any such information. This also was not one of Obama's ideas, it was part of The Patriot Act signed by Bush, whom I think was just about as much a communist as Obamas. Thanks for your letters, even though I don't always agree." – Paid-up subscriber ATB

Good investing,

Brian Hunt
Delray Beach, Florida

May 9, 2012