A note from Porter... The market loves silver bullion... A billionaire investor thinks a Saudi revolution means a market collapse... More on the global food crisis... A subscriber's accountant asks him for investment advice...
Porter comment: We had an overwhelming response to Friday's Digest. We were putting forth our ideas for solving America's core structural problems. The last thing we want to become is a "world improver." That's why we're disclaiming any role in politics. We want to educate the public about how much spending is affordable, and we want to restructure the system so more Americans have a real equity stake in the government.
We firmly believe that as long as the incentives in our society remain so badly aligned (where a majority of voters pay none of the real costs), there will never be a way to control the government's spending... a true collapse of our society will be inevitable. If you like these ideas, please remember to sign up for our separate mailing list. (There was a small glitch in the sign-up process. We've improved it here.)
Also... there was one typo last week... Our core idea is to limit the size of the federal government by requiring a balanced budget and limiting the size of the tax base. To accomplish this, we suggest a constitutional amendment that would give all citizens a civil right to 80% of their earnings, from whatever source. In this way, the states and the federal government will have to reach a compromise on taxes. They won't have the option to spend whatever they want or tax as much as they want.
In our view, it's critical everyone pay the same rate of taxation and all forms of tax shelters be eliminated. That way, all voters will share the burden of the costs of government – with one exception: retired people. If you've paid a lifetime of taxes, when you retire you ought to be let go from this burden. Unfortunately, because of a mix-up in our editing process, we wrote that these taxes would only apply to folks 65 and older. We meant the exact opposite. Folks over the age of 65 (who are retired) should not have to pay any more taxes. They've done their part.
If you want to share these ideas with your friends (and we hope you will), you can forward them last Friday's Digest. We've also begun putting Restore America content on a new website, which will be available this week. And you'll also be able to sign up for our mailing list through this website.
To re-read Friday's Digest, click here.
The world is running out of silver...
That's the message we delivered in the February 24 Digest. We discussed a video from Eric Sprott of Sprott Asset Management. Sprott is a brilliant resource investor. And he's a mega-bull on gold and silver. (Silver is his largest holding.) But he thinks the world is facing a physical silver shortage:
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[The] world is out of silver. Sprott says aggregate investment demand for silver between 2000 and 2009 was 293.8 million ounces (according to the GFMS, the world's foremost precious metals consultancy). Using his own numbers, Sprott compiles the silver holdings for seven large investors, including himself, iShares Silver Trust, ZKB, GoldMoney, etc. Just those seven entities own 519.6 million ounces of silver... That's 225.8 million missing ounces. And again... That's only seven investors. It doesn't include central banks, individuals, hedge funds, etc. It's obvious, as Sprott notes, silver data has been "very, very misstated." Sprott ends his speech saying, "There's $22 billion of silver available in the world, of which the ETFs already own half, and between you guys and us we probably own the other half... which means there's nothing left." |
Today, we got validation of the "world is out of silver" thesis... The premium to hold physical silver (bullion) over paper silver (an ETF) reached an all-time high of 20% today. Think about that for a minute. People are paying 20% (a HUGE sum) for the peace of mind of holding physical silver. Some will dismiss this anomaly as a temporary mispricing. We consider it a warning sign of things to come...
While the world may be running out of physical silver, Retirement Millionaire editor Dr. David Eifrig is making sure his readers get all the silver they want... And it's the least expensive silver you'll find anywhere. Doc, as we call him, detailed his strategy for buying this inexpensive silver in his report, "How to Buy U.S. Government-Created Silver for $2.08." Retirement Millionaire subscribers can find it posted under the "Special Reports" section on our website. If you aren't subscribed and want to get access to Retirement Millionaire and this little-known strategy for investing in silver, click here...
Silver rose 2%-plus today to more than $36 an ounce (up over 17% this year). Gold hit an all-time high (noninflation adjusted) of $1,445.70 an ounce today. With gold and silver both going to the moon, how do you think they compare to the S&P 500's return year to date?
As you can see, so far this year, silver is king. But the S&P has returned over three times gold. So what does that mean? Gold and silver aren't the only outlets for investors trying to flee the U.S. dollar. Stocks can also perform well when folks start looking for alternatives to dollar savings... especially companies that excel at controlling costs and carry powerful brand names that allow them to raise prices. This is one of the many allures of owning Dan Ferris' World Dominators. To learn more about Dan's World Dominators, click here...
Continued drama in Libya pushed oil prices as high as $107 a barrel today. Libya is the world's 18th-largest oil producer, pumping out some 1.6 million barrels a day (around 3% of global daily output). Its daily production has fallen by half. So the world is losing less than 2% of its daily oil production. We've been emphasizing this point since the Middle Eastern/North African (MENA) troubles arose. Imagine what will happen when the crisis spreads to the world's largest oil producers... like Saudi Arabia, which exports more than 7 million barrels per day... or Iran, which exports 2.5 million barrels per day. Both countries are experiencing turmoil, though not on the same level as Libya.
David Tepper, the billionaire hedge-fund manager who called the housing crash and subsequent financial stock rebound, agrees with us. According to an Institutional Investor article, the MENA situation is Tepper's No. 1 concern right now. The article says Tepper would go to cash if the crisis hit Saudi Arabia. He believes investors could lose half their money if revolution hits the world's second-largest oil exporter (oil prices would likely double, crippling the global economy). In other words, everything but gold, silver, and oil will get smashed. Even if the MENA crisis improves, the global race to devalue currencies ensures gold and silver will perform well.
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New 52-week highs (as of 3/4/2011): Mirasol Resources (MRZ.V), Silver Wheaton (SLW), Suncor Energy (SU), Virginia Gold Mines (VGQ.TO), Arch Coal (ACI), Calpine (CPN), HMS Holdings (HMSY), Molina Healthcare (MOH), iShares Silver Trust (SLV), ConocoPhillips (COP), SandRidge Energy (SD), Walter Investment Management (WAC).
Our mailbag was flooded with responses to last Friday's Digest... And we also received the great note we're publishing below. Has your financial advisor or accountant ever asked you for investment advice? If so, we'd love to hear about it... feedback@stansberryresearch.com.
"Throughout history those who told the truth paid dearly for their courage. Especially when the truth is sooo simple. Most people find it difficult to believe that our government is wrong, reckless or even criminal. So no wonder some readers are angry at you. You are destroying their illusions. It reminds me of the abuse we got for challenging the Vietnam war! Now one of the architects of that war admitted it was a mistake. Wow what a costly mistake.
"Your scientific and common sense approach and analysis is truly refreshing. The same for Dan and Steve and that other tiger Badialie. I have lost few thousand dollars on some of your (collectively) recommendations but many others and your overall ideas have been very lucrative for me.
"You once asked so here it is. I am at least three million dollars richer. This is after all the 'financial planners' destroyed my pension funds. Thanks to you and your colleagues (and the other Agora organization). Since I am approaching retirement you can understand that permanent grin on my face while so many of my colleagues do nothing but complain. You will be vindicated.
"Funny thing happened last week. My accountant asked me for an investment advice! I told him to buy gold, silver and an Alliance membership." – Paid-up subscriber II
Regards,
Porter Stansberry and Sean Goldsmith
Baltimore, Maryland
March 7, 2011