A rush to safety... Quantitative easing may end in October... Big problems in Portugal... A bad month for Tesla... A major sign of the top in Dubai... Record stock issuance... Wilbur Ross is selling... It's a bull market in gold stocks... One of the most valuable investments you can make today...
Global stocks are plummeting... 10-year Treasurys fell to 2.52% and 10-year German bunds hit a two-year low of 1.185%.
Gold and silver – also acting as "safe havens" – jumped more than 1% each. Palladium hit a 13-year high.
And we have Fed Chair Janet Yellen to thank for all of this (as well as problems in Portugal, which we'll address in a minute).
According to the minutes from its June meeting, out today, the Fed said it would likely end its bond-buying program (with a final $15 billion reduction) in October.
The Fed also said it wouldn't hike the federal funds rate for a "considerable time" following the end of quantitative easing. It expects inflation to remain low.
Traders took the continued accommodative policy as bullish news for precious metals... With a longer-term view that the Fed won't be able to control inflation as planned.
Portugal's largest bank, Banco Espirito Santo (BES), has delayed interest payments on its short-term debt. Portugal received a €78 billion bailout in 2011. The difference between a liquidity problem and a solvency problem will only become clearer in the future as we start to see more troubled banks surface. This temporary loss of faith in the financial system is another reason precious metals are soaring today.
BES shares fell 17% before they were suspended from trading.
The selloff took the air out of momentum stocks, including our favorite whipping boy, electric-car manufacturer Tesla...
Our reasons to doubt Tesla are numerous... shares trade at an outrageous valuation, the company's cars catch on fire, and it's building a $5 billion "gigafactory" – a massive battery plant.
And as we discussed in yesterday's Digest Premium, Porter believes Tesla's accounting is fraudulent. The company leases cars for $100,000. It receives $25,000 in the first year of the lease. But Tesla books the full $100,000 in revenue that first year.
Porter says the company also overestimates the value of its cars following a three-year lease.
Still, it's Tesla's fiery crashes that steal the headlines...
Recently, a stolen Model S split in half after crashing in a high-speed chase with the police. On the bright side, the assailant survived, which bolstered Tesla's high safety rating...
The carmaker also had recent trouble in China...
Chinese businessman Zhan Baosheng is suing Tesla in China over alleged trademark infringement issues. He is demanding Tesla stop all sales and marketing activity in China.
Beijing is planning to install 10,000 public charging stations by 2017. Unfortunately, none of them will be compatible with Tesla vehicles.
The stock is down nearly 9% this month.
One of the clearest signs of the top leading up to the 2008 financial crisis was Dubai's absurd real estate. The small Arab nation was building the Burj Dubai, the world's tallest skyscraper.
We wrote about the skyscraper indicator in the October 13, 2008 Digest.
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Dubai also built manmade islands to house wealthy residents, the world's most expensive hotel (the Burj al Arab), an indoor ski slope, and replicas of global landmarks like the Eiffel Tower... In total, Dubai borrowed $80 billion to turn itself into a global tourism hub.
We noted the madness had peaked when, in addition to building replicas of famous landmarks around the globe, Dubai started building replicas of Dubai landmarks – located miles away.
We all know what happened next: Dubai collapsed.
Now, the emirate is back in the headlines for its creative real estate efforts...
In one of the greatest signs of the top we've seen to date, Sheikh Mohammed Bin Rashid, Vice President and Prime Minister of the United Arab Emirates, announced plans for the world's first temperature-controlled city in Dubai.
The 48-million-square-foot facility will have the world's largest shopping mall and the world's largest indoor amusement park. There will also be 100 hotels (20,000 total rooms) and apartment buildings. (You can watch a YouTube video of the project here.)
More signs of a top...
As of Tuesday, companies have offered $510.1 billion of stock and stock-linked securities (like convertible bonds) in 2014, according to data provider Dealogic. That's above the previous record of $498.9 billion set back in 2007.
All the madness is scaring one billionaire investor out of the market...
Distressed-asset investor Wilbur Ross told CNBC this morning, "On balance we've been a seller. We've sold six times as much as we've bought so far this year... everywhere."
Ross noted the market's all-time highs, saying "with markets [near] all-time highs, it shouldn't be surprising that there are more things that are attractive to sell than to buy."
Back to gold for a moment... The precious metal hit a three-month high today. Gold stocks are rallying. And S&A Short Report subscribers were along for the ride.
Two weeks ago, S&A Short Report editor Jeff Clark said gold stocks were in "bull mode."
As he wrote in the June 26 Growth Stock Wire...
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Today, Jeff updated Growth Stock Wire readers on gold stocks again, saying they've flashed a "buy" signal...
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Trading gold stocks is one of Jeff's greatest strengths... Look at some of the gains he's made readers in the sector over the past few years...
| • | 170% in six days with the Market Vectors Gold Miners Fund |
| • | 142% in seven days on the SPDR Gold Shares Fund |
| • | 109% in 14 days with Glamis Gold |
| • | 103% in 22 days on Gold Fields |
| • | 100% in 22 days on Seabridge Gold |
| • | 91% in 27 days on Kinross Gold |
| • | 83% in seven days on Exeter Resources |
The list goes on...
And just two days ago, Jeff recommended a trade on gold miner Yamana Gold (AUY). S&A Short Report subscribers are already up around 40%.
It's too late to get into that trade... But Jeff will continue trading this bull market in gold. And if history is any indicator, his subscribers are poised to make a fortune.
We're ending today's Digest with a note from Gray Zurbruegg, member liaison for The Atlas 400, the private wealth club Porter started. Gray wanted to pass along some of the recent happenings from the club...
I (Gray) have been lucky these past few years to surround myself with titans of industry and entrepreneurial geniuses... And I've learned a lot from them. Much of what I've heard is privileged – it's "in the room" only.
But one idea that I've heard – which I'll share with you today – is something that has changed my outlook on life...
Remember, we've always said that The Atlas 400 is purely a social club. But today, we have an investment idea to share. Something that has come up over and over again at our private annual meetings... Managing this asset is something many struggle to understand – even some of the world's top financial minds. It's not tangible. You can't buy or trade for more.
Let me be clear... this investment is not financial in nature. It's as old as human civilization. This asset is the one aspect we have control over in our daily existence. It's the hardest aspect of life to manage, and rarely do we feel like we have enough.
I'm talking about our time.
The way you spend your free time is important. In a world of constant communication and demanding work schedules, your free time should be used to travel... to learn... to share experiences... and to build new meaningful relationships.
That's why you should only spend time with people who will enrich your life, share knowledge, and add tremendous value.
Surrounding yourself with excellent people is one of the best ways to hedge your risk against the future's uncertainty...
It's the only investment that continually holds its value – and actually gets stronger when everything else seems to be falling apart.
This investment has proven beneficial to Atlas members many times over. A handful of our members have corrected crippling back injuries... Thanks to the expertise of another member – a world-leading spine surgeon.
Taking time to build relationships has fostered the development of creative entrepreneurial outlets and collaborative investment opportunities... new opportunities in the world of publishing, lucrative natural resource projects, and offshore asset-protection strategies.
And making the time to travel has provided members with once-in-a-lifetime opportunities around the world.
Fortunately, there's a way to reap the benefits of this investment: Through membership in The Atlas 400.
It's our goal to maximize your personal time. The Atlas 400 is a vehicle through which we facilitate shared experiences, personal growth, and help to create an unparalleled network of highly successful people.
We operate The Atlas 400 to surround ourselves with the best and smartest people in the world. These people – all at the top of their game – share one major similarity: excellence. They're all outstanding at what they do... They are leaders in their fields. They're exactly the type of people you would want to have as friends, neighbors, and business partners.
And how do we go about doing this?
Four to five times a year, we host amazing adventures around the world... We've fished the sapphire waters off of the Panamanian coast for colossal marlin... Hunted red stag and wild grouse in the hills of Scotland... Toured some of the best wineries in Tuscany... And we recently traversed the snow-capped mountain ranges in South America's Patagonia region.
And that's just to name a few. Here's what's on the horizon...
The Atlas 400 is headed to Austin, Texas in October. We're renting out the entire Formula One Track for our exclusive use.
Prior to racing, we'll spend time with Formula One instructors, becoming familiar with the track and driving methods. Our vehicles for the event are some of the only cars made to replicate the high-speed racing conditions... They're faster than a supercar, totally driver-focused and intensely rewarding to drive. We may even have a few Ferraris to put to the test. For those waiting on the opportunity to race, we've arranged private tours of the track's interworking and a special opportunity to meet with current F1 pit crews and car mechanics.
When we're not whipping around the track at hair-raising speeds, we'll be dining at some of Austin's best restaurants. Local favorites and Top Chef winners alike have offered to host our group at their restaurants. They're creating custom menus and wine pairings, and in some cases, they'll even teach us how to cook their most prized dishes. And who knows... maybe some of our members in the entertainment industry will help us arrange a VIP concert experience, in one of the country's best cities for live music.
The trip to Austin is one of the shorter and more frequent domestic trips we're hosting to accommodate our members. Our club's participation is at an all-time high and the member's relationships are deepening... Who wouldn't want to spend more time with their friends and peers?
The release of the trip's itinerary reinforced this idea... It filled up in less than 12 hours – fastest in The Atlas 400's history – and is actually now on a wait list.
For those who won't be able to join us in Austin and race sports cars, there's an opportunity for redemption. We've decided to make a triumphant return to Germany (the club's first-ever event). And for Atlas members, that means Porsche, BMW, Oktoberfest, and Munich... All of our favorite stops will be on the itinerary.
And there's more than Germany on the Atlas itinerary for 2015... We're already planning trips to New Zealand and one of the most exclusive properties in North America... We'll share more about this in a future Digest.
The club is growing, and with each addition, the membership becomes more interesting. We just confirmed 10 new members, and in the past month, we've received numerous applications.
There's a famous quote, "If you're the smartest person in the room, you're in the wrong room." Fortunately for me, I never have to worry about this in the presence of Atlas 400 members. They're some of the brightest and most intriguing individuals I've ever come into contact with.
But regardless of IQ, all members understand one thing: Relationships take work. And The Atlas 400 is no different. If you're willing to try and add value to this relationship, the club may be a perfect fit for you. That's how our current members view it as well.
In short, we want members who are positive... who see the potential in our club... and who are willing to help us make it one of the world's best and most exclusive groups.
We're truly careful about how we grow The Atlas 400. The club isn't for everyone. We receive hundreds of applications each year. And it's certainly not an inexpensive endeavor. But if you're the type of person who enjoys sharing extraordinary experiences and meeting new people who you would never have the opportunity to meet otherwise... I would urge you to start the application process by clicking here.
If you're planning on attending our upcoming conference in Los Angeles, and would like to meet with an Atlas representative and current member, please contact me in advance by e-mailing me at gzurbruegg@theatlas400.com so that we may arrange the opportunity.
New 52-week highs (as of 7/9/14): Alcoa (AA), Bank of Montreal (BMO), Dorchester Minerals (DMLP), Freeport-McMoRan (FCX), KLA-Tencor (KLAC), Royal Gold (RGLD), Sandstorm Gold (SAND), and Sprott Physical Platinum and Palladium Fund (SPPP).
Today's short mailbag reminds me of a common saying from Porter... "Horse, meet water." Send your e-mails to feedback@stansberryresearch.com.
"I see several references to muni bonds in your recommendations, but no solid advice as to how to invest in the munis. Please provide some detailed information about buying munis." – Paid-up subscriber Jim
Goldsmith comment: Jim, I'm not sure if you were paying attention or not, but I named a specific muni-bond fund in yesterday's Digest...
Regards,
Sean Goldsmith
July 10, 2014
Rick Rule: The most hated commodity right now...
At our natural resources event in Dallas last month, investing legend Rick Rule told the crowd about the world's most hated commodity.
In today's Digest Premium, he discusses this commodity... and shares his top way to profit from it...
To subscribe to Digest Premium and receive a free hardback copy of Jim Rogers' latest book, click here.
Rick Rule: The most hated commodity right now...
Editor's note: At our natural resources event in Dallas last month, Porter asked investing legend Rick Rule to discuss the world's most hated commodity. In today's Digest Premium, Rick reveals the commodity... and shares his top way to profit from it...
Now I (Rick) was thinking, did Porter say the cheapest commodity – the most undervalued commodity? Because there's a target-rich environment. I mean, water! Nobody cares about water. It is so cheap. The problem is, nobody hates it.
Agricultural minerals! Remember when we had a big agricultural minerals boom three or four years ago? People put a whole bunch of money into agricultural minerals they couldn't pronounce and couldn't spell. Amazingly, they lost money. So they didn't like those, either.
Platinum group metals! I like them a lot, but nobody really hates them.
Coal! People hate coal. The industry mines coal and they lose money on every pound. Being miners, they try and make it up on volume. They mine more pounds and they lose more money. President Obama doesn't like it. It's bad for salamanders. It has a lot of stuff going for it. It really does. But people don't hate it.
People hate uranium. You know, when I first started telling the uranium story, some people, like Porter, had a sort of a mild view. I was either delusional or I was a crook. But that's because Porter's open-minded. Most people thought I was way worse than that. I'd give this uranium speech and people would come up to me and say, "Even by your standards, that was a despicable speech! You're encouraging us to profit from Hiroshima, Nagasaki, and Three Mile Island. You are truly a vile creature."
From a contrarian point of view, it couldn't be better. These guys were shining my shoes and combing my hair for me. This was spectacular. I mean, talk about confirmation.
Let's go all the way back then to 1998 and talk about it in the context of today. You see, back then, we had gone through a 20-year bear market. Those of you who are students of bear markets know that this was truly legendary. It was wonderful.
Three Mile Island, of course, kicked it off, and the price of uranium declined from $32 a pound to $10 a pound even as inflation continued. A truly epic bear market.
So by 1998, on a global basis, there were a couple interesting things to look at. It cost the industry about $20 a pound to make the stuff. And they sold it for $10. So for every pound they made, they lost $10. They had a -50% operating margin. Wonderful business.
Obviously, people weren't looking for much uranium. They were losing enough $10 bills with their existing production. They didn't need to find some more.
And as a consequence of that, we were using about 150 million pounds of uranium a year worldwide. We were making 90 million pounds of uranium a year worldwide. So 60 million pounds a year were going to supply heaven. We had a relatively big stockpile from the time when uranium was expensive, but it was clear that the time would come when that would be used up.
Now, in commodities, the real way that you make money – and please pay attention to this – is you buy industries where the ongoing demand for the commodity is certain... where the industry does not earn its cost of capital. That's important.
– Rick Rule
Editor's note: We still have a limited number of "early bird" seats for our next live event in Los Angeles on August 23. But we expect to sell out this week... and then we're raising the price. If you'd like to see what Porter has in store for next month – and hear presentations from Steve Sjuggerud, former Morgan Stanley Asia director Peter Churchouse, master speculator Doug Casey, and many more – I hope you'll join us. You can secure your lowest-price "early bird" ticket by clicking here.
Rick Rule: The most hated commodity right now...
At our natural resources event in Dallas last month, investing legend Rick Rule told the crowd about the world's most hated commodity.
In today's Digest Premium, he discusses this commodity... and shares his top way to profit from it...
To continue reading, scroll down or click here.