America Is No. 1 for the First Time

America is No. 1 for the first time... Forget the UK, this is the 'patient that is sickest'... More bad news for Tesla... A new warning from the bond market... How to retire with the income stream of a millionaire...

It has never happened before...

A new study by independent oil and gas analytics firm Rystad Energy shows the U.S. now has more oil reserves than either Saudi Arabia or Russia for the first time in history.

The study estimates recoverable oil in the U.S. now totals 264 billion barrels, compared with just 212 billion in Saudi Arabia and 256 billion in Russia.

Of course, the big driver behind the move has been "disruptive" technologies like hydraulic fracturing (or "fracking"), which have unlocked billions of barrels of oil from America's shale deposits. And according to Rystad, it may not be over yet. As the Financial Times reported on Monday...

"There is little potential for future surprises in many other countries, but in the U.S. there is," said Per Magnus Nysveen, analyst at Rystad Energy, noting recent discoveries in the Permian Basin in Texas and New Mexico, which is the nation's most prolific oil-producing area. "Three years ago the U.S. was behind Russia, Canada, and Saudi Arabia."

It's important to note that the firm defines "recoverable" as oil that is both technologically and economically practical to produce. In other words, this isn't some "pie in the sky" estimate... It's oil that could be extracted and used for energy today if needed.

In total, the analysis found more than 2 trillion barrels of recoverable oil reserves around the world today. That's about 70 years of production at current rates... and is only likely to increase as technology continues to improve.

So much for the claims that we're running out of oil.

The news is notable for another important reason: It's incredibly bullish for the future of the United States.

We don't believe the problems in the energy sector are over just yet. But they won't go on forever.

Despite what some folks suggest, the world isn't suddenly going to stop using fossil fuels. Oil and gas prices will recover... And the U.S. will be in a position to benefit in ways most people can't even imagine today.

This stance may seem like a contradiction... After all, we've spent a lot of time recently sharing warnings and gloomy predictions. We assure you we haven't suddenly changed our view.

But it's also important to remember that we're not perma-bears. The world has a way of not ending, and even these problems will eventually pass. Yes, the next few years could be terrible for most investors... But as Porter has explained, they don't have to be terrible for you.

If you're prepared, you can weather the storm. And the future could be much brighter than you expect.

In the meantime, our concerns for the near term remain...

Today, we note that distress in the European banking system is growing. Regular readers will recall warnings from British and European Union ("EU") officials that the recent "Brexit" vote would lead to disaster for the U.K.

But so far it appears to be the weakest EU economies that are being punished the most. In particular, the Wall Street Journal reported this morning that Italian banks are now on the verge of a "full-blown crisis." From the Journal (emphasis added)...

In Italy, 17% of banks' loans are sour. That is nearly 10 times the level in the U.S., where, even at the worst of the 2008-2009 financial crisis, it was only 5%. Among publicly traded banks in the eurozone, Italian lenders account for nearly half of total bad loans...

"There is an epidemic, and Italy is the patient that is sickest," said Pierpaolo Baretta, an undersecretary at the Italian Economy Ministry. If "we don't stop the epidemic, it will become everybody's problem... The shock of Brexit has created a sense of urgency."

One of the worst is Italy's third-largest lender, Banca Monte dei Paschi di Siena. More than 30% of the bank's loans have already gone bad, and the European Central Bank has asked the bank to slash these nonperforming loans by 40% over the next three years.

The situation is so dire that the Italian government is looking to bail it out for the third time since the financial crisis. But there's a catch...

A new EU bailout rule, which took effect this year, officially requires a "bail in" – where the bank's bondholders and shareholders would shoulder losses first – before it can be bailed out with taxpayer funds. The Italian government wants to use an emergency "loophole" for the rule, but it isn't clear if the EU will grant an exception.

We'll keep a close eye on this... The decision could have huge implications for other troubled European banks.

One of Porter's favorite whipping boys released some more dismal news over the long holiday weekend...

Electric-car maker Tesla Motors (TSLA) said it shipped just 14,370 cars to owners in the second quarter. That's far below its forecast of 17,000.

The company blamed the miss on some 5,000 cars that were "still in transit" to customers at the end of the quarter, and will be delivered in the third quarter.

Even if you accept this "check's in the mail" excuse, consider that the company plans to ship more than 50,000 cars in the second half of the year. If Tesla intends to hit that target, it needs to increase production by nearly 75%... starting right now.

This plan seems unlikely enough, but it gets worse...

Tesla says it expects to be shipping 500,000 cars per year by 2018. That's 125,000 cars per quarter... representing an incredible 770% ramp-up in production capabilities from its latest numbers miss.

Consider us more than a little skeptical.

But Tesla's problems don't end with missed deliveries...

Regular Digest readers know Tesla recently offered to buy troubled solar-panel installer SolarCity (SCTY), where Tesla CEO Elon Musk just happens to be the chairman and the company's biggest shareholder.

We called the move an obvious conflict of interest, and a de facto bailout of the beleaguered solar-panel firm. But it's also an ominous sign for Tesla...

As Porter and the Stansberry's Investment Advisory team have explained, the business models of both companies are similarly broken. Each is dependent on government support and huge infusions of cash to simply survive... and their access to both is rapidly vanishing.

In short, they believe both companies are doomed... and recommended shorting both in the June issue of Stansberry's Investment Advisory.

Unfortunately, this recommendation came out before Tesla's big proposal... So Porter and his team were already short shares of SolarCity when the "bailout" was announced.

But they have not changed their stance on the companies. In fact, they're as bearish as ever. They shared their latest thoughts in the July issue, out last Friday...

This is nothing short of Musk bailing himself out. But it's particularly brazen in that it comes less than a month after Tesla closed a stock offering that raised $1.7 billion in net proceeds to finance its Model 3 program. Nothing in the offering stated Tesla intended to purchase SolarCity.

We doubt that management didn't already have this plan in place when it offered these shares. But that's typical of Musk. SolarCity formed a special committee of two "independent" directors to evaluate the deal. There's not much to evaluate: It's a great deal for SolarCity shareholders, who are watching the company race into bankruptcy.

The whole process misses the point and is another example of Musk mesmerizing the market with blue-sky ideas that will never make a penny for shareholders. Famous short-seller Jim Chanos describes it as "a shameful example of corporate governance at its worst." We agree. The business models of both Tesla and SolarCity are broken. Even Wall Street analysts are struggling to come up with reasons why this deal makes any sense.

Finally, we note the U.S. Treasury bond market could be sending an early recession warning...

The "spread," or difference between short- and long-term Treasury yields, has been plunging. According to Deutsche Bank analysts, this move is now signaling the greatest risk of recession since 2008. The proprietary model – which adjusts for record-low short-term rates – suggests a 60% chance of a U.S. recession in the next 12 months.

Again, this is the model's strongest recession signal since August 2008... just months before the worst of the financial crisis.

Whether this measure is correct again, one thing is certain...

The plunge in yields over the past few years has devastated retirees who have traditionally relied on bonds to provide income in retirement. And the situation is only getting worse as central banks continue to push short-term rates lower... even into negative territory.

This is no surprise to our colleague Dr. David "Doc" Eifrig, who has predicted for years that yields will stay low much, much longer than anyone expects.

But he also understands it doesn't make it any easier to earn a decent return on your savings.

So what should you do with that money instead? Doc recommends taking a look at a little-understood corner of the market...

Over the past several years, Doc has taught thousands of people with little or no trading experience how to generate safe, consistent income... and sleep well at night, no matter what the markets are doing.

Doc first learned this strategy when he was a trader with Goldman Sachs... It can help you generate extraordinary amounts of income – even in volatile markets like we're seeing today.

In fact, periods of fear and volatility are when this strategy really shines... and allows you to collect even more safe income than usual. If you've never tried it, Doc says this is an ideal time to add this strategy to your investment "toolbox."

Better yet, it's easy to learn... Doc even taught it to his mother to help her pay for her expenses in retirement.

And it's safe... As we mentioned on Friday, Doc's subscribers have closed 293 out of 314 series of trades with a profit... a win percentage of 93.3%. And his trading service has received an "A+" in Porter's annual Report Card every year since we launched the product in 2010. As Porter wrote in February...

If you aren't reading Retirement Trader, you're missing out on the best trading product we've ever published – and likely the best trading product ever to exist in our industry.

We know most people completely shut down when we mention options, but let Doc's track record serve as proof: You can achieve large, consistent returns using this strategy.

If you're not currently making as much income per month as you need, you owe it to yourself to learn more about Retirement Trader. Doc recently put together a brand-new presentation explaining how his strategy can help you generate extra money for retirement.

How much? Doc says it's possible to use this strategy to retire with the income stream of a millionaire... even if you've only saved $100,000 to $200,000. See for yourself right here.

New 52-week highs (as of 7/1/16): Automatic Data Processing (ADP), Aflac (AFL), Central Fund of Canada (CEF), Deutsche Bank Gold Double Long Fund (DGP), Western Asset Emerging Markets Debt Fund (ESD), Franco-Nevada (FNV), Fidelity Select Medical Equipment and Systems Fund (FSMEX), VanEck Vectors Junior Gold Miners Fund (GDXJ), SPDR Gold Shares Trust (GLD), Gold Standard Ventures (GSV), Welltower (HCN), Invesco Value Municipal Income Trust (IIM), Mid-America Apartment Communities (MAA), Medtronic (MDT), 3M (MMM), Altria (MO), Nuveen AMT-Free Municipal Income Fund (NEA), Newmont Mining (NEM), NovaGold Resources (NG), New Gold (NGD), Nuveen Premium Income Municipal Fund 2 (NPM), Procter & Gamble (PG), Pretium Resources (PVG), Regions Financial – Series B (RF-PB), Spectra Energy (SE), Silver Standard Resources (SSRI), AT&T (T), Vanguard Inflation-Protected Securities Fund (VIPSX), Vanguard REIT Fund (VNQ), ExxonMobil (XOM), and PIMCO 25+ Year Zero Coupon U.S. Treasury Index Fund (ZROZ).

In today's mailbag, several subscribers weigh in on Friday's mailbag, where a subscriber complained about our gold research... and another has a question about "hedging" our gold recommendations. Send your notes to feedback@stansberryresearch.com.

"In Friday's Digest there was mention of a Stansberry Gold Investor subscriber being grumpy in the mailbag. All I can say is there is no way that any subscriber who understood and implemented the recommendations in Stansberry Gold Investor so far could be disappointed. The case that was made when the service was introduced was thorough and compelling, and the advice and results so far have been fantastic." – Paid-up subscriber J.C.

"I signed up [for Stansberry Gold Investor] first night it opened and my portfolio is on steroids! I followed your advice with position sizing and percentage of overall portfolio. Today my positions increased in one day the cost of the entire membership! I added to my positions with new 'buy under' prices yesterday. Thank you for all your hard work and research! Stansberry Gold Investor is the best ever!" – Paid-up subscriber Sharon M.

"I signed up for Stansberry Gold Investor the first night it was offered as well. I recall receiving a GIFT of 10 oz. of silver that today is worth about $192. I couldn't say if that offer is on the table for the newbies, but I paid for the Stansberry Resource Report and since then I've had one silver stock recommendation at 154% and one gold stock at 98% as of 7-1-16. I think what Stansberry Research offers is more than fair!!" – Paid-up subscriber Robert H.

"So is the Stansberry Gold Investor subscriber complaining because prices fluctuate? Does it really surprise him that you might choose to re-offer your SGI service with a special deal with lower or higher prices? Does it matter if the service is doing well or bad? Mister, you might want to get out of stock market investing, because guess what? Prices fluctuate. By your standard of fairness, your big gains in gold stocks are shameless. Oh, and never mind that the businesses we invest in (and capitalism in general) doesn't function without fluctuating prices. It amazes me that any investor could have such a complaint." – Paid-up subscriber C.C.

"Since gold has been on a tear will you recommend some hedges in your gold service?" – Paid-up subscriber Charlie T.

Brill comment: We think you've misunderstood, Charlie...

First, as Porter and his team have explained, the Stansberry Gold Investor service already includes appropriate risk management. It includes specific position-sizing and trailing-stop guidance tailored to each type of gold investment recommended. If you're following this advice, you're all set.

(Stansberry Gold Investor subscribers can find all this information and more in our special report, "The Gold Decade: How to Prepare for the Coming Bull Mania in Gold." This report is e-mailed directly to all new Stansberry Gold Investor subscribers and can also be found on our website here.)

Second, and much more important, gold is a hedge. As we've discussed many times, gold is real money... It's the only asset that isn't also someone else's liability. And it's the ultimate hedge against currency debasement. We launched this service to help you protect your savings from the coming breakdown of the global paper-money system... and take advantage of what we believe could be the final bull market in gold.

If you don't have a portion of your hard-earned savings in gold and select precious metals investments, you're taking a massive risk today. Click here to get instant access to our best gold and silver research.

Regards,

Justin Brill
Baltimore, Maryland
July 5, 2016