Another reason plunging currencies are good for gold... Sjuggerud: Gold is flashing a major 'buy' signal... The latest with the 'Grexit'... Why Germany wants Greece to stay... Apple and Microsoft tap the debt markets... How to save money on your taxes...
Regular Digest readers know we're bullish on gold today.
The reasons are numerous... Record-low (and sometimes negative) interest rates around the world make gold's zero yield relatively more attractive. Central banks are engaged in an all-out currency war in a race to debase their paper money... And gold is rightly acting as a safe haven against this madness.
Finally, gold's price action is starting to look bullish again. Despite a rallying U.S. dollar (which usually moves opposite the price of gold), gold has rallied and is carving a bottom in the $1,200-an-ounce area...
A rising gold price is bullish for gold miners... They're getting more money for each ounce of gold they sell. Brian Yu, a senior analyst at Citi Research, gave two more reasons to be bullish on gold miners today – namely the large players, Goldcorp, Newmont Mining, and Barrick Gold.
In addition to increasing gold's value as a safe-haven asset, plunging currencies are also improving these miners' margins. Yu estimates the declining Australian dollar and Russian ruble will decrease these companies' production costs between $15 and $24 an ounce.
Exporters like mining companies or oil companies can make a fortune with the right currency market... Their production costs, in local currencies like the Aussie dollar and ruble, are plunging. But they're selling their goods on the global market, mostly in dollars.
Likewise, falling oil prices are lowering costs for miners. These capital-intensive businesses require lots of fuel. Yu estimates lower diesel fuel costs will save these firms around $13 an ounce in production costs.
Mind you, Yu is still bullish despite his firm's forecast of lower gold prices. From Barron's...
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In the February issue of True Wealth Systems, Steve Sjuggerud and his research team gave more insight into gold's performance relative to other global currencies... and why it's so bullish for the precious metal.
As Steve explained, the dollar is up 7.5% in the past three months... but gold is up even more...
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Steve also noted that gold is up more than 12% versus the euro, yen, and pound since November...
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In addition to acting as a safe-haven currency, gold also serves as a crisis hedge. And we wouldn't be surprised to see gold spike if Greece leaves the European Union (EU).
Greek stocks surged higher today on rumors that the EU agreed to a six-month extension on the bailout negotiations.
Making things even rosier, the Wall Street Journal also reported that Greece is going ahead with the privatization of the state's 67% stake in Greece's Piraeus Port Authority seaport. (Left-wing Syriza had previously said it would stall the sale.)
Yesterday, Greek Finance Minister Yanis Varoufakis reportedly announced Syriza would agree to 70% of the reforms laid out in the terms of the bailout.
In short, it looked like both parties are moving toward a deal. Then German Finance Minister Wolfgang Schaeuble denied those rumors following the G-20 meeting in Istanbul today. Despite Schaeuble's refute, the markets are still bullish.
In his latest letter to investors, hedge-fund billionaire Dan Loeb explained why it's in everyone's interest to keep Greece in the EU...
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To summarize, Germany has a huge economic advantage thanks to the weakened euro. If Germany – an industrious, fiscally conservative nation – had its own currency, the value would be much higher. Germany's export advantage would fade.
On a separate note, shares of consumer-products giant Apple hit an all-time high of nearly $122 today.
The company is taking advantage of record-low yields to issue Swiss franc-denominated bonds.
Apple raised 1.25 billion Swiss francs ($1.35 billion) in a two-part bond sale today. The 875 million bond maturing in November 2024 will pay investors 0.281%. The 375 million 15-year bond will pay a 0.74% yield.
Microsoft also tapped the debt markets, selling $10.8 billion of debt yesterday – the largest sale of the year. The company upped the original $7 billion sale after orders hit $37 billion.
The debt ranges from five years to 40 years... And the $2.3 billion of 40-year debt trades for 1.53 percentage points more than 30-year Treasurys.
This is just more proof of the madness at work in the bond markets today... People are looking for a safe place to put their cash. And they're willing to accept paltry yields as a consequence.
Meanwhile, corporations will issue as much debt as they can, at as long a duration as possible, to lock in these record-low interest rates.
If you haven't already, be sure to read DailyWealth this week. Each day, we're featuring special essays that will help you save money on your taxes. (Remember, tax day isn't far away.)
Today, Dr. David "Doc" Eifrig explains a tax move you can make that will generate an instant 33% return. You can read the essay for free right here.
New 52-week highs (as of 2/9/15): Brookfield Property Partners (BPY) and iShares U.S. Home Construction Fund (ITB).
In the mailbag... One subscriber praises Porter's radio show and another is pleased with his TradeStops subscription. Send your thoughts on the latest happenings in the market to feedback@stansberryresearch.com.
"Hey Porter. I just got a chance to listen to your first interview of the year with Erez Kalir which was of course great content as usual. You asked for feedback and I felt it's the least I could do for what you provide your audience. The free show was honestly the most information and knowledge dense show on iTunes. I listen to quite a few shows while at work to pass time and learn, but your show was far above the others. It was the only show I've saved every episode of on my iPod and listen to each one at least twice.
"It pisses me off that other listeners wouldn't pay you guys to continue the show. I actually wrote you guys near the end urging you to charge me 25$ in an effort to get others to do the same. Regardless, I appreciate what you're doing and I hope this lasts for a good while. I was curious if the black label show would continue. If not I understand, but that was by far my favorite show. Again I appreciate and thank you for all you do and I've learned an incredible amount from the podcasts alone. Take care." – Paid-up subscriber Ryan K.
Goldsmith comment: I know Porter appreciates this comment... He had a tough time convincing the "short-arm" Stansberry Radio listeners to pay even a tiny amount for the excellent premium radio content. That's why he decided to get rid of the free radio show, host the new show himself, invite world-class guests like Erez, and charge a small fee. If you'd like to listen to Porter's new radio show, you can sign up here.
"I am really happy with TradeStops. It allows me an objective exit strategy that removes procrastination. My only hiccup was with JNJ. I was up over 60% on the stock when it did a temporary nosedive. If I would have followed the new smart trailing stop I would have been stopped out. Instead I put a 25% trailing stop on and stayed in this stalwart company. The smart trailing stop was probably too tight. When I made that choice I felt it was a difficult decision and I worried about the decision till JNJ went back up. Otherwise, I have pulled the plug and been happy to walk away without big losses with all other issues." – Paid-up subscriber George O'Neil
Goldsmith comment: Make sure to read the Digest Porter wrote last Friday about TradeStops... It's incredible how much annual returns improved using this simple service. You can read it right here.
Regards,
Sean Goldsmith
February 10, 2015
