Goldsmith comment: Porter's in Tennessee and didn't have time for The Digest today, but I know he's preparing a great rant for Friday, so don't miss it.
The latest issue of Chris Weber's Global Opportunities Report came out this week. Chris Weber told his subscribers:
In nearly 40 years of watching the gold market, one thing I think I have learned is that gold hates to be in the spotlight. It does its most rising when the fewest people are watching it.
And the spotlight is certainly shining on the precious metal...
Earlier this month, insurance giant Northwestern Mutual bought gold for its portfolio for the first time in the company's history. And in another sign of a top, drug dealers in the Dominican Republic started accepting gold for payment. Now, the Germans are selling gold in vending machines in airports and train stations across the country... The machines update prices every few minutes and charge a 30% premium to spot.
Gold is down around $930 an ounce – off 6% from its 2009 high, but we expect you'll be able to buy it much cheaper before year's end. The downturn is no reason to sell your gold. In fact, we advise never selling your gold. Instead, use the correction to add to your stash. When the market finally wakes up to inflation, you'll need it.
We wrote it, did you short it?
I predict over the next 12 to 18 months, Capital One experiences defaults on more than 10% of its total loan book, resulting in losses of around $15 billion. That would erode a majority of the bank's equity. Depositors would quickly find a safer place for their money, and Capital One would find itself, like certain Wall Street firms of late, trying to raise capital in the midst of a panic.
It seems foolish to run a consumer-lending business based on unsecured debt with so much leverage that a 10% default rate would probably bankrupt you. If you or I owned Capital One, we would never run the company this way. So... why is it run this way? Because it compensates senior managers mostly on the basis of share price, which is largely determined by the company's profits. – April 2008, Porter Stansberry's Investment Advisory
This week, Capital One announced its net charge-off rate for U.S. credit cards – debts the company never expects to collect – rose to 9.41% in May from 8.56% in April. The charge-off rate would have actually hit 10% if it weren't for an accounting change administered by MasterCard and Visa that waits longer to declare debts of bankrupt customers as uncollectible.
And today, Standard & Poor's downgraded Capital One – along with 21 other U.S. banks – saying the industry's future will not be as profitable as in the past. Shares fell as much as 4% today... and over 50% since Porter issued his short-sell recommendation.
FDA Report editor Dr. George Huang is unveiling his latest trade tonight... It's in the hottest area in medicine right now: cancer vaccines. In late April, biotech firm Dendreon received positive results from its prostate cancer vaccine in a pivotal Phase III trial – and shares soared over 450% this year. Everyone's searching for the "next Dendreon," and we believe George has found it...
A certain biotech firm bid for a smaller, Connecticut-based company developing a successful cancer antibody... But shares are trading 25% below the takeover price. The deal is a lock – the only reason it wouldn't close is because big shareholders are holding out for more money... Either way, subscribers will make quick profits.
And once the deal closes, we'll own shares in the leading small-cap cancer vaccine biotech... If shares act anything like Dendreon, we'll make a killing. To sign up for the S&A FDA Report and receive details on the trade, click here...
New highs: Allied Nevada (ANV) and Crucell (CRXL).
We've definitely hit a sore spot with the torture topic... How else can we get a rise? Let us know... feedback@stansberryresearch.com.
"Before I go on to farmground, I must tell you I subscribed to Penny Trends a couple of weeks ago. It was an excellent decision on my part. I'm up $50,000 so far.
"Anyway, my husband bought 600 acres of prime farmground in Ohio 2 years ago. Three weeks ago we were offered triple what we paid for it. We didn't sell because farming is so good right now. We grow specialty crops (i.e. not round up ready beans or corn) so we get quite a premium. This year alone it will amount to over $250,000. Looks like the time for farmers is here. We are about to close on another 350 acres the first of July. I hope the good times for farmers continue so I can buy more of your services and build the log home of my dreams. After all, I do want to retire in about 30 years." – Paid-up subscriber Terri
"Hey Porter – would you like to know what I'm doing with some of the profits I've made from subscribing to your letters? I've supported social security, medicare, medicaid, food stamps, and a host of other state and local public assistance programs. Taxes, Porter. From me according to my means to some of my finest fellow Amerikans according to their needs – or wants, judging by all of the rampant fraud. Nothing like seeing someone driving a BMW and paying for their groceries with food stamps." – Paid-up subscriber Mike P.
"Thinking back on my wartime experience I would say that we can eliminate torture and all that nasty stuff you don't like in this modern age. Lets just throw nuclear bombs at the possible enemy via computers and drones. No more closing with and bayoneting the enemy eye to eye, stick-um in the chest. Computers would be good clean fun, just like the stock market. Who could complain then? Can I operate the computer?" – Paid-up subscriber Steve-O
Regards,
Sean Goldsmith
Baltimore, Maryland
June 17, 2009