Goldsmith comment: Dan Ferris is in New York today attending the Grant's Interest Rate Observer conference. Expect some updates from the conference on Thursday. Meanwhile, he'll be happy with the bullet below...
More bearish news for commercial real estate (CRE)... Daniel Tishman, chairman and CEO of the giant Tishman Construction Corporation, recently told CNBC, "Trillions of dollars are involved in commercial loans. The rollover of those loans in the next five to seven years is going to happen, and the money just isn't there for refinancing."
Digest readers know we believe CRE is the next shoe to drop. Banks, especially regional banks, are loaded with CRE loans that – as Tishman pointed out – will be impossible to refinance in this environment. Not to mention the writedowns these banks will take from declining property values and increasing vacancies.
Ferris has recommended selling short shares of one bank that will suffer worse than all the rest when the CRE crisis hits. This is a great way to hedge your portfolio if the huge rally we're currently experiencing takes a turn down. To get more details, click here...
Mark Johnson, whose USAA Precious Metals and Minerals Fund was the top performer in its class over the past decade, is betting gold mining stocks will rise much faster than bullion as miners' profit margins improve... "For every 1% percent move in gold, the stocks should gain 2% to 3%," Johnson told Bloomberg.
The $1.2 billion fund has around 80% of its assets in mining stocks. Johnson likes to visit the mines of potential investments to discover details you can't find in financial reports, like what the workers are doing. His combination of fundamental and "boots on the ground" research has produced a 51% return this year through September 18 and an average 23% in the 10 years ended August 31 – making it first in its category and second among all U.S. mutual funds, behind ING Russia.
Right now, Johnson likes Agnico-Eagle – the fund's largest holding – which he says will benefit from a "very steep growth profile." He also recently increased his stake in Centerra Gold, a Toronto company with a mining project in Central Asia. And he holds a large position in AngloGold Ashanti.
But we don't think Johnson's picks will come close to rivaling our resource analyst's latest recommendation. S&A Resource Report editor Matt Badiali expects a 70% overnight gain for his readers, and they came much closer to that gain last week...
An independent auditor confirmed the value of Valdecanas, an incredibly rich silver deposit in Mexico.
Back in December 2008, MAG Silver, the tiny company that owns 44% of the project, fought off an insultingly low "stink bid" from its partner. The cheap offer had been keeping shares depressed – allowing Resource Report readers to buy in this summer with virtually no downside.
Now, the auditor claims MAG's share of the silver is worth as much as 68% more than the tiny miner's market cap... and 89% over the lowball offer (and that doesn't give any value to MAG's other projects, including the neighboring and equally rich Juanicipio vein).
MAG shares jumped 5% on the auditor's report, and subscribers are up double digits already... but the real payday will come when a takeover bid for MAG emerges.
MAG shares trade for more than Matt's buy-up-to price now, but he has several other precious-metals picks in his portfolio. His favorites right now are two players in China's gold sector. These two companies are about to merge, combining to make the largest nongovernment gold miner in a country starving for gold and gold investments. To learn more, click here...
The government's latest plan to bail out the floundering Federal Deposit Insurance Corporation (FDIC): have the organization borrow money from the very banks it's supposed to protect. Under the terms of the plan, which senior regulators are "seriously considering," healthy banks would lend billions to the FDIC to protect bank depositors at struggling banks.
Of course, the banks love the idea. Who do you think will ultimately pick up the tab when the FDIC is unable to repay the loans? It's just a thinly veiled taxpayer bailout that allows FDIC Chairwoman, Sheila Bair, to save face.
I've received several e-mails from people who had initially expressed an interest in The Atlas 400 when we first started covering the club in The Digest, saying they never received any further communication from me. I apologize for any confusion, but it seems several e-mail systems blocked my initial communication – sent on September 4, 2009.
If you were expecting more information about The Atlas 400, but never heard back from me, please send me an e-mail (sean@theatlas400.com). I will respond with the original invitation letter and directions on how to apply for membership.
If you had planned on attending the car-racing event in Germany, again – apologies – but I assure you, there are many more excellent events to come.
For clarification, the initiation fee will be $25,000 and $5,000 a year thereafter for the first 100 members. The cost to join will increase after every 100th member. I look forward to hearing from you.
New highs: Vanguard Tax Exempt (VWSTX), Korea Electric Power (KEP).
In the mailbag... The people want more Atlas 400. We'll surely bring back some excellent tales from Munich: feedback@stansberryresearch.com.
"I disagree with JJ about keeping the e-mails from the Atlas 400 Club private. I doubt that I will ever join the Atlas 400 Club. But, I was interested to find out that it was being created, and I look forward to hearing about their exploits. I find it quite easy to live vicariously through the adventures of others. Someday I hope to make it to an Alliance convention. The date doesn't work for us this year. I've decided that the Alliance group is one group I would enjoy schmoozing with – I can tell they are my kind of people – and I will plan to get to a convention. The Atlas 400 Club – I'll just dream about being a member. You never know – it could happen!" – Anonymous
"Obama isn't stupid enough to truly believe that government supported newspapers are a good idea for anyone except for a bloated, inefficient, and abusive government. Governments that are systematically destroying the economy need tight control over an efficient propaganda machine to continue to thrive and avoid the breakout of a violent revolution when things inevitably get bad enough due to the ever increasing weight of the government albatross. He is also not stupid enough to believe that misinformation is anywhere near as dangerous on the internet as true information that the government would prefer to keep hidden.
"The less Obama manages to accomplish during his administration, the better off everyone will be. He has a lot of ideas that are dangerous to freedom and prosperity, and few (if any) good ideas.
"I could continue with a long rant about government, but I'll just state that I'm a libertarian who fully believes in the ideals expressed so eloquently in our largely ignored constitution." – Paid-up subscriber Roy
"Like the other guy in California right now I am surviving. A costly divorce a couple of years ago, starting a new business and helping three kids with college doesn't leave a lot left over for too much investing. But the bills are paid, room to grow in the business, good health and looking ahead. I have followed your advice in a few areas and it has paid off... enjoy reading your advice and I think you are right on with the political advice... which is very important because those policies affect us. Looking forward some day to traveling with you all to all those 'exotic' places you go. Keep up the good work." – Paid-up subscriber BW
Regards,
Sean Goldsmith
Baltimore, Maryland
September 22, 2009