It's 'impossible' to beat these long-term results

This gold stock has tripled, but it's still ramping up...

Over the last decade, Gold Stock Analyst editor John Doody amassed one of the most impressive track records in gold stocks we've ever seen.

When he speaks, we listen. And in today's Digest Premium, John shares the name of a junior gold miner that is ramping up production and could be a takeover candidate for a larger firm...

To subscribe to Digest Premium and receive a free hardback copy of Jim Rogers' latest book, click here.

It's 'impossible' to beat these long-term results... Turning $100 into $9,000... Record dividends from the world's biggest companies... Another new high for Tesla... The world's largest battery factory... Gold hits a four-month high...

 "It is almost impossible for investors following any other kind of strategy to beat the long-term results of investing in high-quality, capital-efficient companies and reinvesting the dividends."

Porter has been writing about the beauty of capital-efficient businesses for years... These are companies that don't have to reinvest much money to maintain their business. As a result, they generate so much cash, the best are able to return large amounts of capital to shareholders through buybacks and dividends. (Like Hershey and Coca-Cola, for instance.)

As Porter said, simply buying and holding these businesses (while reinvesting the dividends) is the best way for the average investor to make a fortune in the market. You can read the full essay Porter wrote on the topic in this classic DailyWealth.

 Porter's lead analyst for Stansberry's Investment Advisory, Bryan Beach, wrote more about compounding via reinvesting dividends in a recent DailyWealth...
 

To illustrate this point, take a look at the following chart for oil major ExxonMobil (XOM). ExxonMobil is probably the best-run company in the entire world.   The chart displays the performance of how you would have made out in ExxonMobil with two investment strategies, by investing $100 in the stock in 1981.     Look closely at this chart. Over 34 years, a $100 investment grew to more than $2,200, not including around $700 of dividends.   Making $3,000 on a $100 investment isn't bad at all. It works out to around 11% per year. But by reinvesting dividends – which, again, requires no additional effort on your part (and incurs no additional fees) – your $100 turns into $9,000.

 As you can see from the chart, the beauty of compounding doesn't kick in for about 15 years... Many investment professionals say the hardest part of their craft is "doing nothing." And most investors can't sit still for 15 years.

But using Exxon as an example, during those 15 years, you're accumulating more and more shares through dividend reinvestment. And more shares generate more dividends... Eventually, your returns explode.

 One benefit of our government's loose monetary policy (in addition to soaring stock prices) is that companies have record amounts of cash on their balance sheets. And according to new data, the world's largest firms are paying out more in dividends than at any point in history.

Research from Henderson Global Investors shows the world's largest companies paid more than $1 trillion in dividends last year. Payouts have increased by $310 billion since 2009.

 Financial and technology firms took the top spots for largest payout contributors. And the U.S. is leading the world in dividend payouts, accounting for one-third of the total. The U.S. has also increased payouts the fastest over the past five years, with a 49% gain.

Another fun fact: Apple, which reinstated its dividend in 2012, paid nearly one-sixth of global technology dividends last year.

 We'll shift our focus from high-quality companies paying healthy dividends to one of the greatest absurdities in the market today: electric-car manufacturer Tesla.

We've long been wary of Tesla's soaring share price and lofty valuation. We most recently wrote about the company two weeks ago when shares hit an all-time high. But the company faces plenty of problems. It loses money. Its cars catch on fire. And given the low driving radius, it's difficult to use a Tesla as you would a normal car – but they still cost $100,000.

 The company's market cap sits at $31 billion... Meanwhile, it trades for 14 times sales.

Still, Tesla shares soared nearly 20% today to a new all-time high after a Morgan Stanley analyst placed a $320 price target for them. (Shares hit as high as $259.20 today.)

The company is expected to announce plans to build the world's largest battery factory (with partners like Panasonic) this week. The Morgan Stanley analyst, Adam Jonas, thinks the move could help Tesla not only disrupt the automotive industry, but the electric-utility industry, too. From the Wall Street Journal...

 Tesla's a hot story today... But its valuation is ridiculous. It's highly unlikely a $31 billion company can grow enough to justify a multiple of 14 times sales. But trying to short this rocket ship is a mistake... The trend is clearly up.

 Meanwhile, gold continues its ascent...

The price of gold just hit a four-month high of $1,341 an ounce. The precious metal jumped slightly today after weaker-than-expected data from the consumer confidence index and a recent business survey from the Richmond Federal Reserve.

On January 30, Steve Sjuggerud called the bottom for gold and gold stocks. He noted sentiment toward gold couldn't get any worse and that gold stocks were trading at a record discount to the price of the metal. Since then, prices for gold stocks, as measured by the Market Vectors Gold Miners Fund (GDX), are up more than 13%. The metal itself is up 8%.

 In today's Digest Premium, gold-stock expert John Doody shares one of his favorite gold-mining stocks today... It's a company he thinks one of the major miners should purchase. Digest Premium subscribers can read this exclusive content below.

 Phase 1 Investor editor Frank Curzio recently hosted a live webinar to discuss "flash bids." This is a strategy that allows you to buy some of the world's smallest companies at a huge discount... and sets you up with the potential to make hundreds-of-percent returns. Plus, it's much safer than simply buying shares on the open market.

Some of the greatest speculative investors in the world use this strategy... including Rick Rule, Doug Casey, and Steve Sjuggerud.

Steve, for example, told me he used this strategy to book 300% gains on a small bank stock. Rick used this strategy to buy a stock for $2 that he later sold for $140 – an amazing 3,400% gain. Of course... these types of gains aren't the norm. But we want to show you the potential gains you can achieve using Frank's "flash bids" strategy.

Flash bids are essentially lowball orders placed well below the current price of a stock. Of course, there's more to the strategy than just that... It also involves finding the right stocks and the right sectors.

When you can use these lowball offers to purchase stocks at or below book value, it allows you to buy speculative stocks with little risk. It also gives you the chance to see huge, triple-digit gains...

 Frank recently hosted a webinar to discuss this strategy... And he just released a brand-new report titled "The Most Powerful Investment Technique You're Not Using Right Now," where he added five flash bid targets to his watch list.

 New 52-week highs (as of 2/24/14): ProShares Ultra Biotechnology Fund (BIB), BP (BP), Brazil Resources (BRI.V), C&J Energy Services (CJES), Comstock Resources (CRK), Corning (GLW), Hershey (HSY), iShares Biotechnology Fund (IBB), Integrated Device Technologies (IDTI), SPDR International Health Care Fund (IRY), Penn Virginia (PVA), ProShares Ultra Health Care Fund (RXL), Constellation Brands (STZ), Skyworks Solutions (SWKS), Cambria Shareholder Yield Fund (SYLD), United Technologies (UTX), and Vanguard Natural Resources (VNR).

 Slow day in the mailbag... What's irking you in the markets today? Are you still buying this market at all-time highs? Let us know your questions and concerns at feedback@stansberryresearch.com.

 "Will you help me? I missed the buy on (NG) Nova gold and wonder if it is a buy at these prices? I am so mad at myself for missing this 2.12 buy. Was out of town." – Paid-up subscriber Mel G.

Goldsmith comment: We're sorry you missed Porter's NovaGold recommendation. As you're aware, Stansberry's Investment Advisory subscribers are up more than 70% since November. But we can't offer individualized investment advice... So your best bet is to go back to the November issue to reference Porter's original buy advice.

Regards,

Sean Goldsmith
New York, New York
February 25, 2014

This gold stock has tripled, but it's still ramping up...

Editor's note: Today's Digest Premium continues from our exclusive interview with John Doody, founder and editor of the Gold Stock Analyst advisory. (You can read the first piece here.) Longtime Digest readers know John's track record among gold stocks is nearly impossible to beat. Between 2001 and 2012, his "Top 10" portfolio of gold stocks returned more than 1,200%.

In today's Digest Premium, John shares the name of a junior gold miner that is ramping up production and could be a takeover candidate for a larger firm...

 I (John) have never really been interested in large mining stocks like Newmont and Barrick.

These stocks just don't give you a great amount of leverage to the upside. They're in so many operating areas and so many political risk areas, and my interest goes away when a company's production gets to 1.5 million ounces a year. Beyond that, they're too big to control their own destiny.

Big miners don't have the upside leverage from adding a new project. If you're producing 1 million ounces a year and you add a 200,000-ounce-a-year mine, that's a 20% increase. But if you're producing 4 million ounces a year, 200,000 additional ounces a year is only a 5% increase.

 That's the target that companies look for... A mine that has either 2 million ounces of reserves or one that can produce 200,000 ounces a year. You don't find big, 500-million-ounce-a-year mines anymore. They have all been found. And either they can't permit them or they can't finance them. Companies like Seabridge, Northern Dynasty, and NovaGold have plenty of gold. But there are issues about getting them into production.

 Goldcorp is making a hostile bid for Osisko, which has a 10-million-ounce mine in Quebec. And actually, I think Goldcorp chose the wrong target. There's a better mine in a better tax jurisdiction. And the other target, which is in my Top 10 portfolio, has 15 million ounces, and could be bought cheaper than Osisko. And it's the same kind of project: a big 50,000-ton-a-day mill with a low grade. The stock Goldcorp should have bought – Detour Gold (DGC.TO) – has tripled from its low late last year...

Detour Gold is still in the ramp-up stage. Its full production is 650,000 ounces a year, and it's probably still a year away from that. This year, Detour should produce around 475,000 ounces.

These mines are big operations, particularly when they're big, low-grade, 50,000-ton-a-day mills… They just don't turn on and off like a light switch. It takes a long time to ramp them up and tweak them.

Osisko has the same mill, a smaller deposit, but the same production capability, and it took the company two years to get all its stuff straightened out. Osisko has done it now, and maybe that's why Goldcorp jumped at it while Detour is still in the teething stage. But Detour is a better project... The grade is slightly higher, and it's a better tax jurisdiction (Ontario versus Quebec).

– John Doody

Editor's note: You can gain access to John's latest research and his famed "Top 10" favorite gold stocks with a subscription to Gold Stock Analyst. You can learn more by clicking here.

This gold stock has tripled, but it's still ramping up...

Over the last decade, Gold Stock Analyst editor John Doody amassed one of the most impressive track records in gold stocks we've ever seen.

When he speaks, we listen. And in today's Digest Premium, John shares the name of a junior gold miner that is ramping up production and could be a takeover candidate for a larger firm...

To continue reading, scroll down or click here.

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(Top 10 highest-returning open positions across all S&A portfolios)

As of 02/24/2014

Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any S&A publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio.

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