The Internet has made print media obsolete...
As we discussed in yesterday's Digest Premium... newspaper circulation and advertising revenue are plunging. Free news on the Internet has commoditized the offerings of most print news sources. And with Internet ads, as opposed to print ads, advertisers can accurately judge whether their ads are worth the expense.
But even we were surprised to learn how fast newspapers are falling...
New data from search giant Google shows this isn't going to be a slow death. In the first six months of 2012, Google has collected more in advertising revenue than all U.S. print media (newspapers and magazines) combined. From Statista, a German-based statistics and research firm...
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[I]n the first six months of 2012, Google raked in $20.8 billion in ad revenue, while the whole U.S. print media (newspapers and magazines) generated $19.2 billion from print advertising. That is, Google, a company founded 14 years ago, makes more money from advertising than an industry that has been around for more than 100 years. |
As you can see from the chart, this is the first year Google could potentially out-earn all of U.S. print media in advertising. This is a trend that will continue.
Even we are surprised how fast these companies are dying…
We shared with you yesterday how the Internet is strangling traditional print newspapers… Then, last night, we found some eye-catching numbers that underscore this won't be a slow death. In today's Digest Premium, we'll share what we learned.
To continue reading, scroll down or click here.
Even we are surprised how fast these companies are dying...
This week, World Dominating Dividend Grower McDonald's (MCD) announced solid earnings... The company saw same-store sales increase in the U.S. of 2.5% for the month of November. Analysts expected a 0.01% increase.
Sales increased 1.4% in Europe and 0.6% in the Asia-Pacific region. The company credited a focus on its Dollar Menu, and the addition of several premium items.
Shares popped 2% on the news. But think way back to October... McDonald's announced same-store sales fell by 1.8% globally. It was the first monthly decline in nine years. U.S. sales were also down 2.2% that month.
Instead of viewing the sales decline as a black eye (after all, it was the company's first monthly sales decline in nine years), Wall Street thought it was the end of McDonald's. The stock sold off 10%.
Despite the fluctuations in the stock price (and the company's recent troubles in Europe), we've maintained that McDonald's is still one of the best businesses in the world.
I asked Dan Ferris, who is in Orlando for a conference, to comment on the recent situation:
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It's typical for the press and Wall Street to say things are terrible because of one quarter... But if you actually owned a business, you wouldn't be exiting the business because of one bad quarter. |
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McDonald's has always been a great business... And we'd have no reason to believe that it won't continue to be a wonderful business. I don't know what people will be eating in 10 years, but I guarantee you, McDonald's will find a way to sell it to millions of people around the world. |
Last week, Goldman Sachs, one of the most respected banks on Wall Street, told its clients to sell gold... Goldman lowered its 12-month price target for the precious metal from $1,940 to $1,800 per ounce. Gold sold off on the announcement.
But master trader Jeff Clark thinks the recent drop in gold presents one of the year's great buying opportunities. In today's Growth Stock Wire, he wrote:
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Anyone looking for a chance to buy gold at a cheaper price has to look at Goldman Sachs' announcement as an early Christmas present. The "smart money" certainly is... |
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We last looked at the action of the gold commercial traders – the "smart money" – back in October. Then, gold was trading for $1,785 per ounce. And the commercial traders were net short more than 300,000 gold futures contracts. |
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That's a BIG short position. And it's typical of what we've seen in the past from the smart money near short-term highs in the gold market. |
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But last week, the "smart money" was buying. Commercial traders took advantage of the Goldman Sachs-inspired selloff and reduced their net short position to 215,000 contracts. |
The net short position number reflects data available as of last Tuesday's close... We bet traders reduced their net short positions even further since then. The next Commitment of Traders Report comes out on Friday.
Jeff is using the selloff – and bullishness of the "smart money" – to buy gold. Last week's 4% decline in mining stocks has pushed the sector to prices similar to what we saw in May (when gold stocks popped 20%-30%). Here's what Jeff wrote:
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In theory, once-in-a-decade opportunities are only supposed to come along every 10 years or so. |
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But we've had two such moments in gold stocks already this year. Back in May and July, gold stocks were trading at their cheapest value relative to gold than they had been at any other time in the past decade – except for the October 2008 financial crisis. |
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We took advantage of those situations and bought gold stocks aggressively. And we racked up a string of winning trades. |
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The same condition exists today. |
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Take a look at this chart comparing the Gold Bugs Index (the HUI) to the price of gold... |
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The last time gold stocks were this cheap, Jeff made huge gains... From May to August, his S&A Short Report subscribers booked gains of 96% in two days on Seabridge... 100% gains in one day on the Market Vectors Gold Miners Fund... 75% in a month on Gold Fields... 128% in two weeks on Barrick Gold... 78% in a week on the iShares Silver Trust... 148% in three weeks on Pan American Silver... and the list goes on and on.
Today, he thinks he's found his next triple-digit winner. When mining stocks slid last week, one stock ended the week higher... This is an important move... Jeff notes that stocks that outperform the sector during a decline tend to lead the sector higher during rallies.
In addition to strong technical action, the stock is "dirt cheap," according to Jeff. This company has over $1.8 billion of reserves in the ground... But the market cap is around $200 million. Plus, the company has no debt and a strong cash position.
If the stock performs like it did following the last buy signal in July, S&A Short Report readers could make 600% in a few months.
To sign up for the S&A Short Report, and gain immediate access to Jeff's latest gold trade, click here...
Jeff is confident we're nearing a "buy" signal in gold stocks. And we're even more confident that the government's loose monetary policy will cause gold to balloon over the long term.
Today, Bloomberg reported that the Federal Reserve will expand its balance sheet to $4 trillion by the end of next year – the Fed's balance sheet is currently $2.8 trillion. In other words, the U.S. government will create another $1.2 trillion in the next year. The government will do this by buying more long-term Treasurys and continuing its $40 billion monthly purchases of mortgage-backed securities.
Porter believes these actions will eventually lead to a massive inflation. And Paul Singer, the billionaire founder of hedge fund Elliott Associates, agrees. In a recent speech at real estate firm Archstone Partnerships' annual meeting, Singer told the audience how scared he was of inflation...
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[World governments] say this is not massive money printing, but first, they are wrong; and second, monetary authorities in the United States did not see the crash coming and the unsoundness of the financial system. In fact, right up until the crash, they were saying that nothing like what happened could ever happen. |
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So money printing and zero-percent interest rates, which have distorted the economic recovery and the landscape in the United States and Europe, have become a substitute for sound, pro-growth, fiscal regulatory tax policy. As a result, they say they are not concerned about inflation. |
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This monetary policy, $3 trillion of bond buying in the United States, $3 trillion in Europe and another $2.5 trillion to $3 trillion in Japan, is unprecedented. It is not the case that they know the ultimate inflationary potential when this low-velocity money gets back into the system and acquires some velocity. |
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If and when people lose confidence in paper money because of repeated bouts of quantitative easing and zero-percent interest rates – it could happen suddenly and in a ferocious manner in the commodity markets, in gold, possibly in real estate – interest rates could go up at the long end by hundreds of basis points in a very short time. |
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I'm quite concerned as a money manager that we have to manage money, not just for the boundaries of what's in front of our faces – maybe we'll have a little tax increase or not, the fiscal cliff, or the stock market might go up or down 10% or 15% – but for a basic shift. |
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The thing that scares me most is significant inflation, which could destroy our society. Frankly, in my view, the recent election has diminished the probability of a strong resurgence of growth, and I'm quite concerned. Others are concerned about the course of the next 12 to 24 months in terms of growth, taxation, regulation, and social unrest, a resurgence or larger version of bashing anyone who has made money or makes money and not paying their fair share. |
The gold-coin market is certainly reflecting Porter and Singer's fears... The U.S. Mint's sales of American Eagle gold coins jumped 131% in November to the highest level in more than two years. The Royal Canadian Mint also had its strongest month this year.
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New 52-week highs (as of 12/10/12): iShares Australia Fund (EWA), Guggenheim China Real Estate Fund (TAO), and Vanguard Inflation-Protected Securities Fund (VIPSX).
Not much in the mailbag today... Please send your feedback to feedback@stansberryresearch.com.
Regards,
Sean Goldsmith
New York, New York
December 11, 2012
McDonald's: Once hated, now loved... Jeff Clark: Gold-stock rally imminent... This billionaire is terrified of inflation...