Sandy's aftermath...
Editor's note: We conclude our weeklong series with coin and collectibles expert Van Simmons with his thoughts on an unusual rare coin investment. Van says fewer than 500 known examples of this collectible are left in the world. And they're one of his favorite pieces...
They're called Indian peace medals. And from the late-18th through 19th centuries, they were given by representatives of the U.S. government to Native Americans as signs of good will.
Between 1797 and 1892, the U.S. minted 3,449 Indian peace medals. They were made of silver. Many of these were melted down and restruck with the face of the new president. (Each president during the era had his own medal.) And most of the medals that weren't melted were buried with the Indians... The Indian chiefs wore them around their necks and considered them a badge of honor.
Non-U.S. governments (like France, Spain, and Britain) also made Indian peace medals. But the U.S. would make the Indians surrender all foreign medals – especially ones from Britain – to receive a U.S. peace medal.
The first Indian peace medals were made for George Washington. They became more widely distributed starting with Thomas Jefferson. He would give the medals to Lewis & Clark, who would take them on their exhibitions and would give them to certain Indian chiefs they encountered on their travels.
"It was a badge of honor and sign, to both sides, that he who displayed the medal was a friend to the American nation," Jefferson wrote in 1803 to William Henry Harrison, then-governor of the Indiana Territory.
"Today, it is an enduring symbol of one of [the] greatest Chief Executives and his forward-looking hope to live in perpetual peace with Indians, to cultivate an affectionate attachment from them, be every thinking just and liberal which we can do for them within the bounds of reason. And by giving them effective protection against the wrongs from our own people."
There are three different sizes of peace medals – 52 millimeter (mm), 62mm, and 76mm. The importance of the Indian chief determined the size granted.
Indian peace medals are "the purest form of the American Indian juncture with the American government on peaceful terms." And due to their rarity, these medals are expensive...
[Editor's note: Van says he has only has one Indian peace medal in mint condition.]
Most of the Indian peace medals you encounter today are well-worn. And some of these were brought to market by grave robbers from the 1930s to the 1950s. Even today, you will see a peace medal in horrible condition come to market... most of these were likely stolen from graves.
The most common Indian peace medal is a poor-condition, Ulysses S. Grant piece. You can find one today for around $7,000.
The most valuable Indian peace medal is a Thomas Jefferson in mint condition. We had the opportunity to buy one of these at auction a few years ago. I instructed my team to bid up to $100,000. (We figured we'd win by a wide margin).
We barely made the opening bid... And the Thomas Jefferson peace medal sold for $305,000.
Editor's note: If you would like to contact Van Simmons to discuss collectibles, you can e-mail him at van@davidhall.com or call him at 1-800-759-7575. We receive no compensation for mentioning Van or his business.
Editor's note: In today's edition of our Digest holiday series, we're reviewing one of the best ways to take advantage of the huge energy glut in the United States. (We'll return to our regular Digest fare on January 2.)
The U.S. is experiencing a period of massive growth in oil and natural gas. Supplies are increasing and prices are falling. That has created an opportunity for investors to earn large, growing streams of tax-advantaged income for decades to come.
Back in October, 12% Letter editor Dan Ferris showed his subscribers seven companies that should profit off this trend... as well as a proprietary model for evaluating which businesses in the sector will do the best job of creating shareholder value. Since this piece was published, oil prices have continued to fall... and supplies have continued to climb.
Read on to learn more about the oil and gas boom and gain access to Dan's invaluable research...
Sandy's aftermath... Apple's share price reflects (my) doubts... Porter was right: the Canadian oil price crash... New pipeline demand is soaring... How to make 16% a year with tax-advantaged income...
Ugly pictures of Hurricane Sandy's devastation are everywhere. I (Dan Ferris) saw a small apartment building in New York with its brick facade ripped off and a fleet of taxis in New Jersey sitting in about four feet of water. You've probably also seen pictures of the dozens of homes that burned to the ground at the Jersey shore. And worst of all, last I heard, more than 50 people died in the hurricane.
If you're without power or worse due to Hurricane Sandy, our thoughts and good wishes are with you today. Our own Sean Goldsmith is in his New York apartment without power, cell phone, or Internet. Hang in there, Sean!
Although Sandy disrupted life in Baltimore – where S&A maintains its headquarters – the damage wasn't as extensive... We're happy to report the office is back up and running, and our customer service representatives are again available by phone. If you have a question about your subscription, you can reach us at 888-261-2693.
Apple's share price broke below $600 Friday for the first time since July. Today, the stock trades in the $590s. It hasn't closed below $600 since July 30.
Apple fired two executives earlier this week, including mobile software chief Scott Forstall, the company's most controversial executive. Forstall was close to late Apple co-founder Steve Jobs. The Wall Street Journal suggests Jobs' "outsized personality" kept feisty characters like Forstall in check. Apparently, the last straw for current Apple CEO Tim Cook came when Forstall refused to sign an apology letter Cook issued to Apple customers for the company's bug-laden and widely criticized mobile maps software.
Apple also fired John Browett, the recently hired head of Apple's retail stores. Browett was also thought to be difficult to work with and a poor fit for the Apple culture. Makes you wonder how good Jobs' successor Tim Cook is at finding new talent that fits Apple's unique culture.
Apple's business trades at less than 10 times earnings, once you factor out its excess cash holdings. That seems pretty cheap for such an iconic business... but I doubt I'll ever recommend the stock. I have this nagging fear it will end up like Dell. The computer-maker was the darling of the 1990s. I even heard one analyst say Dell was the best-performing stock of the 1990s.
But today, Dell is struggling. It turned out, PCs and laptops were more like commodity products than branded consumer products. Apple has more than 60% of the tablet market today. How long will that last? Definitely not forever... and maybe not much longer.
Microsoft's new Surface tablet is a huge step in the right direction. Apple's iPads are more like big phones than small computers. I can't do real work on mine. I won't know for sure until my new Surface arrives at my door, but it looks like I'll be able to do real work on it… because it runs on a version of Microsoft's updated Windows 8 operating system. That's smart of Microsoft. We'll see how it sells.
Porter's prediction of lower oil prices is already coming true.
Western Canada Select crude has crashed to $56.24 a barrel, down 32% from last November's $82.26 price tag and about 26% below the year-to-date average price of a little more than $76. Western Canada Select is a blend of heavy oil-sands crude and conventional crude oil. It's lower-quality than West Texas Intermediate (WTI) crude, whose price is the benchmark for U.S. oil. So Western Canada Select typically sells at a discount to WTI.
The problem is that 99% of Canadian oil-sands petroleum is sold in the U.S... where we have more crude oil than we know what to do with these days. So all oil prices are falling, and oil-sands prices are nearing the point where it's literally not worth extracting the stuff.
A report by market research firm Wood Mackenzie said some new oil-sands projects would need $90-$100 per barrel oil prices to make economic sense. Others would need at least $65 per barrel to work. Those projects won't see the light of day any time soon.
Worse... many current oil-sands projects require $45-a-barrel oil to make a profit... With prices now at $56 a barrel, how long will it be until most of the Canadian oil-sands industry is operating at a loss?
The massive new oil and gas boom that prompted Porter's prediction of lower oil prices is creating an opportunity for investors to earn large, growing streams of tax-advantaged income for decades to come.
The income I'm talking about is already pouring into investors' pockets from the pipeline industry. The United States' 210 natural gas pipeline systems encompass more than 305,000 miles of pipe, according to the federal Energy Information Administration. All our natural gas pipelines laid end to end could cross the continental United States more than 100 times.
These pipelines carry natural gas, crude oil, gasoline, jet fuel, ethane, propane... and many more valuable energy commodities.
The huge oil and gas boom in the U.S. today means demand is greater than ever for pipeline capacity. Phil Blancato, CEO and president of New York-based asset management firm Ladenburg Thalmann, says: "There is demand for $200 billion to $300 billion of new pipelines."
That's a huge opportunity. It would approximately double the current market cap of all of today's pipeline stocks. While new pipeline companies will surely be formed to address some of that demand, existing pipeline companies will handle much of the growth.
That's good for investors who know how to find great pipeline stocks. Our research shows that one area of the pipeline sector has outperformed nearly every other asset class for the last 10 years... earning investors more than 16% a year in returns.
If you'd put $10,000 into pipeline stocks 10 years ago, you'd have more than $50,000 today compared with less than $30,000 if you'd bought real estate investment trusts and utility stocks... and less than $20,000 with U.S. stocks in general. And with the U.S. energy boom creating massive new pipeline demand, it's likely the pipeline stocks will keep growing for many years to come.
As you can see, pipelines tend to treat investors very, very well. So I've prepared a special 32-page report, featuring seven pipeline stocks.
My research partner, Mike Barrett, and I scoured the universe of pipeline stocks to come up with the best recommendations for subscribers to my monthly income newsletter, The 12% Letter.
We even developed a proprietary, seven-point system to make certain we only recommend those pipeline stocks that do the best job of creating shareholder value.
I'm fairly certain you won't find anything like this report anywhere else. The report is called "An A.O.P. Retirement." It's free to all 12% Letter subscribers. We believe it's your best bet for a safe, tax-deferred income for the next 10 years.
You can get access to The 12% Letter (without sitting through a long promotional video) and read the full "A.O.P. Retirement" report by clicking here.
Longer term, rising natural gas prices are also part of Porter's global energy outlook… but it has nothing to do with the weather. As oil and gas companies throw themselves into producing more and more crude from domestic shale formations, they're shifting operations away from gas resources. Meantime, super-low gas prices are spurring demand. Falling production plus rising demand equals higher prices.
Regards,
Dan Ferris
Medford, Oregon
October 31, 2012
