Shifting from gold to another precious metal... Five deaths this month in South Africa... Private-equity stocks are still cheap... Lorillard is in talks to be acquired... Big numbers from a dollar store...
Investors are dumping gold...
Demand for gold bars and coins fell 39% in the first quarter from a year ago – the lowest level in four years, according to the World Gold Council.
And the lack of demand is reflected in the holdings of the world's largest gold exchange-traded fund, the SPDR Gold Trust (GLD).
The fund, which is allegedly backed by physical gold, has lost about $2.6 billion of value in the past two months... Holdings fell to 780.19 metric tons.
The price of gold fell 28% last year, its biggest one-year fall since 1981... And holdings in global gold exchange-traded products (ETPs) fell to 869 tons in 2013. Financial-services giant Barclays estimates gold ETPs may shed another 100 tons this year.
But demand is picking up for another precious metal...
We started encouraging readers to take a look at platinum last year. The metal was trading around $1,330 an ounce. Platinum usually trades at a substantial premium to gold – as much as 50% in 2010. It's about 20 times rarer than gold (annual production is around 125-175 tons a year). And around 80% of the total production is used in automobiles (namely catalytic converters).
But what we really like about platinum is that it's a way to bet on political instability. The majority of production is in South Africa, Zimbabwe, and Russia. Russia, as we all know, is caught up in a crisis with Ukraine.
And South Africa didn't disappoint, either... As resource expert Matt Badiali wrote in a recent Growth Stock Wire...
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The strike was hurting the industry so much that Impala Platinum, one of the largest producers in South Africa, said in April it would start buying platinum on the open market to meet deliveries. Platinum spiked to $1,430 an ounce on the news.
Today, the strike continues... A mine worker was stabbed and killed this morning for crossing the picket line. That's the fifth death this month.
And the metal continues to rise in price. It hit $1,494 an ounce today – its highest price since September 2013...
Palladium is similar to platinum... The metal has many of the same industrial uses. And South Africa is also one of the world's largest producers of the metal.
Investors are flocking to both...
Total holdings in global palladium exchanged-traded funds hit 85 tonnes, a 30% increase since April. Palladium is now trading for $833 an ounce – a three-year high.
But as long as the strikes continue, expect to see more upside in platinum and palladium. Investment bank Citigroup estimates global palladium supplies can meet demand for about 13 weeks. Platinum supplies can last 26 weeks. But Russia holds half of those supplies, and carefully controls the outflow. Further sanctions against the country could also limit shipments.
This is all good news for DailyWealth Trader subscribers...
Last June, editor Amber Lee Mason recommended readers get into the Sprott Physical Platinum & Palladium Trust (SPPP). Today, shares hit a 52-week high. Amber's subscribers are up 10% on the recommendation.
Elsewhere in the market, True Wealth subscribers are up triple digits on Steve's recommendation of private-equity firm Blackstone Group.
Private-equity shops have been huge beneficiaries of the Federal Reserve's quantitative easing. They have been able to borrow money for next to nothing to buy productive assets. And rising asset prices, coupled with fierce demand for acquisitions, has allowed these firms to book large profits from their holdings.
But even after their big run, Steve says shares are still cheap. From his latest True Wealth issue...
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Turns out, the executives at the world's largest private-equity firms agree...
"I still think that the value of carry is undervalued in the market," Adena Friedman, the departing CFO of Carlyle Group, told the audience at the Bloomberg CFO Conference earlier this week. She was referring to carried interest – the share of investment profits private-equity firms keep for themselves.
Blackstone CFO Laurence Tosi also spoke... He said the valuation discount of large, alternative-asset managers to traditional money managers – like BlackRock, for example, which trades for more than 14 times forward earnings – "is just not sustainable" and should improve over time. "The story hasn't been fully told and there's a long way to go," Tosi said.
Stansberry's Investment Advisory recommendation Lorillard (LO) soared 10% yesterday after news broke that fellow tobacco firm Reynolds American was in active discussions to acquire the company. British American Tobacco, which owns 42% of Reynolds, may also play a role.
The deal would combine the second- and third-largest U.S. tobacco companies. Lorillard hit an all-time high on the news yesterday before giving back some of those gains during today's trading. Porter's subscribers were up 29% in four months as of yesterday's close.
Shares of discount retailer Dollar Tree (DLTR) spiked nearly 8% today on good earnings...
The company announced that first-quarter earnings rose to $138.3 million, besting expectations. Revenue increased from $1.87 billion a year ago to $2 billion today.
We don't hold Dollar Tree in any of our model portfolios... However, the company's recent success underscores one of Porter's key theses. Its strong earnings are more evidence of a move toward discount retailers.
Porter and his team of analysts recommended another company in the sector – Dollar General (DG) – as a way take advantage of the growing wealth disparity in the U.S... The money the Federal Reserve is printing will cause prices to rise across the board. Meanwhile, wages for most of America will be stagnant or falling. This will result in hordes of people fighting to maintain their quality of life.
Dollar General makes the bulk of its profits selling household supplies, frozen food, and other consumer staples. It also recently introduced tobacco products to increase traffic.
The company is also benefiting as more shoppers migrate away from supercenters like Wal-Mart and toward smaller discount retailers like Dollar General.
Dollar General has 11,000 retail outlets around the country... And it plans to open another 700 stores this year.
New 52-week highs (as of 5/21/14): Apple (AAPL), American Homes 4 Rent (AMH), BP (BP), Callon Petroleum (CPE), Carrizo Oil & Gas (CRZO), Devon Energy (DVN), Lorillard (LO), ProShares S&P 500 Buy Write Fund (PBP), Sabine Royalty Trust (SBR), Market Vectors India Small-Cap Fund (SCIF), Superior Energy Services (SPN), Sprott Physical Platinum & Palladium Trust (SPPP), Targa Resources (TRGP), and U.S. Commodity Index Fund (USCI).
We received loads of feedback yesterday... But it was all in response to Kim's request for contacts in Thailand. We won't publish these notes, but we're passing them along to Kim. Thanks for your help and support. And please send us your e-mails for tomorrow's mailbag to feedback@stansberryresearch.com.
Regards,
Sean Goldsmith
May 22, 2014
The government is now monitoring your investment account...
In a recent episode of Stansberry Radio, Porter spoke with radio host Alex Jones about a scary proposal.
It's possible that the government will soon be allowed to monitor every brokerage account in the U.S...
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The government is now monitoring your investment account...
Editor's note: Today's Digest Premium is excerpted from episode 153 of Stansberry Radio. In it, Porter and radio host Alex Jones discuss a scary proposal that may allow the government to monitor every brokerage account in the U.S...
Porter Stansberry: The new Foreign Account Tax Compliance Act (FATCA) law will take effect July 1st. And FATCA is about closing down any ability for Americans to have offshore banking accounts.
But it has nothing to do with tax evasion whatsoever, because these are all accounts that are disclosed. It's all about the record keeping that is required and the requirement that these banks withhold taxes from any transactions. And there is just no way that they can meet these requirements.
And the government knows this... so it's forcing a lot of investment dollars back into U.S. banks.
And then there's the Financial Industry Regulatory Authority (or FINRA), which is the securities regulatory body that's owned and managed by the industry itself... It's not a government organization, but it's similar.
FINRA just proposed a new rule that will require every single securities dealer in America to open up every single private account to FINRA's own computers.
FINRA claims that they want access to your account in real time so that they can monitor whether or not your broker is providing the right advice for you. But the reality is it's now impossible for Americans to conduct investments with any privacy whatsoever because they can't use an offshore broker, and now FINRA can have constant monitoring in real time of every single investment account in the country.
Alex Jones: And then they'll leave Goldman-Sachs and all the big boys alone... This is a total monopoly setup taking place where they can also nickel-and-dime and harass investment advisors out there. This is a total consolidation. Meanwhile, too-big-to-audit partnerships escape IRS scrutiny. The big billionaires and the globalists are above the law. This is all being written to hammer the middle class.
Porter: Think about what this will do. One of the core foundations of a free market is that the buyers in the market don't know for certain who all of the owners are of another security. And the U.S. Securities and Exchange Commission (SEC), for example, doesn't make people disclose if they own a particular stock until their interest in that company rises above a threshold, usually about 5%. And so that allows smart investors to go ahead and take an interest in a business without having their work or their ideas stolen by other investors immediately.
If you have to happen a good reputation like T. Boone Pickens does in oil and gas... And you want to take a position in a stock, you shouldn't have to tell everybody in advance, because that will make it impossible for you to build a position in that business or in that oil well.
Alex: So this is a National Security Agency (NSA) hub now directly in the private investment to be fed to select interest?
Porter: Exactly. What are the chances that those FINRA computers end up getting bugged or monitored by the NSA? And I don't have any proof of this, but what are the chances that that information is being used in a lot of ways against people? Even something as simple as knowing, for example, how many individual investors own certain securities could be very, very valuable.
Alex: So they want this data to be able to rig the markets even more and truly kill the free market?
Porter: Exactly. I can't think of any other reason why someone would invest so much time and effort into trying to monitor every brokerage account in the United States in real-time. That's an enormous technical challenge. And of course the only people with the authority to do it would be FINRA and the SEC. This idea was proposed today, so it's brand new as far as I know. And if you're right about the way the world is going, then nothing will stop it.
Editor's note: Alex Jones is speaking at the Stansberry Society conference on May 31 in Dallas. He's joining Porter, legendary oilman T. Boone Pickens, rare-coin expert Van Simmons, master resource investor Rick Rule, and a host of other brilliant minds to discuss some of the most important investment and political themes in the world today.
It's probably too late for you to join us in person, but you can still live stream this one-time event from the comfort of your own home. And if you sign up soon, we'll also give you live access to our events in Los Angeles and Nashville later this year. You can learn more by clicking here.
The government is now monitoring your investment account...
In a recent episode of Stansberry Radio, Porter spoke with radio host Alex Jones about a scary proposal.
It's possible that the government will soon be allowed to monitor every brokerage account in the U.S...
To continue reading, scroll down or click here.