Gold suffered its biggest two-day drop in 30 years recently... And gold is now down nearly 30% from its record highs. Porter has expected the decline. And he's now scouring the market for his favorite gold miners.
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Gold suffered its biggest two-day drop in 30 years recently... And gold is now down nearly 30% from its record highs. Porter has expected the decline. And he's now scouring the market for his favorite gold miners.
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A massive economic experiment is going on around the world right now… and it's driving stock prices higher almost everywhere…
In major economies across the globe… governments are courting inflation in an attempt to "grow" their economies… In the U.S., near-zero-percent interest rates and ongoing quantitative easing have our benchmark S&P 500 stock index hovering at all-time highs. It's a phenomenon True Wealth editor Steve Sjuggerud labeled the "Bernanke Asset Bubble"…
In Japan, Steve called the same experiment "Abe's Revenge."
As we've recently discussed, Japanese Prime Minister Shinzo Abe has vowed to print as much money as it takes to spark inflation in Japan. And he's kept his word... Abe and his appointee for Bank of Japan Governor, Haruhiko Kuroda, have sent Japanese stocks soaring 40% since mid-November. Steve still expects greater gains to come.
And now, another country is joining the experiment. And Steve believes readers can make even more money – up to 75% in 12 months – by buying Russia…
Like Japan, Russia isn't happy with its economic growth. Russian President Vladimir Putin has vowed to "fix" the situation.
As Steve wrote in the April issue of True Wealth...
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You see, Russian President Vladimir Putin isn't happy with his central bank...
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The country's outgoing central bank chairman Sergei Ignatyev had a problem... He's known as an "independent" central banker – one who doesn't bow to the wishes of his government. He has been committed to protecting Russia from inflation since he took over in 2002. And he's been praised for his handling of the global financial crisis in 2008.
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But in Putin's Russia, you can't behave like this...
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President Putin wants economic growth, period. And this old fuddy-duddy Ignatyev was more concerned with preventing inflation than following the wishes of Russia's president. So Putin "recommended" Elvira [Nabiullina] as the replacement.
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The European debt crisis is hurting Russia, which is growing at its slowest pace since 2009. And Putin is already letting his government know he's serious about boosting the country's stock market. He has instructed Russia's central bank to make sure the country's economy grows. You can read more about the situation in the April 8 DailyWealth.
Putin said the slowdown is shrinking incomes. That suggests "the government may be prompted to revisit demand-supporting measures such as wage and pension increases," according to Credit Suisse Group analysts Sergei Voloboev and Alexey Pogorelov. "The focus on the policy side is now on the timing – and magnitude – of forthcoming monetary easing, and any other types of stimulus that the government may come up with."
As you can see from the chart below, Russia's market is lagging Japan so far. But both have embarked on massive quantitative easing... and Steve is still bullish. If he is right, we should soon see a major rally in Russia...
Holding interest rates near zero turns everyone into a speculator. Folks can't survive with their money in savings (earning next to nothing). Instead, they're forced to buy riskier assets, like corporate bonds and stocks.
As Steve wrote in the March issue of True Wealth...
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I know the entire globe is struggling right now. According to the most recent data, the U.S., Europe, and Japan are all experiencing NEGATIVE economic growth. And that's today...
Looking down the road, a crisis in the U.S. is inevitable... You can't borrow money and print money at the rate we are without consequences.
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But in the short term, these policies are sending stocks and most assets soaring.
The two results of near-zero-percent interest rates – monetary expansion and higher tolerance for risk – make this the perfect climate for asset managers.
Take the latest results from the world's largest asset manager, BlackRock...
BlackRock's first-quarter earnings jumped 10% to a record $632 million.
Its business model is simple... As these firms gather more assets – which they charge a fee to manage – they earn more money.
And BlackRock's assets hit $3.9 trillion at the end of the first quarter, up from $3.7 trillion in the same quarter a year ago and $3.8 trillion in the previous quarter.
BlackRock's announcement also confirmed the shift from bonds to stocks. The firm said equity funds had net inflows of $33.7 billion, and its fixed-income funds saw net outflows of $2.6 billion.
Gold reversed its two-day rout today, jumping more than 1% to around $1,380 an ounce. As we discussed in yesterday's Digest, this was a necessary – albeit painful – correction for gold. The precious metal has gone up for 12 straight years. And as our Editor in Chief, Brian Hunt, likes to say, "Markets are like runners. They can't sprint all-out for miles without taking a 'breather.'"
We can't know for sure if we're at a bottom for gold prices, but the correction was healthy. And we're currently scouting our favorite gold-mining stocks. When gold stocks do turn the corner, some of our analysts believe they could double or even triple in a short period of time. That's when fortunes are made...
If you're looking to build a shopping list of gold stocks to buy, we recommend you consider our friend John Doody's Gold Stock Analyst newsletter. John has been using his method for investing in gold stocks for years... And he's amassed an eight-figure fortune doing so.
His proprietary method for selecting gold stocks has vastly outperformed the overall market (and even the price of physical gold)... From 2000 through the end of 2012, John's recommendations have returned 1,239%... crushing the returns from the S&P 500 (13%), gold (515%), and an index of gold stocks (222%).
When this market does turn the corner, you'll want to have John's expertise to help you choose the biggest winners. You can learn more about Gold Stock Analyst by clicking here... And until midnight tonight, you have the opportunity to sign up at a large discount.
New 52-week highs (as of 4/15/13): none.
In today's mailbag, readers offer their take on subscriber Paul Christianssen's e-mail saying that "capitalism is an evil"... Send your e-mails to feedback@stansberryresearch.com.
"I suggest Paul try living in Putin's Russia or Mao's China, and don't let the door hit you on the ass." – Paid-up subscriber JM Pumphrey
"By all means, please continue to prove Marx correct. The Catholic church concerns themselves with my morality. They do not tell me how to make money. On the other hand, if you all acted as a sort of "moral compass," maybe the Church would tell me how to make money, but I doubt they'd be as effective as you all are. One question: if Mr. Christianssen (real name?) is such a moralist, I'm wondering what percentage of his annual income and net holdings he gives to charity? Just asking..." – Paid-up subscriber Steve Heitzig
"I would strongly recommend to Paul to read The Anticapitalist Mentality by Ludwig von Mises, this may clear a bit his very clouded understanding what the capitalism actually is. This small book published back in 1955 is even more correct today. Best regards to all at PSIA, keep the good work!" – Anonymous
Regards,
Porter is getting ready to buy gold stocks…
The two-day rout in gold prices (its largest in 30 years) is the correction I (Porter) have long been expecting for the precious metal. And I'm getting ready to buy...
If you go back and read my newsletters from 2012, you'll see I thought gold would finally correct last year… Gold's been in a 12-year bull market. Nothing goes up forever. The correction had to come sooner or later.
Plus, so many people got leveraged into gold... And so many people who had never owned gold before were buying. High leverage and low-conviction owners equal a big crash when prices finally reverse. It was just a matter of time until we saw something like this.
This is a classic liquidation. People are hitting their margin calls and trailing stop points. And they're bailing. And these are folks who have no idea what it is they actually bought. They don't know the real reason to own gold or what the asset is worth – particularly in regard to gold stocks.
So, I believe this is an excellent time to begin looking into these businesses in a more detailed way. It's time to start building a "wish list" of gold stocks you'd like to own.
We started nibbling on mining stocks for the first time in a long time, earlier this year. I imagine we'll buy more after this latest correction.
For people who have lost money and are scared and mad – those are natural reactions, by the way – refer to the March 1 Digest. I reminded everybody that making money in commodities is very difficult.
Most people should simply avoid investing in commodities. You can become a very successful investor without ever buying a gold stock (just look at Warren Buffett). For most people – especially those who don't have a passion for the sector or cannot master their emotions – it's best to avoid commodities.
For everybody else, there's always an opportunity to make money in commodities, as long as you're willing to wait to buy until after a liquidation.
Remember, gold went up for 12 straight years. I've been waiting for some time to have the opportunity to buy into gold. And I'm glad that opportunity has arrived. We'll probably start buying more gold equities in my newsletter as this bear market intensifies.
– Porter Stansberry with Sean Goldsmith