Stepping outside the lines... Golden 'lottery tickets'... Why today is an even better opportunity than 2005... A possible addition to the Stansberry Research Hall of Fame?...
Editor's note: In lieu of our normal publishing schedule, we're giving Porter the day off from writing his popular Friday Digest. Instead, we're featuring an excerpt from the April issue of True Wealth Systems, which hit e-mail inboxes last night after market close.
In short, editor Steve Sjuggerud has uncovered an investment opportunity that he believes could lead to life-changing gains...
In December 2011, I (Steve Sjuggerud) stepped outside the lines in True Wealth Systems...
Normally in True Wealth Systems, our computers let us know what the best buys and sells are, based on how we've programmed them.
But in December 2011, I recommended an idea that did NOT come from our computers. It was a little-known investment called "TARP Bank Warrants."
Why did I do this?
The idea behind True Wealth Systems is to deliver big profits to you as best as I can. Most of the time, we do that with 1) our TWS computer signals and 2) with leverage from double-long exchange-traded funds.
But sometimes, finding big profit opportunities means stepping outside the lines.
In December 2011, I discovered an incredible investment deal that was created by the U.S. Treasury. Few people had heard of it. I ran some numbers (thanks to our computers), and I thought we had a chance for big profits.
We've already locked in gains of 123%, 105%, 60%, and 39% in our TARP Warrants. Another TARP Warrant that we still hold is up more than 100%.
In short, stepping outside the lines paid off. This month, it's time to step outside the lines again...
Today's opportunity didn't come from our TWS computers. And it's too speculative to recommend in True Wealth... But the upside potential is too dramatic to ignore.
This month, we're buying three stocks that I think of as "golden lottery tickets." The last time I recommended a similar trade was in 2005. Folks who took my advice doubled their money on two of the stocks.
Astoundingly, today's opportunity is even better than 2005's...
Stocks in general have soared over the past four years... However, gold-exploration companies are down 90% in the same time frame. Gold-exploration companies are now better values than ever, and they're more hated than I can ever remember.
It's time for us to repeat the idea I recommended in 2005... It is time for us to buy three "golden lottery tickets."
Let me explain...
What I Did in 2005... and Why Today Is a Better Opportunity
In July 2005, I recommended three small gold stocks in my high-priced, speculative newsletter back then called Sjuggerud Confidential. (That letter was a predecessor to True Wealth Systems... without the systems.)
At the time, gold-exploration companies were dirt-cheap and completely ignored. Nobody wanted anything to do with them.
You've got to remember, the price of gold in mid-2005 was around $425 an ounce... To put that in perspective, the price of gold was down 50% from its highs 25 years earlier! Why on earth would anyone invest in a gold-exploration company in 2005?
Of course, you know I'm a contrarian investor... I look for what nobody else wants. By 2005 I was already buying gold and gold coins in my True Wealth newsletter. Gold had bottomed and was moving up. So I started checking out the gold plays with more upside potential – like exploration companies.
I wanted to find three gold companies with massive piles of gold in the ground. I wanted to find three "golden lottery tickets" that never expired... They just needed the price of gold to go up.
So in July 2005, I recommended three gold-exploration companies to my subscribers – Seabridge Gold, Arizona Star, and Crystallex.
As I wrote then, "the thing about buying tiny gold stocks is, you really shouldn't buy just one." You want to spread your risk, as some will soar, and some will crash. I stand by that advice today.
As you know, the price of gold soared over the next few years. Seabridge Gold and Arizona Star turned out to be home runs – you would have more than doubled your money on both of them following my advice.
Seabridge was the top performer – we pocketed 995% profits. That 2005 recommendation of Seabridge Gold has turned out to be the best-performing stock recommendation of my career so far. The third stock didn't turn out so well... Crystallex was taken over by the Venezuelan government and basically went to zero.
But because our risk was spread out across three stocks, we made extraordinary returns.
Today, we have an even better opportunity than in 2005...
Gold-exploration companies have been decimated over the past four years. They're down 90% since April 2011. Take a look...
After a crash like that, gold explorers like Seabridge Gold are cheaper today than they were in 2005 (based on how much gold you control when you buy a share of their stock). And they're more hated than I can ever remember. Nobody wants anything to do with them.
The bigger picture in gold stocks is similar...
This next chart is a ratio of a gold-stock index to the price of gold. Today, you can see that this ratio is right at its all-time lows...
The only time this ratio got this low in the past was in late 2000 – and gold stocks soared by 300% in two years after that.
Right now, our True Wealth Systems computers don't have gold (the commodity) as a buy. But that doesn't mean we can't buy gold stocks. This ratio is too extreme to ignore. Gold explorers have fallen the most – they are the most hated.
So today, we're following the same blueprint from 2005. We are buying three "golden lottery tickets." We plan on holding them for three years. They all offer us maximum leverage to the price of gold. So if gold goes up, they will go up a lot.
This time around, we are making one change... We are not putting money into Venezuela, or any uncertain political environment. All of our "golden lottery tickets" are in North America.
As Steve mentioned above, the last time he recommended these types of gold companies in 2005, it resulted in the highest-returning recommendation in the history of Stansberry Research. Seabridge Gold returned 995%.
Some people think it's hyperbole when we say you can double or triple your money in junior mining stocks. But if you've ever witnessed a bull market in this sector, you know it's the truth. The potential gains are astronomical.
That's how some of the richest people we know have made their fortunes... taking advantage of the cyclicality in the resource markets to buy great companies at ridiculously low prices.
And that's the opportunity we have today. But it's important to own the right companies... As Mark Twain famously said, a mine is nothing but "a hole in the ground with a liar standing next to it." And unfortunately, that's the case with many speculative miners. That's why you need to know the players involved in the sector... the major investors... and which projects they're backing.
With his decades of experience, Steve has this knowledge. And yesterday, he recommended the three best junior mining stocks to his True Wealth Systems subscribers. You don't often have the chance to buy these assets after a 90% selloff. This opportunity comes around once every decade or so... and when it arrives, you should take advantage of it.
That's the situation we have today. If we see a rally in gold stocks, shares of these companies will absolutely soar. We may even see the longstanding top recommendation in Stansberry Research history unseated.
But remember... these stocks are incredibly volatile. They can jump 20% to 50% in a matter of days. If you're interested in the opportunity, we urge you to act quickly.
To learn more about True Wealth Systems – and how to gain immediate access to Steve's latest issue – click here.
New 52-week highs (as of 4/2/15): Global X China Financials Fund (CHIX), iShares China Large-Cap Fund (FXI), iShares U.S. Home Construction Fund (ITB), and ProShares Ultra FTSE China 50 Fund (XPP). In the mailbag, Editor in Chief Brian Hunt responds to a subscriber's claim that we're "fudging" our charts. Send your thoughts to feedback@stansberryresearch.com. "Have enjoyed the services across the board and the candid presentations and have made and prospered from many purchases, sells, etc. based on your services.
"One complaint – In your graphs you 'fudge' the data by changing the distance between the scale points on the vertical scale to 'enhance' the point you are trying to make. For example, the Stansberry Digest report of April 1 reports Philip Morris (PM) in 5 dollar units. Each unit should be the same distance on the vertical axis but you are 'stretching' the units as the price decreases to infer more price decrease than actually exists from the data.
"While the raw data is correct, the graphs are misleading when you do this. I have noted this on many occasions. Please institute a consistent scale to be sure that readers to not make inferences that the data do not suggest." – Paid-up subscriber Steve Vass
Brian Hunt comment: We use logarithmic as our default view for price charts (not charts that display percent returns). We do this because non-logarithmic charts suggest that a move from $10 to $20 (+100%) is the same as a move from $20 to $30 (+50%). For percentage charts, of course, a move from 5% to 10% is the same as a move from 25% to 30%. Steve Sjuggerud wrote a great DailyWealth essay in which he explained the argument for the logarithmic scale more in-depth. You can read it right here.
Regards,
Sean Goldsmith
April 3, 2015
