Thu, Jul 23, 2020|Corey McLaughlin

The Side Effects of Working at 'Warp Speed'

The 'fake money' effect... Silver follows gold higher... $100 silver soon?... Pump the brakes on that vaccine... The side effects of working at 'warp speed'... What to look for in a vaccine 'winner'...

The 'fake money' effect...

Regular Digest readers know many of our editors have been bullish on gold and silver since the Federal Reserve revved up its money-printing computers in March...

The move may have saved the major U.S. stock indexes from a crash of even greater than 30% and kept the debt markets moving. But of course, $3 trillion of "fake money" does not appear in the world without consequences, including a big one...

With "normal" supply and demand of many industries already thrown out of whack from the pandemic, we're now staring at possible inflation on the products and services that remain in demand and that people can still afford to buy.

Call it "essential inflation," – rising prices on the must-haves, like food.

The point being... the prices of things going up... plus interest rates on our cash that have never been lower (and will likely be that way for several years)... plus millions of unemployed people who can't spend as they would have this time last year... is a recipe for inflation.

In the short term, the 'Fed put' environment has sent a lot of investors into stocks and valuations skyrocketing...

And the truly unprecedented "easy money" policies around the world are also driving demand for "hard assets."

By that, we're referring to things – like gold (which our editors have long called a "chaos hedge"), silver, real estate, and even art – that will actually rise in value as the value of a U.S. dollar erodes.

At the height of March's panic, we heard from many subscribers who couldn't get their hands on any physical gold coins because the normal routes were sold out. Gold prices were starting to rise off March's bottom back then, and they still are today...

In the April 27 Digest, we revealed that Gold Stock Analyst editor John Doody was calling for an ounce of gold to eventually rise to more than $3,000. Since John made that prediction roughly three months ago, gold – considered a "safe haven" – is up 11% to nearly $1,900 today.

John's longtime colleague, Garrett Goggin, has been calling for a similar breakout in silver over the past few months in Silver Stock Analyst, the sister publication to John's gold service.

We noted this most recently in the July 9 Digest, when Stansberry NewsWire technical analyst Mark Putrino said a breakout could soon arrive in silver...

And now, we're starting to see silver follow gold's path higher...

As DailyWealth Trader editors Ben Morris and Drew McConnell wrote today, while updating their subscribers on a trade they opened on July 6...

In the first three days of this week, silver launched 19% higher. Yesterday alone, it soared 9%.

Silver and gold are now at their highest levels in years.

Silver's near-parabolic move higher this week marked a key push above the metal's $20-per-ounce "resistance" level – a traditional line in the sand of demand.

Silver hasn't traded for more than $20 per ounce since September 2010. That wasn't too long after the 2008 global financial crisis and the Fed's previous era of massive money printing, which doesn't get close to the "warp speed" and scale of what's happening today...

Back in 2008, the Fed increased its balance sheet from "only" $900 billion to $2.25 trillion in six months. Today, it has gone from $3.9 trillion to $7 trillion in one quarter. We just wrote about it on Monday, but it's worth repeating...

In 10 days in March, the Fed created and added more money to its balance sheet than it did in the previous 30 years before the financial crisis of 2008 and 2009.

Like the Fed's printer, the price of silver is moving faster (and higher) this time, too...

As Garrett told us in an e-mail this morning...

From the 2008 bottom, it took nearly two years for silver to break above $20 per ounce. This year, it only took four months. This silver bull market is moving multiples faster.

And our government isn't even done yet. Expect the next stimulus bill to add another few trillion to the tab. The firehose of Federal Reserve stimulus will propel silver higher than most believe.

That's why Garrett says it's important for investors to know that "you are here" in the following chart – meaning we're right where investors were before the last big breakout on silver.

This time, he says silver could end up as high as $100 per ounce based on the amount of stimulus being thrown into the economy. Gold is near its all-time high. For silver to get to the same, it would have to at least double.

A few important notes if you're interested in putting on a silver trade...

As always, position sizing is critical. We're not saying to go "all in" on silver today. But in a Fed-led, low-yield world – where significant returns are hard to come by in assets like bonds – gold and silver present an attractive alternative to protecting and growing your wealth.

Historically, silver is more volatile than gold. When it moves, it can really move. Expect to see some volatility with the longer-term bullish trend up. Ben and Drew wrote more about this today in their DailyWealth Trader issue.

The price of silver will also likely send the share prices of silver miners – the ones that actually pull the stuff from the ground – higher along with it. In addition to covering the broader trends in silver, these are the companies Garrett and John recommend to their subscribers in Silver Stock Analyst.

If you're interested in learning more, click here to find out how you can get access to Garrett's Silver Stock Analyst today.

You'll see much more about why Garrett thinks silver could hit $100... and find out the latest updates about his "Fave 5" portfolio of the best silver stocks. This portfolio was up 104% in 2019... and it's up 39% so far this year with much more room to run.

Switching gears – kind of – to another big trend of the day...

I (Corey McLaughlin) say "kind of" because "chaos hedges" and our next idea – the race for a COVID-19 vaccine – certainly have a link.

As far we can tell, government policy has had more of a "shutdown" influence on the economy and markets than on the continued spread of the virus itself.

COVID-19 is not going away.

So as we wrote in Tuesday's Digest, a lot of eyes remain fixed to the "race for a COVID-19 vaccine." And let's be clear... This is a race, even if it shouldn't be. "Operation Warp Speed" is the name of this thing in the U.S., after all, with a deadline of January.

The hope is that a vaccine – assuming people actually want to take it, which as we'll explain today, is not a safe assumption – will get the "real" economy thriving again.

Take the airlines, for example...

Just yesterday, United Airlines (UAL) CEO Scott Kirby said his industry wouldn't get back to normal until there was a vaccine widely available. The airline expects to lose $25 million per day through the third quarter.

In other words, engage Warp Speed...

The World Health Organization says 23 potential COVID-19 vaccines are being tested in clinical trials.

Around the time our Digest was arriving in inboxes on Tuesday, President Trump spoke at the White House – in the first new episode of his coronavirus-response briefings – and indicated six vaccine candidates by U.S. companies were squarely in this race.

That same day, executives from the major pharmaceutical players that are working on vaccines testified before the House Committee on Energy and Commerce. (Notice how nothing about "health" is involved in the title of the committee, indicating where priorities lie.)

Here's what we learned... Representatives from AstraZeneca (AZN), in partnership with Oxford University, are hoping to have a vaccine available in October.

Moderna (MRNA) and Pfizer (PFE), working with German firm BioNTech, said their timeline is the end of 2020. Johnson & Johnson (JNJ) said its time frame is around March 2021... and Merck (MRK) said later in 2021.

And we've seen reports of "encouraging results" of trials. That all sounds swell and makes for good headlines, but the devil is always in the details...

'Pump the brakes' on that vaccine...

If we're to believe what we see on TV, this will all be a done deal sometime this winter. But hold on...

Dave Lashmet, editor of our Stansberry Venture Technology newsletter, wrote us earlier this week with some important information. He's an expert medicine and technology researcher, patent-holding inventor, and former professor to our founder Porter Stansberry... So when he speaks, we listen.

Regular Digest readers know we've featured Dave's take on the science behind COVID-19 since it got on our radar. He has been spot-on with his warnings, including what we shared in the February 27 Digest...

This coronavirus is here in the developed world, and it's not singling out the young or the old in particular. Nor is it following boundaries, or for that matter, poorly applied universal precautions. Instead, it's spreading rapidly, starting with the manufacturing center of the world.

Think that might affect the economy, and the stock market?

I do.

Dave also recently booked a 1,000% winner for subscribers on part of his position in tiny biotech firm Inovio Pharmaceuticals (INO).

Today, Dave says handicapping this race for a vaccine is 'naked speculation' for investors...

And he says that the expectations for an October release date and enthusiasm may be premature.

He pointed to the fact that even the Oxford University/AstraZeneca offering – which is the only one in Phase III trials in the U.S. – has unanswered questions about it.

Phases I and II of the Oxford/AstraZeneca trials, for instance, included only 1,077 people. For something to be proven effective, it needs to be tested on many, many more folks. Phase III studies will include thousands.

Plus, the side effects reported so far also aren't being weighed correctly. As Dave put it, "There's no frontrunner for a vaccine"...

I say this because both the Moderna vaccine and the Astra/Oxford vaccine triggered a lot of moderate and severe side effects – like fever, fatigue, and pain.

And that's in normal, young healthy adults. Not kids, not the elderly, not anyone with co-morbid conditions.

When you scale this up from hundreds of people to hundreds of millions of people, the side effect burden is, well, burdensome. More from Dave...

That's not being alarmist, or being unfair. We know both vaccines have very significant side-effect profiles...

At least so far, that one in 10 people are losing a few days to fever, fatigue, and pain isn't a great option for a national vaccination campaign.

All this is just academic until we see actual phase III data, on rates of infection on the vaccine versus sham controls.

Hilda Bastian, a scientist and blogger, wrote an article for Wired earlier this week that also sounded the alarm on vaccine enthusiasm. As Bastian said...

The press release for Monday's publication of results from the Oxford vaccine trials described an increased frequency of "minor side effects" among participants.

A look at the actual paper, though, reveals this to be a marketing spin that has since been parroted in media reports. (The phrases "minor side effects" or "only minor side effects" appeared in writeups from The New York Times, The Wall Street Journal and Reuters, among other outlets.)

Yes, mild reactions were far more common than worse ones. But moderate or severe harms – defined as being bad enough to interfere with daily life or needing medical care – were common too.

Around one-third of people vaccinated with the COVID-19 vaccine without acetaminophen [Tylenol] experienced moderate or severe chills, fatigue, headache, malaise, and/or feverishness.

Close to 10% had a fever of at least 100.4 degrees, and just over one-fourth developed moderate or severe muscle aches.

The paper's authors said the vaccine was "acceptable" and "tolerated."

Forget for a moment that "acceptable" and "tolerated" don't exactly scream "happy to take it" – if your boss said in your year-end review that he only tolerates you, you're probably not getting a bonus – but these words also mean different things to different people.

And with only about 1,000 participants from 18 to 55 years old in Phases I and II of the Oxford/AstraZeneca trials, for instance, more research is needed before something is handed out to millions of Americans.

For reasons like these, Dave doesn't expect we'll see a vaccine widely available until early 2021. And despite what you hear in the mainstream media, he's not alone in that prediction...

What the 'Superforecasters' think...

Our colleague Matt Weinschenk shared an interesting set of predictions in his latest COVID-19 briefing video with Retirement Millionaire and Income Intelligence editor Dr. David "Doc" Eifrig. (You can watch it for free here.)

The group Matt cited are dubbed "Superforecasters," a term derived from the research and the book of the same name by Philip Tetlock, a noted political science writer and professor at the University of Pennsylvania.

Tetlock, as Matt told viewers, "tries to figure out what makes some people good at predicting things and other people are not. And he identifies these certain people as Superforecasters and sees why they work."

Tetlock's research is called the "Good Judgment Project." And the evidence-based methods he teaches won out in a four-year-long competition against the U.S. intelligence community. These prognosticators even outperformed analysts who had access to classified data.

The reason we bring this up is because, as part of the project, these "Superforecasters" predict ongoing happenings in current events, like "When will Walt Disney World's Magic Kingdom reopen to the general public?" They essentially predicted that with certainty six weeks before it happened.

Now, they're predicting the likely date of when we'll have 25 million doses of a COVID-19 vaccine... And their opinions are converging between October 2020 and September 2021 – with 38% thinking between October and March 31, 2021, and 37% predicting between April 1, 2021 and the end of September 2021.

No doubt, a truly effective and safe vaccine would be a game-changer...

We're talking about one that anyone – even an "at risk" person – could feel comfortable walking into a CVS or Walgreens store and buying... without worrying that they'll have horrible, debilitating COVID-19-like symptoms hours later.

But today, so many candidates for a COVID-19 cure still exist that we don't know how well any will work, or if people will even want to take them... especially one developed at Warp Speed and unproven to the general public.

Whatever the date ends up being that a vaccine is available, or if it happens at all, the point is... it's a smart bet to prepare to live with COVID-19 in our economy, markets, and debate arenas for longer than many people may be hoping or expecting.

What to look for in a 'winner'...

We'll end with some parting thoughts from Dave on what ultimately might win out in the vaccine race...

Don't quit on side effects. If a vaccine candidate has a much milder side-effect profile and roughly equivalent efficacy, that's the winner.

We just don't know how all the candidates stack up against each other yet. Efficacy and side effects both matter.

If the antibodies quickly disappear, that's potentially a problem too. And that might require a booster shot... with more side effects too.

Again, we don't know any of this yet, and we need to know. That's why we won't have a vaccine until early next year.

Stay tuned.

The Case for Cannabis Today

Cannabis Capitalist editor Thomas Carroll and our colleague Jessica Stone chat with SoRSE CEO Howard Lee about new opportunities in cannabis investing and the post-COVID-19 national push to legalize medicinal and recreational marijuana.

Click here to watch this video right now. For more free video content, subscribe to our Stansberry Research YouTube channel... and follow us on Facebook, Instagram, and Twitter.

New 52-week highs (as of 7/22/20): Agnico Eagle Mines (AEM), Sprott Physical Gold and Silver Trust (CEF), Costco Wholesale (COST), Dollar General (DG), Quest Diagnostics (DGX), Equinox Gold (EQX), Franco-Nevada (FNV), Fortuna Silver Mines (FSM), Fidelity Select Medical Technology and Devices Portfolio (FSMEX), VanEck Vectors Gold Miners Fund (GDX), SPDR Gold Shares (GLD), Barrick Gold (GOLD), Alphabet (GOOGL), Green Thumb Industries (GTBIF), Home Depot (HD), Hecla Mining (HL), Lonza (LZAGY), MAG Silver (MAG), Novo Nordisk (NVO), Pan American Silver (PAAS), Flutter Entertainment (PDYPY), Sprott Physical Gold Trust (PHYS), Sprott Physical Silver Trust (PSLV), ResMed (RMD), Rollins (ROL), Seabridge Gold (SA), Sandstorm Gold (SAND), Sprott (SII), Global X Silver Miners Fund (SIL), SilverCrest Metals (SILV), iShares Silver Trust (SLV), Silvercorp Metals (SVM), Victoria Gold (VGCX.TO/VITFF), Vanguard Short-Term Inflation-Protected Securities Index Fund (VTIP), and Wheaton Precious Metals (WPM).

In today's mailbag, feedback on Monday's Digest about debt and government gaffes... Mike Barrett's Wednesday Digest on "stealing the crown jewels"... and Dan Ferris' Friday Digest about "screaming inside your heart." Are you "in" on gold and silver today? What are your thoughts on a COVID-19 vaccine? As always, you can send your notes to us at feedback@stansberryresearch.com.

"Seems that we have had the warning that printing money to infinity will not work: once you print more than 90% of GDP, the marginal improvement in productivity and increase in GDP starts diminishing rapidly. I am guessing this is reflected in the continuing collapse of Velocity of Money Chart shown on FED website, but you will never hear the FED talk about it being relevant.

"In fact, more and more of the printed money is being used to prop-up the internal workings of the Major Banks and Large Cap companies. The large caps are no longer using these funds for Capital Improvements that would show up in higher personal productivity. It's being pocketed by CEO's through stock buybacks. This is the longer way of saying the Money Velocity has been tanking ever since the beginnings of [Modern Monetary Theory].

"Why? Because all this money / liquidity is NOT making through internal economic workings to the general public, and especially to the "middle and lower classes." Thus the wealth gap has been increasing and still accelerating to the few at the top. Lots of so called liquidity for the Major Banks but the Public is not benefiting nor able to take on more debt, so the Velocity is still plummeting!

"We will know when the FED monetary and Fiscal policies start working when the Money Velocity Chart reverses and starts rising while the FED is Printing Money. Don't hold your breath! Utterly ineffective policies and continuing lies to the American Public. This doesn't end well, and we only seem to be at the beginning." – Paid-up subscriber Norton W.

Corey McLaughlin comment: Thanks, Norton. Your points are well taken, particularly about the growing wealth gap in this country...

Porter is actually putting together a presentation on this exact topic. And I'm happy to be able to say today that it will go live next Thursday, July 30, at 10 a.m. Eastern time.

You can find more information about this event right here. And we'll be talking much more about it over the next week in the Digest.

"I have to say, as an Alliance member for over seven years, I couldn't be more thrilled with the offerings from Stansberry and Associates. I have to admit though that there is so much information provided, I often find myself falling behind on the reading. The one publication I never miss is the Stansberry Digest. I love it.

"Only one thing could make it better: when you allude to a stock from one of your publications, e.g. 'In Extreme Value, Dan Ferris and I recommended a company that has amassed almost 20 times more land than Copart,' I would love if you had a link that could take me right there, so I don't have to hunt around for it.

"Keep up the great work." – Stansberry Alliance member Jim G.

McLaughlin comment: Thanks Jim, and noted on the suggestion. We'll try to do that more often.

"Fantastic Friday comments on COVID-19, national debt, stupid rioting and looting. I really enjoyed the newsletter. The BLM/ANTIFA saga may well put us into a civil war.

"No way I'm kneeling down for anyone, nor will my multi-ethnic family of Hispanic, European and African. We are all educated and limited government oriented.

"Thanks for all the investment advice (choice subscriber). I continue to make lots of $ from your recommendations. God Speed!" – Paid-up subscriber Rik R.

All the best,

Corey McLaughlin
Baltimore, Maryland
July 23, 2020