I (Porter) found an exceptional opportunity with a piece of trophy real estate near Baltimore, of all places. I hadn't planned on spending a lot of money on real estate in Baltimore... but it was an exceptional opportunity.
In last Friday's Digest Premium, I said my favorite places to put cash to work are high-quality stocks and high-quality real estate. And along with my Miami property, this is one of the highest-quality pieces of real estate I've ever seen in any city around the world... And it was available for a price that made absolutely no sense.
I'm buying roughly 100 acres. It's a working farm with several impressive structures, including a 10,000-square-foot main house and two 3,500-square-foot rental houses. It sits right on the most beautiful river in Baltimore County, Jones Falls. And it's in a huge area of land protected by the Maryland Environmental Trust.
This is a unique and special property... It was built in the 1920s. It's relatively grand, and the farm is beautiful. It reminds me of Tuscany. And of course, the location is excellent. It's fewer than 10 miles from downtown Baltimore and 25-30 miles from Washington, D.C.
The property will provide me with some income from the farm and the rental houses. And it's a great place to live.
This property is worth at least $10 million in a good market. And it was first offered at $7.5 million. I won't say what I'm paying for it, but it's a fraction of that. And my main reason for buying was price. I expect to be sitting on a massive capital gain in 10 or 20 years.
Also, I normally don't finance my real estate with debt. But in this case, the income from the property will more than cover the note, so I felt safe doing so. And the size of the note relative to my net worth is inconsequential.
But the primary reason I took the note out was because I was able to get a rate that was based on the market about a month ago. I figured the note would pay for itself in terms of a fixed rate of interest over 10 years in a highly inflationary environment.
– Porter Stansberry with Sean Goldsmith
Porter just made a major real estate purchase...
In the past few years, Porter has purchased real estate in Miami and the Pennsylvania mountains. But he recently made a purchase in a city where he never expected to own property. As he explains in today's Digest Premium… the deal was just too good to pass up.
To continue reading, scroll down or click here.
Porter just made a major real estate purchase...
In the past few years, Porter has purchased real estate in Miami and the Pennsylvania mountains. But he recently made a purchase in a city where he never expected to own property. As he explains in today's Digest Premium… the deal was just too good to pass up.
To subscribe to Digest Premium and access today's analysis, click here.
The Market Vectors Gold Miners Fund (GDX) – an exchange-traded fund that holds shares of the world's largest public gold mining stocks – has been crushed this year, dropping more than 50% from its peak...
A confluence of events is crushing the price of gold. It's down from its $1,900-an-ounce high to $1,235 today.
And those events are also taking down the share prices for the firms that dig the precious metal out of the ground... Gold miners are getting paid less for their flagship product.
At the same time, input costs for gold miners are rising… the Federal Reserve has hinted it may taper its $85 billion in monthly bond purchases, which have supported the prices of all kinds of assets… interest rates are rising, making gold – which has no yield – less attractive… and gold miners are taking massive write-offs for bad asset purchases they made during boom times.
According to a letter to investors, billionaire hedge-fund manager John Paulson's PFR Gold Fund fell 23% in June and is down 65% this year. But Paulson is staying the course, saying the fund – which holds both bullion and gold stocks – will "produce outsized returns in the long run."
There's no denying gold stocks are cheap today. But trying to call a bottom is futile. The trend is undeniably down. And we'll likely see more bad news and big write-downs in the mining sector before it turns around. The recent multibillion-dollar write-downs from the big firms Barrick Gold and Newcrest Mining are only the start.
In today's Growth Stock Wire, Small Stock Specialist editor Frank Curzio said he's not buying yet:
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Investment bank Citi is also bearish on miners... In a recent report, Citi analysts noted, "No gold company under our coverage will generate free cash flow at spot gold."
Miners have cut exploration, capital expenditures, and overhead expenses to make up for falling gold prices and mining costs that are up 15% over last year, Citi noted. But it's not enough. "Most of the global gold cost curve is burning cash at spot levels," Citi said in the report. "Further cuts are needed in the coming 12 months to make ends meet."
What Citi is saying is, most gold miners are losing money at today's gold prices. We hope they don't try to make it up on volume...
Ultimately, Citi views this correction as normal. Gold has gone up for 12 straight years. As gold prices marched higher and higher, gold miners became more and more reckless with spending. (It's the hallmark of a cyclical business.) From the report:
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In other words, the sector could spend the next 10 years working off its excesses of the great gold bull market.
While gold stocks are getting pummeled, we're seeing lots of important new highs that suggest the U.S. consumer is back...
Online retail giant Amazon hit a new high today. So did department-store chains Macy's and Nordstrom. Purveyor of $4 coffees Starbucks hit a new high. Luxury electric-car maker Tesla, electronics retailer Best Buy, and car-rental firm Hertz also made the list.
Americans are feeling flush... Perhaps because the U.S. household debt burden hit a record low, as Dr. David "Doc" Eifrig pointed out in his latest Retirement Millionaire:
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Retirement Millionaire recommendation Wells Fargo, the country's largest mortgage lender, also hit an all-time high today. Doc recommended Wells Fargo in April 2012. He believed the bank would profit from a recovering U.S. economy. He wrote:
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Wells Fargo continues to enjoy higher loan volumes as the housing market recovers... And it's making more money on those loans as 10-year Treasury yields have increased. (Meanwhile, it still borrows money for almost nothing.) Retirement Millionaire readers are up nearly 30% in a little more than a year on the recommendation.
New 52-week highs (as of 7/5/13): American Financial Group (AFG), DCP Midstream Partners (DPM), 1st United Bancorp (FUBC), iShares Insurance (IAK), ProShares Ultra KBW Regional Banking (KRU), Ligand Pharmaceuticals (LGND), short position in iShares Barclays 20+ Year Treasury Bond (TLT), and Wells Fargo (WFC).
"As wonderful as Retirement Trader has been (going 123 in a row), will selling puts work in a bear market? Does selling puts work because lots of stocks are going up in a bull market, so selling puts is safe, but would not work when the stock market loses steam? Thanks for the opinion." – Paid-up subscriber Mark Allison
Goldsmith comment: Doc mitigates the risk of a down market by only selling puts on world-class, blue-chip companies at prices he's happy to pay for them. These are financially solid, long-lived businesses that are most likely to survive a broad downturn.
So if you're "put" the stock – meaning you have to buy shares – that's fine... You get to own a wonderful business at a bargain price you named. Plus, you can immediately start selling calls against your position to generate extra income. And remember volatility rises during a downturn, so the premium you receive for selling the options rises…
Regards,
Porter just made a major real estate purchase...