Yellen's first speech...

'The worst-performing, most out-of-favor' sector in the markets today...

Over the years, Extreme Value editor Dan Ferris has racked up huge gains through blue-chip "World Dominators." But today, he has begun focusing on little-known, dirt-cheap opportunities.

In today's Digest Premium, he shares one beaten-down sector that could be setting up for huge rewards over the next few years...

To subscribe to Digest Premium and receive a free hardback copy of Jim Rogers' latest book, click here.

Yellen's first speech... Gold likes the new Fed chair... China's huge gold appetite... A once-in-a-lifetime opportunity... Mobius and Blankfein think emerging markets are cheap... Gambling with 'The Dovenator'...
 

 We're staying the course...

That's the message Federal Reserve Chair Janet Yellen delivered in her first public remarks since taking the post on February 3.

In testimony before the House Financial Services Committee, Yellen said, "I am committed to achieving both parts of our dual mandate: helping the economy return to full employment and returning inflation to 2% while ensuring that it does not run persistently above or below that level."

Yellen noted the recovery in the labor market is "far from complete." She also said she'll continue to scale back the Fed's asset purchases in "measured steps"... and that there's no "pre-set course."

She also doesn't believe the current market turmoil will hurt the U.S. economy.

 That likely means the Fed will continue to slowly taper its monthly bond purchases, which are down from $85 billion a month to $65 billion a month today. No real surprises.

Still, the market liked the news... The Dow Jones and S&P 500 indexes were both up more than 1% as of midday trading.

Gold rose nearly $15 an ounce to nearly $1,290 an ounce. Gold stocks, as measured by the Market Vectors Gold Miners Fund (GDX), were up more than 3%.

Gold prices are up seven out of the past eight trading days. The precious metal is up nearly 6% in 2014. It's one of the best-performing asset classes since the Fed first announced it would begin to taper its bond purchases on December 18... and it sits at a three-month high.

 Yesterday, we discussed how China was another bullish driver for gold and how gold demand from China jumped 41% last year.

We think we'll see a much bigger surprise in 2014. China will reportedly announce its official gold holdings later this year for the first time since April 2009, when it held 1,054 tons.

Since that time, China has said it doesn't view gold as a useful asset to diversify into... But the latest numbers prove China was fibbing.

 Why doesn't China want the world to know it's buying up physical gold?

If word got out that China was buying gold, prices would spike higher... And China couldn't accumulate its desired position.

 Porter wrote a great Digest last fall about the transfer of wealth moving from West to East – citing the example of China buying One Chase Plaza in New York City for $750 million. You can read the full piece here. But the gist is simple: The U.S. has run up huge debts it can't afford. Now it's in a death spiral of selling assets to finance those debts.

This massive transference of gold from the U.S. to China is just another example of our massive debt load crippling our economy.

 In the short term, the U.S. stock market is holding up better than those of emerging-market countries. The Fed's announcement to taper sent their currencies tumbling against the dollar... And their stock markets followed. Emerging-market stocks have had their worst start to the year since 2009.

But True Wealth editor Steve Sjuggerud thinks we have a once-in-a-lifetime opportunity setting up in emerging markets. He wrote in today's DailyWealth...

So what's the next once-in-a-lifetime opportunity? I believe it will be emerging-market stocks. Investors are fleeing emerging markets at a faster rate than I can remember. We've seen a record 15 straight weeks of OUTFLOWS from emerging markets. That beats the previous record of outflows set in 2002.   But take a look at how emerging-market stocks performed from 2003 through 2007...     They soared from around 300 to around 1,300 – for a gain of over four times your money.

 A couple other leading figures echoed Steve's sentiment today. Mark Mobius, who oversees more than $50 billion as executive chairman of the firm Templeton Emerging Market Group, believes the selloff is close to over.

"We are nearing the point where people are beginning to say, 'Hey, it looks pretty good now in terms of valuations,'" Mobius said in an interview with Bloomberg radio today. "We are probably nearing the end of this big rush out of emerging markets."

 And Lloyd Blankfein, CEO of investment bank Goldman Sachs – who had previously made bullish comments on emerging markets – reiterated that sentiment today in Hong Kong. Speaking to Bloomberg, Blankfein said today isn't the same as the 1998 financial crisis, when plunging currencies spurred international bailouts.

"There were a lot of things in '98 that don't exist now," Blankfein said, noting that the markets now have "better reserves, more flexibility in exchange rates, [and] better policy orientation."

 It has been a busy year for The Atlas 400, the private-wealth club Porter and I founded five years ago...

Last month, we hosted our second annual event at Cabin Bluff – a beautiful hunting lodge just north of Jacksonville, Florida. We had the entire 24,000 acres to ourselves...

The 18-hole, Davis Love III-designed golf course, the hunting grounds, the fishing boats, the skeet, you get the idea... Oh, and we dominated the bocce ball courts (while enjoying fine cigars and whisky) after dinner.

 About 25 members joined us in southern Georgia for the event.

The Atlas 400 is a social club. But when you put 25 people who have all been incredibly successful in business in the same area, the topic comes up...

I hunted with one member who owns a major insurance business... And he's looking to sell for a huge sum. I introduced him to another member whose family sold their insurance business to AIG... And another who has brought several companies public. (He already advised one of our members during the sale of his business, helping him make millions more dollars from the acquirer.) They were able to chat specifics over the campfire at night.

During a rousing bocce match, I spoke to one member, an expert in collectibles, about the next major asset class for the big auction houses. You'd never guess it...

 I was also naïve enough to challenge the Argentinian world-record holder for dove shooting to a showdown on the skeet course. I didn't believe the stories he was telling about hunting in Cordoba, Argentina... He said he once shot more than 15,000 birds in a single day.

But he destroyed me on the skeet course. That night, he wore a shirt emblazoned with "The Dovenator," claiming his official stats in Argentina. It turns out he wasn't lying. (At least I only lost $20 on the bet...)

 Italian gunmaker Berretta sent two of its representatives to join us on our trip... They brought an entire truck full of Berretta guns and hosted us for a day of "five stand" shooting, where five shooters line up and take turns on clays. We shot five different Berretta guns, from competition guns to incredibly high-end field guns. It was a real treat. We're also working with the gunmaker to develop an exclusive offer for Atlas 400 members.

On the topic of exclusive offers... The team at Cabin Bluff was nice enough to build us a wooden chest to keep on their property... It's only for our members. It has a log book, a gun, booze, and mementos. It's a great way for us to continue the Cabin Bluff tradition and to share our past memories.

 Ultimately, that's the point of the club... Surrounding yourself with great people who have incredible networks. Folks you wouldn't meet in the normal course of your life.

Having the right friends is important. Knowing who to call is important. And being around a group of driven and intelligent people you can trust is important.

That's why we take great care in selecting our members... Of the 1,000 or so applications we've received, we've chosen just 100 people to be a part of our group.

 Later this month, we're leading a trip through Patagonia. Seventeen Atlas 400 members will relax for seven days in some of the world's most beautiful terrain. We have exclusive use of world-class lodges. Our members will hike, fish, kayak, and relax.

Then, two Lear jets will take us back to Buenos Aires for a night of steak and tango dancing.

 We've also arranged an insider's trip to Bordeaux, France... We'll be visiting the top chateaus in the region (places you simply can't access without the right connections)... and enjoying the beautiful French countryside.

In addition to our terrific adventures, we've also started hosting quarterly events in different regions around the country, where a dozen or so local members will gather for dinner and a night of discussions.

We're trying to make sure all of our members can engage as much as possible. And it's working. Our trips have been filling up faster than ever. We're already working on new adventures for this year.

 I look forward to sharing some photos and stories from Patagonia later in the month. In the meantime, if you're interested in learning more about The Atlas 400 club, please fill out an application here.

 New 52-week highs (as of 2/10/14): Dominion Resources (D) and Hershey (HSY).

 In today's mailbag, one subscriber asks us what to do when our analysts' opinions differ. Send your e-mails to feedback@stansberryresearch.com.

 "Question: What is one of the lesser-appreciated aspects of S&A that also probably causes you some head-throbbers over the volume of emails I'm sure it generates? Answer: The diversity of opinion among your analysts. This one says the end is near, that one says it's still party time. What's an investor to do? Your analysts are (at one time or another) highly accomplished investors, asset managers, traders, researchers, and advisors – no slouches or slackers allowed. So in this stew of diversity, it takes a little between the lines reading to sometimes get the message. How sweet it is when titans like Sjuggerud and Clark converge on an idea like gold miners. It's like the Bulls and Bears, Hatfields and McCoys, Cowboys and Redskins all decided to hold hands and sing around the campfire. Drinks all around!" – Paid-up subscriber LAF

Goldsmith comment: We catch a lot of grief from readers when our analysts differ on their opinions. But Porter explained this in a Digest from last month:

You can read the rest of Porter's argument here.

 "I have to tell you this quote from the Digest [Premium] today: 'But Carl had to leave. He said, ''No, I can't do it right now. Besides, my wife would kill me.'' The salesperson looked at him and said, "Well, Mr. Press, it would be easier to replace a wife than it would be to replace one of these shotguns."' made me laugh by myself for 5 minutes... keep up the good work." – Paid-up subscriber Joshua C. Fredericks

Regards,

Sean Goldsmith
Miami Beach, Florida 
February 11, 2014

'The worst-performing, most out-of-favor' sector in the markets today...

Editor's note: Extreme Value editor Dan Ferris has loaded his portfolio with "World Dominators" over the past decade, racking up several double- and triple-digit winners with these blue-chip stocks. But he believes the golden age of World Dominators is ending – for now, at least. And he's turning his attention toward other areas of the market that are offering little-known, dirt-cheap opportunities.

In today's Digest Premium, excerpted from the February issue of Extreme Value, Dan shares one of the worst-performing, most-hated sectors in the market today...

 The worst-performing, most out-of-favor group in the North American markets today is gold stocks (and mining stocks in general).

I (Dan Ferris) looked for stocks with the worst one-year performance and the worst three-year compounding average. I found 32 stocks that suffered a one-year drop of 40% or more. That's a truly horrendous performance. I then found 29 stocks that lost 30% per year on average over the last three years – the worst value-destroyers in that period. With a bull market roaring, these losers obliterated investors' capital.

One stock appeared at the top of both lists: Direxion Daily Gold Miners Bull 3x Shares Fund (NUGT). NUGT is a leveraged exchange-traded fund that delivers a performance equal to 300% of the daily movement in the NYSE Arca Gold Miners Index (an index comprised of mainly gold and silver miners).

NUGT is down 91.2% in the past year. The S&P 500 climbed 30%. And NUGT lost an average of 74% per year over the last three years. The S&P 500 compounded investors' capital at about 10% per year over the last three years.

 Here's our recent list of the top 10 worst performers in the U.S. over the past year. As you can see, six of them are mining stocks, with NUGT leading the way...

Here's our list of the worst value-destroying stocks of the last three years. Seven of them are in the mining sector. And once again, NUGT tops the list...

?

The 32 worst one-year performances included 20 mining stocks, 13 of which were gold stocks. Of the 29 worst three-year performances, 18 were mining stocks (10 precious metals and four coal stocks).

That alone puts gold and other mining stocks officially on our radar. Gold mining is a highly cyclical, highly capital-intensive business. But that doesn't mean there's no such thing as a well-run gold-mining company.

– Dan Ferris

'The worst-performing, most out-of-favor' sector in the markets today...

Over the years, Extreme Value editor Dan Ferris has racked up huge gains through blue-chip "World Dominators." But today, he has begun focusing on little-known, dirt-cheap opportunities.

In today's Digest Premium, he shares one beaten-down sector that could be setting up for huge rewards over the next few years...

To continue reading, scroll down or click here.

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