Trillions, Not Billions

by Addison Wiggin – January 6, 2011

  • Breaking News: The “biggest announcement in the history of modern medicine”… Patrick Cox explains what it means for you…
  • The silver bullet for heart disease and autoimmune disorders… why scientists can finally take aim
  • Goldman Sachs adopts techniques of Nigerian email scammers to gin up interest in Facebook…
  • Gold down, again… two reasons to take heart
  • Readers stuff The 5’s inbox on eBooks… shrinking food packages… the Dow-gold ratio… and we (reluctantly) accommodate a female reader’s very special request for “equal time”…

“I suspect that this is the biggest announcement in the history of modern medicine,” says Patrick Cox, “if not medicine itself.”

It’s hard to capture Patrick’s zeal in mere words.

A company he’s been following for more than three years is “finally ready to treat age-related cardiovascular and blood diseases.” By “blood diseases,” Patrick means immune system disorders — things like rheumatoid arthritis and multiple sclerosis.

Total treatment costs for Americans alone in this last category of diseases exceeds $87 billion annually, says the American Autoimmune Related Diseases Association. But that’s just the tip of the proverbial iceberg.

Here’s the background to this week’s announcement: Years ago, the man behind this company “developed the means of transforming any cell in your body into an induced pluripotent stem (iPS) cell,” Patrick explains. “The end product of this process creates induced pluripotent stem (iPS) cells that are functionally identical to embryonic stem cells.

“Others have also created iPS cells, but their cells were not rejuvenated. They were as old as the donor” — and thus no good.

But this firm’s process was proven last March, creating “totally rejuvenated iPS cells from aged cells.”

At least 81 million Americans have some sort of cardiovascular disease, according to the American Heart Association: 74 million have high blood pressure and 18 million have coronary heart disease (obviously, some have both). The AHA estimates the annual cost of treatment in the U.S. alone at $475 billion.

At least 58 million of those people could benefit from these stem cell-based therapies… plus another 30 million with autoimmune disorders. The number is bound to grow, with the first baby boomers turning 65 and becoming eligible for Medicare this week.

And “once you consider the market outside the United States,” says Patrick, “it’s clear we’re looking at a market that must be measured in trillions, not billions, of dollars.”

That brings us to this week’s “biggest announcement in the history of modern medicine.” Namely, the firm just made a bold move to extend its web of partnerships to bring these breakthroughs to market even faster.

One of its subsidiaries just lined up a financing deal that speed up the development of these breakthrough therapies. Another subsidiary will take over the clinical trials, mostly in Asia. This comes on the heels of third subsidiary signing a deal with a Big Pharma firm. All of a sudden, events are moving very, very quickly.

“The demand and need for a cure for cardiovascular disease are going to grow even more urgent as the population ages,” says Patrick, who concludes the firm “is now positioned to solve this and other important aging-related diseases.”

This is one of the five “wealth quakes” Patrick sees coming in 2011. Another is the use of nanotechnology to knock out common viruses — even the flu. Combined, all five could deliver you life-changing wealth. Patrick reveals the potential behind every one of them in this presentation.

Major stock indexes are pulling back a bit today, returning some of yesterday’s meager gains. Traders are taking the latest weekly jobless claims in stride: 409,000 people applied for first-time unemployment claims last week.

That’s up from the previous week, and it’s no sign of a robust recovery in the job market, yesterday’s ADP report notwithstanding.. Tomorrow is “Jobs Jamboree Friday,” as our friend Chuck Butler at EverBank calls it. We’ll be here to unpack the Bureau of Labor Statistics’ latest monthly handiwork.

Gee, we couldn’t possibly have seen this coming: Goldman Sachs says they’ll stop taking orders from its “high net worth” clients for shares of Facebook. And some of those clients have been told they’ll have to settle for far fewer shares than they want, so intense is the demand.

This is according to The Wall Street Journal, citing “people familiar with the situation” — as if Goldman doesn’t really want this information put out there to further gin up demand for the inevitable IPO.

“When you have a chance,” reads the Goldman solicitation to its clients, “I wanted to find a time to discuss a highly confidential and time-sensitive investment opportunity in a private company that is considering a transaction to raise additional capital.

“For confidentiality reasons, I am unable to tell you the name of the company unless you agree not to use such information other than in connection with your evaluation of the investment opportunity and to keep all information that we reveal to you strictly confidential.”

Any resemblance between this and a Nigerian email scam is purely coincidental. At least it wasn’t in all caps.

“It looks to me like that’s typical of what the investment banks have been doing for the past decade, which is trading paper for profits, instead of investing in revenue streams,” we told Tech News World this week.

Unfortunately, in the process of editing the article, our central point got lost: How the whole thing smacks of a Ponzi scheme. Goldman’s clients get the big gains, while the IPO investors will be left holding the bag. Plus, it looks like the deal as it’s structured with Digital Sky Technologies gives Goldman’s clients a built-in out… even before the IPO.

Good position, if you can land it.

But the question remains: If Goldman writes to its best clients in language that treats them like everyday marks in a wire-transfer scheme, imagine what it thinks of the schlubs who’d buy publicly traded shares.

Another day, another slide for gold. The spot price is down to $1,371. Can’t blame it all on a strengthening dollar; at 80.3, the dollar index isn’t much higher than it was 24 hours ago.

Consider it a buying opportunity: The Indians sure are. “Our physical sales to India yesterday were the highest in 12 months — from a time when gold was trading around $1,100,” says UBS analyst Edel Tully. Used to be gold had to correct a lot more than this before Indian buyers backed up the truck.

Heck, even The Gartman Letter — a perpetual thorn in the side of gold bugs, says “Do nothing for now. We do need to remember that gold faltered from approximately $1,250 to $1,150 midsummer last year.”

Silver is actually up a bit as we write, to $29.27, amid growing reports that physical supplies are increasingly harder to come by.

Last week, ScotiaMacotta, one of the world’s biggest bullion banks, sold out of its 1-ounce and 100-ounce silver bars. This morning? You still can’t get them.

Anecdotal evidence has grown over the last several weeks that silver buyers can lock in a price… but they have to wait for delivery. Maybe not the three months they had to wait in late 2008 and early 2009, but three weeks is not unheard of. We’ll keep an ear to the ground.

“The item about short sizing consumer products,” a reader writes, “reflected accurately what I have seen in grocery stores lately. A popular OJ named Florida’s Natural recently short sized its 64 oz. carton to 59 oz., which is a reduction by 7.8%. Few people noticed. Other brands have stayed at 64 oz., a true half gallon, at least for now.

“Bath tissues have gone a similar route. A regular Northern tissue roll was 300 sheets a few years ago, but now they call that a ‘double roll.’ John Q. Public might think prices are not rising much, but short sizing causes inflation surreptitiously.”

The 5: Seems the phenomenon is quickly reaching the public consciousness; yesterday, it was a big segment on the Today show. Of course, the segment left boobus Americanus with the impression it was the fault of all those greedy retailers and manufacturers — damn business owners! — as if they’re not facing rising prices and “margin squeeze.”

“Actually the news that 7-Eleven has downsized the Super Big Gulp 9% is the best health news that I’ve heard in a long time. The use of corn syrup in soda drinks is one of the main reasons our nation is becoming super-sized, not to mention the fact that it is also very bad for your overall health.

“Those people who drink that dreck should be thanking 7-Eleven, not complaining. Until they get educated, let the fatsos continue to widen their girth and drop dead of heart attacks.”

The 5: Nice.

“With this analysis of the ratio decline,” writes a reader after our mention of the Dow-gold ratio yesterday, “are you saying gold and silver prices will be going down?

“Just a novice investor here.”

The 5: No worries. We serve all types.

The forecast does not mean the price of gold will go down, although we wouldn’t rule it out altogether. A 2:1 Dow-gold ratio (for instance) could mean anything from Dow 2,000 and $1,000 gold to Dow 200,000 and gold $100,000.

“If the Dow-gold ratio ends up retesting the two fundamental lows that it has achieved in the past,” writes the economist David Rosenberg, and, “if we are correct in our assertion that gold goes to $3,000 per oz, then what we would be talking about here is a Dow 5,000 trough at some point down the road.”

That’s consistent, if a little shy of, the forecast we offered up in Financial Reckoning Day Fallout last year.

“I am sure my men pals are enjoying the cheesecake,” writes a reader who saw the picture of Rihanna we included in Monday’s edition. “So where’s the beefcake?

“Just an observation from one of your women readers. I like some of the older stars — they are still sexy.”

The 5: You mean like the now-former governor of California, Arnold Schwarzenegger?:

Sorry, that was just too much to resist.

“It’s not the prospect of dying that bothers me,” we paraphrase our friend Patrick Cox, “but getting old sucks!”

“I like PDF. It works on so many more things,” writes a reader, kicking off a litany of input we got on what sort of e-book format we should adopt at Laissez Faire Books. A sampling of some others…

  • “Just got a Nook from Barnes & Noble. They allow PDFs and other formats that the Kindle does not”

  • “I have a Kindle and a lot of books on it. Of the two choices (.txt or PDF), I think PDF would be best. I could read the books on my computer or Kindle in that format”

  • “Adobe digital editions first choice. Barnes & Noble second”

  • “I have an iPad, and the preferred format is ePub. Although it does accept a couple of others, they are cumbersome by comparison”

  • “From what I have read, you should also plan for Google’s new eBook format, as the number of books available already exceeds the Kindle.”

“I’d say the PDF format would be the best nonproprietary format,” adds another, “but be cautious with anything with charts, tables or diagrams. These have generally been completely hosed up in regular PDF files (user manuals, etc., downloaded from support sites) as they anticipate an 8.5”-by-11” printed format. If you shrink the size enough to fit a diagram on the reader screen, the print is too small to be readable.

“I imagine if you created a PDF with the eBook in mind as the target platform, it could be addressed.”

“I’ve picked up four books in addition to the Economics in One Lesson freebie,” continues our last reader, “since you’ve acquired Laissez Faire Books, and don’t plan on slowing down much. I have also wondered about eBooks, as I’ve got a Nook that will hold a lot more books than my long-suffering bookshelves.

“In the meantime, I am enjoying both the physical and intellectual heft of Financial Reckoning Day in hard copy.”

The 5: Thanks. FRD is my personal favorite… probably because it was my first. And thank you, too, for your input on formats. Watch this space for updates.

Addison Wiggin
The 5 Min. Forecast

P.S.: “I am a Reserve member,” writes a Reserve member. ”Chris and Byron have done very well by me over the last year. Now if only Patrick — I fear that the timetable of Patrick’s picks may be far in the future.”

With an announcement like we let slip this morning, the time frame for at least one of Patrick’s picks just got a whole lot shorter. Still, when investing in “disruptive technologies,” it’s not the timing, but the entry price… and the payoff.

There were lots of times 70-odd years ago you could have bought shares of Motorola or an electric refrigerator maker… and they’d have gone nowhere or even gone down after, say, nine months. But if you’d held out for the long haul, you’d have had a tidy sum — at least enough to pay for a retirement home with cash and put your grandkids through college.

Indeed, the potential rewards are immense. And as is evidenced by this morning’s news, many of Patrick’s companies are on the verge of genuine breakthroughs. With these types of investments, you just have to play your cards accordingly. For that reason alone, we urge you to review Patrick’s top five forecasts for 2011, right here.

P.P.S.: “I would add one more point,” Patrick adds. “I’ve talked to a lot of people who have made an awful lot of money on stocks that I didn’t tell them to sell. I’m not a fund manager and won’t sell stock before it’s hit really big, but individual investors have done very well trading the moves in the portfolio.”

“If somebody is waiting for me to tell them to sell, they are probably not going to like me.” Still the opportunity for these stocks to deliver those gains is real. Learn why, here.


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