Addison Wiggin – November 30, 2011
- “Risk on!” as six central banks jump off a monetary cliff in unison… Dan Amoss on what it means, plus his “next big call” after the AMR bankruptcy
- $70 silver? Bold forecasts from James Turk, John Embry… and your last chance at our special precious metals bundle
- Here we go again: Bipartisan support for draining the Social Security “trust fund” even more
- What Hank Paulson’s advice to hedgies has in common with the “lock up anyone for anything” legislation in the Senate
- A refreshing tonic from “the Judge”… our own take on the diverging prices of gold and fine wine… urgent reader inquiries about “Income SAFE IOUs”… and more!
Nothing like a little “coordinated action” by the world’s central banks to put the “risk-on” trade back in play.
The Federal Reserve joined forces this morning with the European Central Bank, the Bank of England, the Bank of Japan, the Bank of Canada and the Swiss National Bank to unleash a torrent of dollars on sickly European banks.
“The purpose of these actions,” a Fed statement said, “is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity.”
Notice how the sentence was carefully crafted to bury the part about strains in financial markets.
“Lately,” explains Strategic Short Report editor Dan Amoss, “there has been a shortage of U.S. dollars available to borrow in Europe.
“U.S. money market funds have basically stopped lending to European banks (they are not rolling over commercial paper and CDs). So the Fed is stepping in, offering generous loans to the European Central Bank, which is, in turn, relending those dollars to European banks” via currency swap lines.
If you’re getting a sense of deja vu, it’s not your imagination.
On Sept. 15, the big central banks got together in another “coordinated action” to make it easier for European banks to get their grubby mitts on dollars.
That came a day after Moody’s downgraded two of France’s big three banks, in part because of dollar liquidity concerns.
This latest move comes a day after Standard & Poor’s downgraded 15 global banking giants, American and European alike — a step announced after yesterday’s close.
Markets are reacting to this sugar high of liquidity like a kid who just ate three bowls of Cocoa Puffs…
- As of this writing, the Dow is up more than 400 points… which still isn’t enough to lift it past 12,000. The S&P has now added more than 80 points in less than three trading days
- Treasuries are getting beaten down: The yield on a 10-year note is back above 2%. The yield on a 30-year bond is once again above 3%
- The euro has firmed to $1.346… sending the dollar index tumbling to 78.2
- Gold, sensing an acceleration of the printing presses, is up nearly 2% to $1,747.
The line of the day goes to Peter Tchir, from a firm called TF Market Advisors: “More people just bought stocks than know what a central bank swap line is.”
So what happens when the sugar high wears off?
“Central banks are desperate to stop stress from building in the global banking system,” Dan Amoss explains further. “They are going to ignore the fact that most European banks are insolvent and offer these banks easier and easier access to long-term funding.”
“Once the central banks start lending to insolvent banks, there can be no orderly exit. When sovereign defaults occur, there will be an acceleration of money printing to keep the system propped up.”
“You can only imagine what this means for tangible assets and precious metals!”
Consider this Dan’s “next big call.” It comes on the heels of his declaration last March that American Airlines parent AMR was destined for bankruptcy — which is where it ended up yesterday, delivering 95% gains for his readers in a little over six months.
For guidance on how to act on this “next big call,” look here.
“We can all hope for a better, healthier airline industry on the other side of this restructuring,” says Dan of the AMR filing, “and hope that pilots, flight attendants and maintenance crews impacted by this bankruptcy find other opportunities with American or with other airlines.”
“Successful bankruptcy reorganization,” he goes on, “is as American as ‘Mom and apple pie.’ American history and culture is all about renewal and fresh starts. While painful for many parties, it’s often necessary to restore soundness to an organization — or a country, for that matter.”
“Without restructuring of burdensome debts, taxes and entrepreneur-stifling regulations, the economy will remain sluggish, wasting resources on unsustainable activities… but on the bright side, Europe is even worse off than we are!”
“In capitalism, corporate death frees up the capital and resources to fuel the next wave of company births. Trying to stop this process with bailouts and zero interest rates only guarantees that we’ll squander ever more resources on situations in need of restructuring.”
Sound a lot like what’s going on in Europe. Dan’s newest forecast and recommendation can help you bulletproof your portfolio from any incoming European flak. Do it before year-end and you’ll be ready for anything.
The new glow that gold is feeling today is rubbing off on silver too. At last check, the spot price is up to $32.70.
“I’m just wildly excited about silver,” says John Embry from Sprott Asset Management. “I think it’s been consolidating here between $30-35, after having seen $50, and the fundamentals are impeccable.”
“We’re rebuilding the market and we are getting close to the next major upleg,” he adds. “I’m actually encouraged in this belief by the fact the sentiment is quite negative.”
Bottom line: “I have no problem with silver doubling in a reasonably short period of time.”
GoldMoney’s James Turk sees silver doing even better than that. “Those low [sentiment] readings are a clear indication that there is a lot of money on the sidelines that is waiting to jump on board.”
“That money will come into the market like a tidal wave with just a little bit more upside progress” — which he sees building quickly after examining a bullish “flag” pattern on the weekly silver chart…
“When silver breaks out to the upside,” he says, “this flag measures to a target price of around $68-70. More importantly, the jump out of the flag should happen more quickly than the $18-50 move we saw back in 2010 and early 2011, which took about nine months.”
We can’t think of a more opportune time to load up on a little silver… and as it happens, only a couple of hours remain in which you can snag 10 Silver Eagles, a Gold Buffalo and a “booksafe” storage unit. Best of all, you get them practically free when you consider the value of everything else you get in this one-of-a-kind package deal.
We’re closing down this offer at the close of business today. Act here.
Private employers added 206,000 jobs this month — the most in 11 months — according to the payroll firm ADP.
Yes, some of it is hiring extra help for the holidays, but ADP assures us these figures are seasonally adjusted.
Notably, more than half the increase came at businesses employing fewer than 50 people. Is that a rustling we hear a sign of life in small business?
The ADP report is the first of two previews we get in advance of the government’s monthly unemployment report, due Friday.
The president is in Pennsylvania today stumping for an extension of the Social Security tax cut. Buzz in Washington suggests congressional Republicans are warming up to the idea.
“If it feels like we just went through this,” says Jim Nelson of our income desk, “that’s because we did… 11 months ago.”
“Like that time, Democrats want to extend the payroll holiday. That’s the one in which workers pay a little less in payroll taxes and Social Security gets a little more defunded.
“This time around, however, the White House wants to replace the revenue hole left by the cut with a 3.25% ‘surtax’ on millionaires. The chances of that passing are slim to none. But the actual payroll cut is another story altogether. Both sides seem to always agree on cutting taxes.
“Its current form, with the ‘surtax’ still in place, is up for a vote later this week in the Senate. The House will most likely vote out the millionaire tax when it’s their turn. We’ll see. But it certainly feels a lot like last year this time, when I wrote:
‘The “payroll tax holiday” in the deal means that you’ll see a 2% decrease in the amount you pay into Social Security and Medicare in 2011. Great, but doesn’t that mean that the very system that went into the red just three months ago is going to receive even less money than previously expected? Yeah… it means that.’”
We assure you Social Security remains in the red… a fact that drives Jim every day to seek out alternative sources of income. Naturally, he likes dividend-paying stocks, and he has a newsletter devoted to just that… but since mid-2010, he’s made it his mission to seek out lesser-known and more-lucrative sources.
More in today’s Overtime Briefing, below…
Say it ain’t so: A new report from Bloomberg shows details of Hank Paulson, then Secretary of the Treasury, telling hedge fund managers in July 2008 that he was thinking about a federal takeover of Fannie Mae and Freddie Mac… only 10 days after telling a Senate hearing that he wouldn’t have to resort to such powers.
You may recall Paulson’s infamous “bazooka” remark of July 11: “If you have a bazooka, and people know you have it, you’re not likely to take it out.”
Even so, he tipped off the hedge fund managers about the imminent takeover on July 21.
“Over sandwiches and pasta salad,” reports the new issue of Bloomberg Markets, “he delivered that information to a group of men capable of profiting from any disclosure.”
The takeover took place on Sept. 6.
“You just never ever do that as a government regulator — transmit nonpublic market information to market participants,” says former bank regulator William Black, who helped prosecutors net 1,000 convictions during the savings-and-loan crisis 20 years ago.
Before you publicly air your approbation of the Treasury secretary’s actions consider this: The U.S. Senate is close to passing legislation that would allow the president to use the military to imprison anyone — including U.S. citizens — indefinitely, and without charges.
The measure has bipartisan support, sponsored by Republican John McCain and Democrat Carl Levin.
“Combine the recent efforts by John McCain to create a police state with the revelations of Paulson’s corruption (crony capitalism),” writes John Robb at Global Guerrillas, “and you can only conclude that worse is coming.”
Indeed, Robb sees the development of what he calls a “hollow state.”
“The hollow state,” he writes, “has the trappings of a modern nation-state (‘leaders.’ membership in international organizations, regulations, laws and a bureaucracy) but it lacks any of the legitimacy, services and control of its historical counterpart.”
“It is merely a shell of a state that serves as a legal conduit and enforcement mechanisms for global financial interests to loot what’s left of the state’s economy. Corruption and violence are its only traits.”
This is a thread we intend to pick up in future issues of Apogee Advisory… but for now we offer a countervailing view. As long as something like this can be carried on mainstream cable TV, we’re not giving up hope…
Perhaps you’ve seen the following chart this week tracking the prices of gold and fine wines…
… and perhaps you’ve been inclined to agree there’s now a clear winner “when it comes to the age-old competition of which one makes a better wealth-preserving investment.”
To us, this says only one thing: Buy the dip!
“OK, now you have my interest!” a reader writes enthusiastically after yesterday’s Overtime Briefing. “How do I find out more about purchasing these ‘Income SAFE IOUs’?”
“Where and how do you invest in these?” inquires another.
“Where do I go to find out more about ‘Income SAFE IOUs’?” asks a third.
“Are these ‘Income SAFE IOUs” something I can buy in my pension fund at Franklin?” was a more-specific inquiry we got.
Jim Nelson replies: “Even though every type of pension fund, IRA and 401(k) is slightly different, the rule of thumb I use is that if your account allows you to trade individual stocks and options, it’ll also allow you to buy individual Income SAFE IOUs — which, I feel the need to point out, have nothing to do with either stocks or options.
“Income SAFE IOUs may sound like a brand-new type of investment. But they have been around for more than a century. So most accounts allow you to buy them as easily as any other type of standard investment.”
“Was there a missing link in Jim Nelson’s Overtime on Income SAFE IOUs? It sounded interesting, but I didn’t see a link or way to subscribe to his service to find out how to invest in them. Did I miss the link somehow?”
The 5: You didn’t miss a thing. We’re formally launching this brand-new service later in the week. It’s the product of 18 months of painstaking research on Jim’s part… and Income SAFE IOUs are only one facet of the strategy he’s devised to bring in steady, reliable income.
Don’t miss today’s Overtime briefing to learn about another…
The 5 Min. Forecast
P.S. A final reminder: The deadline for our one-of-a-kind Gold Buffalo “bundle” is only hours away. Here’s your last chance to take advantage.
Five minutes: That’s all it takes to read a typical issue of this letter, and all it takes to boost the income you can earn from investments you already own.
Here again is Jim Nelson with the intriguing details…
Part Three: How to Withdraw
Income From Existing Portfolios
Income From Existing Portfolios
Yesterday I showed you how to generate safe 8-10% annual yields using a secret called “Income SAFE IOUs.”
But because the idea is so alternative…because it’s completely outside the stock market…and because it’s a 180-degree turn from what you’ve been lead to believe about generating income…I understand that some readers simply won’t touch “Income SAFE IOUs.”
No matter how much proof I offer, no matter what I say, a select group of readers will never want to completely ditch their existing retirement plan of stocks and mutual funds.
If this sounds like you, then I have another little-known income secret to show you…
Today’s message is designed to show you how to take any stock holdings you may have…and force those stocks to instantly pay you thousands.
Let me repeat, because this is an important point…
If you hold stocks, you’re most likely missing out on the opportunity to generate thousands in extra instant income payments. Today’s message changes that.
The money isn’t a loan. You never have to pay it back. It’s real money…in your account…generated instantly…for you to use however you want.
I call this secret “The 5 Minute Income BOOST.” And because of the unique way it’s structured, it works best in turbulent market conditions — just like the one we’re in now.
Using today’s turbulent market for the chance to actually generate MORE income sounds unbelievable, I know. But I’ll prove to you that it’s true.
Financial author Joseph Hooper says that a strategy similar to the “5 Minute Income BOOST” is a way to “gain consistent monthly income from…stock portfolios without selling the stocks and regardless of market direction.”
“[This strategy is] a great way to generate income and average down your cost,” says Chartered Market Technician and Forbes.com blogger Ryan Campbell.
Most people don’t know about this secret because at first glance, it seems a bit complicated. But if you try it once…I’m confident that you’ll kick yourself for not doing this years ago.
Here’s how it works…
“The 5 Minute Income BOOST” takes advantage of a little-known, legally binding contract between you and another stock market participant.
That participant pays you (sometimes $1,000 or more) for the right to buy your stock from you. At a higher price. By a specific future date defined in the contract.
In short, you’re being paid by people who are betting that your stocks…stocks that you may hold…will be higher in the future.
It’s like you’ve become the casino — collecting the bets — rather than the person pulling the slot machine’s arm.
Here’s a specific example of how powerful this income secret can be…
Most people think the only way for the mining giant Newmont Mining to pay you income is to simply buy the stock…and wait around for the 2.2% dividend.
Now don’t get me wrong: That dividend payout isn’t bad. It’s twice what you’d receive annually in most savings accounts.
But there’s a way you could significantly boost the income you receive from holding Newmont in your stock account.
First, you must have…or be willing to buy…a block of 100 shares of stock.
Next, you need to make a simple five-minute call to a broker and give him this code: NEM130119C00067500.
That’s it. You’re done. For every block of 100 shares you owned, you’d have $780 instantly hit your account today.
That’s a boost of 5½ times the normal dividend that people receive from owning Newmont’s stock!
If you owned 200 shares, you’d collect $1,560. And if you owned a massive 1,000-share position in Newmont, you’d instantly collect $7,800.
Again, this all money that’s yours to keep. You can instantly put it to work for you — whichever way you choose. And you never have to pay it back.
In return for the income, you simply enter into a contract in which you agree to sell your Newmont shares to someone else for a slightly higher price.
Don’t worry, Newmont isn’t the only stock the secret works on. You can apply the “5 Minute Income BOOST” to just about every blue chip out there…as well as hundreds of small- to medium-sized companies.
For example, I’m seeing “5 Minute Income BOOSTs” on Verizon that pay more than $150…on Microsoft that pay more than $200…and on Apple that pay an eye-popping $6,300 in instant income.
So let me ask you…
Would you agree to pocket upward of $1,000 today…in exchange selling someone else the hope that stocks rocket up sometime in the future?
Yep, I would too.
That’s why I’m convinced that this “5 Minute Income BOOST” belongs in everyone’s portfolio that’s holding a sizeable chunk of stocks.
Yes, this may seem out of the ordinary. And yes, just like the secret I introduced to you yesterday, this does require a small amount of “extra work”…
But remember — with today’s economy, it is not the right time to wait around for the government or the banks to save your retirement. They’ve already shown who they care more about saving.
It’s up to you — and ONLY you — to control your future. And at the very least, I hope the secrets I’ve been introducing you to over the past few days give you a new way to look at doing just that.
Tomorrow I’ll share with you the last of the income secrets. It’s a type of high-paying dividend…that’s contractually obligated to pay you.
More to come on this idea tomorrow…