September 6, 2013
- “The Super Terrific Happy Hour”: How to apply Seinfeld’s secret for effortless investing gains
- Where’s my recovery? Not in today’s jobs numbers
- China loads up on gold, shores up yuan’s position as a global player
- Pensions nationalized… but the news from Poland isn’t all bad
- “Careful what you wish for”: Readers warn about nixing the income tax in the Tar Heel State
We pull back the curtain of today’s episode with a short bit from Seinfeld:
KRAMER: Hey. Well. (proffers the envelope) This was downstairs for you. Ker-ching.
JERRY: (taking the envelope) Oh no, not more checks. They’re coming in faster than I can sign ’em.
GEORGE: What checks?
KRAMER: Oh, you didn’t hear? Jerry’s a big star in Japan.
JERRY: I don’t know why. There’s a one-second clip of me in the opening credits of some Japanese comedy show.
KRAMER: Yeah, the Super Terrific Happy Hour.
JERRY: (opening the envelope and pulling out a stack of checks) They run it all the time, and now I’m starting to get all these royalty checks.
GEORGE: Look at all those! You’re rich!
Alas, due to exchange rates, Seinfeld’s checks netted him only 12 cents a pop. Comedy bits aside, in the world of the contrarian investments, royalty checks are among the most lucrative — yet extremely elusive — ways to collect checks for years without lifting a finger.
That’s why we were so keen on our own Chris Mayer unlocking the details to his “Chaffee Royalty” program which, as we’ve mentioned, is known to have the potential of delivering up to a 50-to-1 payoff…
As you may’ve suspected, the petition response far exceeded the goal. You should’ve received full details on the “Chaffee Royalty” strategy in your inbox at 9:30 a.m. EDT.
Now that the secret’s out, here’s the lowdown on just one of Chris’ opportunities straight from the horse’s mouth — one of the youngest and most successful CEOs in the mining industry…
“So what we do,” the profiteering CEO begins, “is we give people money to go build mines or develop oil fields or gas fields, and what we get in return is a contract that allows us to purchase a certain percentage of their production for the life of that [field], and we purchased it at X price.
“So for example,” he goes on, “on a gold mine, we might give someone $50 million, and what we’ll get in return is the right to purchase 20% of their gold at $500 now.
“And then we just take the ounce of gold every time we buy it for $500, and we sell it at spot rate, which today is about $1,430 an ounce. The difference between $500 is our profit margin and our cash flow, and we continue to reinvest our cash flow into purchasing new contracts.
“If we negotiate a contract or buy gold at $500 an ounce, we know we’re buying it at $500 now, this year, next year or for several years to come. So that really decreases the risk to the operating process for our investors.”
That’s the genius of his model: As prices go up across the board, this CEO’s royalty company is locked in at a fixed price. And where you come in, the profits are doled out to investors in the form of royalties.
[Ed. Note: Again, that’s only one of the ways Chris’ most elite readers have been receiving royalty checks. To see just how lucrative they could be, click here to see eight Americans who cashed in big on “Chaffee Royalties”… and how you can too.]
The “robust recovery” narrative in the media took a hit this morning with the release of the government’s August jobs report. Let’s hit the lowlights…
- The Bureau of Labor Statistics conjured 169,000 new jobs for August — less than the “expert consensus” was counting on. Worse, June and July were revised down
- The “U-3” unemployment rate dropped to 7.3% — but only because people are dropping out of the labor force. And we assure you most of those people did not retire with a gold watch
- Indeed, the labor force participation rate — the percentage of the working-age population in the labor force — has dropped to 63.2%. That’s the lowest since summer 1978, when the Rolling Stones topped the charts with “Miss You” and the big box-office draw was Animal House. Meanwhile, the employment-population ratio remains mired in its post-recession funk…
The real-world unemployment rate compiled by John Williams at Shadow Government Statistics is unchanged from a month ago, 23.3%.
The markets have been all over the place this morning.
Stocks first rallied on the rotten jobs numbers, on the theory the Fed is now less likely to “taper” its money printing program later this month. Then they tanked when leaders at the G-20 summit in St. Petersburg announced — surprise, surprise — they didn’t see eye to eye about Syria.
Who’da thunk it, right?
Anyway, as of this writing…
- The Dow is down modestly, a hair below 14,900. The S&P is squeaking its way back into the green
- 10-year Treasury yields, which nearly touched 3% yesterday, are backing off to 2.9%
- Crude is only a dime away from $110
- The dollar index has slipped half a percent, to 82.2
- Gold has recovered a healthy chunk of yesterday’s losses at $1,387. Silver has rallied to $23.84.
Sales of U.S. Silver Eagles so far in 2013 have already topped the total for all of 2012.
Last year’s total was 33.74 million ounces. As of this morning, it’s 33.75 million. At that pace, the annual record — 39.87 million in 2011 — is in jeopardy.
China has once again notched a substantial increase in gold imports year over year.
The July total for shipments via Hong Kong totaled 129 metric tons, compared with 76 in July 2012. The number was also a slight increase from June.
China is set to knock India off from its perch as the world’s leading bullion consumer this year. Act accordingly.
Meanwhile, China just passed another milestone on its way to becoming a major player in world currencies.
The yuan has cracked the top 10 of most traded currencies as ranked by the Bank for International Settlements (BIS). No. 9, to be precise — up from No. 17 during the last survey, in 2010. Yuan trading volume now equals $120 billion a day.
“Ten years ago, when we first offered renminbi deposits, there weren’t but a handful of dealers that even would mess with renminbi,” writes EverBank’s Chuck Butler in this morning’s Daily Pfennig. “But I think that the trading of renminbi goes hand in hand with the Chinese government’s plans to gain a wider distribution of the currency.”
Indeed, Chuck’s long-standing forecast is playing out before our eyes…
Poland is slipping back into some bad old communist ways. The government is taking over a sizeable chunk of private pension funds — booking them as assets to offset public debt on the state balance sheet.
“Announcing the long-awaited overhaul of state-guaranteed pensions,” Reuters reports, “Prime Minister Donald Tusk said private funds within the state-guaranteed system would have their bond holdings transferred to a state pension vehicle, but keep their equity holdings.
“He said that what remained in citizens’ pension pots in the private funds will be gradually transferred into the state vehicle over the last 10 years before savers hit retirement age.”
Says Nomura analyst Peter Attard Montalto: “The government has an odd definition of private property given it claims this is not nationalization.”
So far, workers are not reacting with the fervor of their parents three decades ago…
If this news is setting off “401(k) confiscation” alarm bells in your head, you can rest easy: These are state-guaranteed pensions, akin to the traditional defined-benefit pension plans in this country backed by the Pension Benefit Guaranty Corp.
If you still have one of those plans, we daresay you’re justified in worrying a bit…
But on the positive side of the Polish ledger, we see a move afoot to repatriate the country’s gold.
“In the face of the ongoing financial crisis and monetary tightening in every major conflict,” the “Give Our Gold Back” website reads after we ran it through Google Translate, “the country should keep the gold in such a place [that] would be available at any time.
“It is important to guarantee,” the site goes on, “that gold will not be anyone ‘leased’ and its resources will always be precisely defined. This is one of the foundations for a strong currency and economy.”
Hey, all the cool countries are doing it. Venezuela’s already done it. Germany is likewise taking back its gold, although the New York Fed prevailed upon the Bundesbank to drag out the process through 2020.
The movement began, according to its vice chairman Piotr Wojda, when two economists became “worried about the safety of more than 100 tons of Polish gold held in the vaults of Bank of England for the last 70 years.”
After meeting with members of the Polish parliament, Wojda explained, “The members of parliament agreed that Polish gold reserves deserve an independent audit…”
An audit? Well, it’s a first step anyway…
“North Carolina, you better watch out what you wish for, or more appropriately what your legislature wishes,” writes a reader after our item yesterday about a move to nix the income tax there.
“I live in Washington State, and we don’t have an income tax. What we do have is one of the highest sales taxes in the country. When the 2008 recession hit, our state’s budget was hundreds of millions of dollars in the red, because no one was spending. Also, all our ‘sin’ taxes, on cigarettes and booze are exorbitant. Throw in the fourth-highest gas tax in the country and, well, there you go. A wolf in sheep’s clothing.
“To make matters worse, every other year or so, either the legislature or some kind of special interest group brings an income tax to the ballot, with the promise of ‘cutting’ the sales tax. Never any ‘elimination’ of the sales tax, but we will ‘reduce’ it, hint, hint, hint, wink, wink, wink. North Carolina, be very wary of any promises to cut back other taxes in exchange for a new tax.”
“I can see what will happen in North Carolina is the way it is in some socialist countries,” adds another reader.
“I recently moved back to the U.S. from New Zealand because the cost of living was so high. Your personal income tax and property taxes were very low, but boy, did you ever pay through the nose for everything else. So one way or another, the government gets your money. The ‘free’ health care there really isn’t free when you get right down to it.”
“I agree with your readers that complain about the long presentations,” a correspondent writes as we wind down the week’s mailbag.
“In training salesmen for over 40 years, I can assure you, with most intelligent buyers, less talk is more effective. Once the customer is ready to buy, shut up and take the order. A suggestion: Have two versions — a short one for buyers who want to make a quick decision and a long-winded one for you to bore the rest of us.”
“Thanks for all the informative work you guys are doing there! Of course, even Ichiro Suzuki, late of the Mariners (and now gone over to the dark side, aka Yankees), doesn’t bat 1.000.
“From the commentary this week, I would like to tactfully and gracefully agree with the sentiments the others expressed about the length and tenor of the — as one writer called them — presentations. I do, in fact, like the fact that if one exits the videos, you can get a text transcript — that helps a lot. A lot of us like text, so we can speed-read — and knowing this may help as you seek to optimize your advertising process.
“Just a (hopefully) helpful observation. You guys are great, and certainly more than the equal of Ichiro in terms of batting average!”
The 5: Gosh, we’d hope so. “Baseball,” said Ted Williams, “is the only field of endeavor where a man can succeed three times out of 10 and be considered a good performer.”
Have a good weekend,
Dave Gonigam
The 5 Min. Forecast
P.S. “I only learned about ‘Chaffee Royalties’ from an ex-commercial banker who used to handle $400 million contracts for breakfast,” says Chris Mayer.
“He discovered them after years of researching looking for unique new way for investors to get very rich. And I’m convinced, along with some very smart and very rich investors, that this may be one of the best undiscovered ways to ‘make money while you sleep’ available today.”
Thing is, the window of opportunity on these plays can close with little or no warning. So check it out while there’s still time.