July 24, 2014
- The low bar set for a “comfortable” retirement
- Worse, only half of working Americans can cross that low bar
- Stocks steady: The economic numbers giveth, and taketh away
- A 24-year-old speech… a “lucky 13” list of gold stocks… and why “platinum is the new gold”: Highlights from Day 1 of the Sprott Vancouver Natural Resource Symposium
- Another nail in the coffin of the money market fund
- “Oh. Puh. Leese.” and other retorts after yesterday’s flurry of reader complaints
“One in two U.S. households is destined for a lifestyle downgrade in retirement,” writes Dan Kadlec at Time.
Not very comforting odds, eh?
Kadlec is summarizing a new report from the Center for Retirement Research at Boston College. A key finding: If you’re still 30 years from retirement, you can retire comfortably by saving 15% of your pay.
Example: A typical couple planning to retire in 2040 at age 65 can expect Social Security to replace 36% of their pre-retirement income. Thus, if they began setting aside 15% in 2010… and if they get a real return (after inflation) on their investments of 4% a year… they’ll have a nest egg of $538,000.
Plow that nest egg into an immediate annuity and it would generate 34% of pre-retirement income: 34% plus the 36% from Social Security gets you to 70% of pre-retirement income, an “acceptable minimum level.”
OK, that’s a lot of “ifs”… starting with the one about Social Security. Heh…
Even assuming all those “ifs” play out… the older you get, the more difficult the math becomes.
Start saving in your 40s and you need to up the saving rate to 28%. Start in your 50s and it’s 39% — a level the researchers label “unrealistic.”
“A better strategy for these households,” the researchers write, “would be to work longer and cut current and future consumption in order to reduce the required saving rate to a more feasible level.”
How many working Americans are falling short of that 70%-of-pre-retirement income minimum? As Mr. Kadlec says, more than half — the highest in three decades.
We assume if you’re reading these daily missives, you’re probably in the 47% of people who aren’t falling short of the bare minimum. But we also assume your retirement dreams aren’t confined to a bare minimum.
No, chances are your idea of retirement is one in which you don’t have to worry about a budget for travel or concerts or meals out.
It’s with that vision in mind that we conducted a “beta test” among 917 readers starting a year ago. And as we mentioned yesterday, we’re now taking this effort to the next level with a project code-named “Gamma-nMC.”
At the risk of repeating ourselves, this strategy is not for everyone. As retirement “catch-up” plans go, this is aggressive. It is also absolutely achievable.
We’re limiting the project to 500 participants. If you even think you might be interested, you’d do well to investigate right now at this link.
Major U.S. stock indexes are flat so far today. The S&P 500 has inched its way into even higher record territory, up a point as we write, to 1,988.
So far, the indexes have risen and fallen with the release of economic numbers…
- First-time unemployment claims plunged last week to 284,000 — a level last seen in 2006. Thus, stocks opened up
- New home sales collapsed 8.1% in June. Worse, the figures for May were revised down.
“Home sales had been improving through the middle of 2013,” reports The Associated Press, “only to stumble over the past 12 months due to a mix of rising prices, higher mortgage rates and meager wage growth.”
Wages? You need rising wages to support rising home prices? Who knew?
Gold tumbled below $1,300 overnight in Hong Kong. At last check, the bid is $1,290. Silver’s taking an even bigger blow, down more than 2%, to $20.45.
Sprott Vancouver Natural Resource Symposium…
Old friend Rick Rule opened up the conference with what he called “a speech written in 1990.”
The point being that the resource market is looking very similar to its early ’90s bottom.
In 1992-93, we saw an “absolute melt-up.”
Today, “we’re in a market that has seen its bottom,” Rick says. “The pieces are in place for a dramatic recovery” in mining shares and other hard assets.
The resource argument is the same today as it was five or 10 years ago: Government liabilities are off the charts, there’s a continued demand for resources from the 7 billion-plus people on this planet — and at the same time, the supply of many coveted resources is tepid.
Said another way, here’s why you should still like this year’s conference theme — a resource rebound:
1. Continued challenges for fiat currency.
2. Demand for resources.
3. And cramped supply.
In investing, you want to buy low… “This is low,” Rick says.
He also hinted at continued excitement in the oil and gas field, where North American producers have done a great job on economic efficiency — something that looks to continue. And something we’ll hear more about tomorrow with Stansberry & Associates’ oil and gas expert Matt Badiali due to speak… and our own Byron King.
“So much for being a long-term investor,” says Adrian Day, complaining about the lackluster performance from the world’s biggest gold miner, Barrick Gold. Over a 12-year time frame, the stock has essentially gone nowhere.
That said, by any metric, gold miners are at multidecade lows.
And we’re already seeing some bottoming action in big shares like Goldcorp — up 30% in eight weeks.
Adrian’s favorite long-term pick, and something covered extensively in the 5 Min. PRO, is Franco-Nevada.
This royalty company has less downside risk, and while Adrian admits it won’t be the biggest gainer when gold heads to $2,000, “You won’t be disappointed,” he says.
In short, here are his top buys right now: Undervalued seniors, royalty companies, prospect generators and takeover candidates.
Day also spilled the beans, and tickers, on his “lucky 13” top gold stocks. Something that we’ll be highlighting in full in our conference special report.
“I’ve never seen a more exciting and breaking hour-long presentation that what I saw with Robert Friedland.”
To say that the metals markets could soon have decades of wind at their back is a true understatement. And I’m not talking about just gold and silver…
“Platinum is the new gold,” says Friedland, founder of Ivanhoe Mines. He also makes one of the most bullish cases for copper I’ve seen. Not to mention the redheaded stepchild of the metals market, zinc.
Here’s a little taste of the big picture…
Urbanization is a “fundamental phenomenon” of our age. Cities are getting bigger, and urbanization is “coming to a theater near you,” Friedland says.
Besides the regular spiel for urbanization and the need for base and tech metals — there’s a new and profitable twist to the story: Terrible air pollution (not the same as global warming, to be sure) is going to have a profound effect on the price of platinum and palladium.
“China’s war on smog” is a start. But it’s more than that…
London’s pollution, per Friedland, is worse than Beijing’s. In fact, even Paris pollution recently hit “life-threatening” levels.
Add it all up and the ball has been set in motion to clean up urbanized air pollution — and that means great things for the platinum metals group, a group of metals critical to clean air.
But that’s not all from Friedland’s metal roundup… not even close: “[The] five-year copper outlook is equally compelling to platinum,” Friedland boasts.
Electric cars, the cloud, new transportation tech, U.S. Army mandates and more could lead to a truly magnificent run-up for copper. According to Friedland, “The Internet is not ‘green’; it takes electricity” And lots of it!
Tablets, smartphones, computers, batteries, electricity generation, electricity transfer: It all takes copper.
You see, “young kids” (you know, those new age money managers at Goldman and T. Rowe) have lost sight of the fundamentals. Today, their eyes are focused investments in Facebook and app maker WhatAapp. And in the meantime, “Real things are out of fashion.” But that won’t last for long…
Once you figure out “where things come from,” he says, it all comes back to a VERY positive outlook for metals.
The biggest chuckle he got from this resource hunter was when he said simply: “If you’re a geologist, this is pornography!”
But here’s our promise — a strictly PG-rated collection of reports and recordings from this week’s activities here in Vancouver. All the lucrative ideas, all the ticker symbols. And while the conference is still in session, you can get it at a handsome discount. Just click here for the order form.
The exits are closing for scads of money market funds.
The SEC voted yesterday to impose new rules on money market funds — following through after a heads-up we gave you two weeks ago.
The rules supposedly aim to prevent a rerun of 2008 — when the Reserve Primary Fund “broke the buck” because it held securities issued by the doomed Lehman Bros. So now, many funds will no longer have a fixed value of $1 a share — the better to break the illusion that a money market fund is as good as money in the bank.
That’s fine and well. It’s good to wake people up that their “cash” is backed by Fannie Mae mortgage paper and the dodgy debt of European governments.
But then there’s the part about allowing the funds to bar withdrawals during a financial panic… or to impose a redemption fee.
Our long-standing guidance remains: If you need to park cash in a money market fund, make sure it’s backed by nothing but U.S. Treasuries. Uncle Sam will always pay you back… even if the dollars will suffer from depreciation.
“Thanks for continuing to let the chronic complainers in your readership have a forum to air their endless gripes,” a reader writes. “Their constant misery over words continues to be a source of amusement.”
Thus begins an extraordinary amount of pushback against the readers who weighed in yesterday about our “boring, long-winded presentations.”
“For all of their whining over the length of your investment opportunities,” this reader continues, “my guess is that these same folks have no problem going to a social gathering and pontificating at length about their own investment ‘ideas’ to anyone who dares let them bend an ear. Oh, and the best in show of the complainers are those who preach to you about how you are losing your readership or how your ideas should be limited to one page!
“Brilliant in theory, excepting the fact that their survey sample size is one reader, whereas the folks at Agora, who seem like rather smart folks, are likely studying their market data in detail and probably have a better grasp on what the readers want or don’t want.
“Bottom line? Complainers always be complainin’. Thanks for The 5.”
“I used to go to a link and think I was ‘stuck’ until the end,” writes another. “But if you just hit the close window, a pop-up usually asks if you want to leave the page; just click ‘NO’ and you have a transcript. Then, scroll to the bottom to see if you have already seen this and decide if you want to read more. Simple and fast and works for everyone.
“The 5 staff is correct in continuing with the videos and long text. Marketing tests have proven that they work; when they stop working, trust me, the staff will change to accommodate the newest technique!”
“I love The 5 and always have. ‘But’ nothing! Keep up the great work!
“I understand the readers writing in to complain about the long presentations, but I also understand that you wouldn’t do them if they didn’t work. To those readers I say just skip the links if you don’t have time. You probably wouldn’t buy the product anyway, long or short presentation.”
“You know,” writes one of our regulars, “this just shows me how truly honest you and the Agora team are. You’ve obviously hit a raw, ‘exposed’ nerve with some of your readers on your marketing presentations. Then you allow them to blast you in print.
“Now, I’ve got to admit, and maybe I do have too much time on my hands, as suggested, that I have watched some of these. I would agree these sometimes do go on and on, so I do appreciate having the ability to ‘read the transcript’ and when in a hurry rush right to the end, look at the additional reports included with the subscription and the price.
“Now, maybe the fact that we are (myself and other readers) clicking them is skewing your own statistics? Just a thought. As if we are those ‘fat cat, stogie-smoking executives’ or whatever the one reader suggested yesterday sitting around listening to Agora diatribe.
“In all honesty, whatever is working for you guys is fine with me. I’ve been a reader and subscriber long enough to know I want to continue getting my subscriptions, as they provide excellent ideas and I do have a delete button if the free benefits of The 5 get on my nerves. Besides, you just may publish us when we write and say ‘B***S***!’ God bless our First Amendment rights!
“Always enjoy my daily dose of The 5.”
“To those who whine about how looooong the ads in The 5 are, I have three words. Oh. Puh. Leese. Yes, they are long, but you can scan a transcript in about 2½ minutes.
“You want a short ad? Here it is. Start with one of the lower-price offerings. I like Chris Mayer’s Capital & Crisis, and Neil George’s Lifetime Income Report. You’ll probably make back the subscription price quickly. When you’re ready, pony up the bucks and grab one of the premium services or join one of the reserves. It’s a significant investment upfront but pays for itself over the years.
“Ad over. Disclaimer: I was not compensated in any way for this promotion, but I’m open to being paid for my copywriting services in the future.”
The 5: That depends on how you’d do writing long copy!
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. Facebook delivered a monster earnings report after the bell yesterday. As we write, it’s up 6.5% this morning.
Now imagine if you could have gotten in on Facebook before it went public.
Go a step further: Imagine investing now in the Facebooks of tomorrow — even if they’re not public yet.
Impossible? Not at all. See for yourself, right here.