Archive for January, 2015

Doc Eifrig: Making this simple change could prevent a heart attack

From Dr. David Eifrig, MD, MBA, editor, Retirement Millionaire: 

Switching to whole wheat could prevent a heart attack. In a study published in the January issue of the Journal of the American Medical Association, researchers found a positive association between the consumption of whole grains and lower number of deaths in both men and women.

The researchers used two previous studies that followed 74,341 women and 43,744 men for 24 and 26 years, respectively. These studies measured cardiovascular disease, mortality, and daily self-reported diet. All of the participants were free from cardiovascular disease at the start of each study.

After adjusting for things like body mass index, age, smoking, and exercise, researchers found that people who reported eating whole grains – brown rice, whole wheat bread, etc. – had a lower number of deaths, including a lower number of cardiovascular deaths. They estimated that every one ounce of whole grain (about two tablespoons) consumed per day was associated with a 5% reduction in overall deaths and a 9% reduction in deaths from cardiovascular disease. That’s just a slice of whole wheat bread each day.

This study gives further support to our “white killers” idea – whole grain versions of foods are far better for you than the over-processed “white” ones, like white bread and white rice. The researchers think the benefits seen in whole grains are likely from the bran, something that is removed in the white killers. Do what I do and cut out white killers and eat whole grain breads and brown rice instead. Your health will thank you.


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Bill Gross: The Federal Reserve will raise rates this year

From Bloomberg: 

Bill Gross, the former manager of the world’s largest bond fund, said the U.S. Federal Reserve will raise interest rates late in 2015 to end distortions that six years of near-zero borrowing costs have brought to financial markets.

Any increase by the Fed will be slow to avoid startling markets that have gotten used to cheap money, and caution will prevail for a long time, Gross wrote in an investment outlook for Janus Capital Group Inc., where he runs the $1.4 billion Janus Global Unconstrained Bond Fund.

The former chief investment officer of Pacific Investment Management Co., who left that firm in September to join Janus, likened financial markets to the board game Monopoly, in which a bank, much like the Fed, supplies money to players who invest it in properties. Gross said the Fed realizes that for the game to function, players need incentives to invest.

“Capitalism depends on hope – rational hope that an investor gets his or her money back with an attractive return,” he wrote. “Without it, capitalism morphs and breaks down at the margin. The global economy in January of 2015 is at just that point with its zero percent interest rates.”

Gross, 70, has previously said that falling oil prices and a strong dollar constrain the Fed from raising rates until late this year, “if at all.”


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Downplaying Inflation

Gross earned his reputation by building Pimco into a $2 trillion money manager with some of the industry’s highest returns. He left the firm he co-founded in 1971 to join Denver-based Janus after losing a power struggle with management and some of his deputies.

The Janus Global Unconstrained Bond Fund, run by Gross since Oct. 6, has lost 0.6 percent in the past three months, trailing 58 percent of comparable funds, according to data from Chicago-based research firm Morningstar Inc.

Gross said Jan. 28 on CNBC that policy makers would raise rates at their meeting in June or September, depending on oil prices and conditions in Europe and China.

Even as the Fed boosted its assessment of the U.S. economy and downplayed low inflation, tumbling oil prices and concerns that Greece could exit the euro have sent American equities lower this year.

‘Heyday’ Over

In his previous outlook, Gross forecast negative returns for many assets this year as record-low rates fail to restore economic growth. Investors should hold high-quality assets with stable cash flows, such as Treasuries, high-grade corporate bonds, and stocks of companies with little debt and attractive dividends, he wrote.

While domestic and global stocks will be supported as rates rise, “their heyday is over,” he wrote today.

Instead of getting invested in projects, cash has accumulated on corporate balance sheets or was used in share repurchases, “like the endgame in Monopoly where cash becomes king at the game’s conclusion,” and “those without cash and the ability to get it go bankrupt,” according to Gross. With an aging population and high debt ratios, he wrote, “hope is challenged.”

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If you want to make a fortune in resource stocks, you need to see this

From Dan Ferris, editor, Extreme Value: 

Warren Buffett has often said: “Bad news is the friend of the long-term investor.”

Bad news leads to lower stock prices. Without low stock prices, it’s basically impossible to use the stock market to make a fortune.

You must buy low and sell high. But the only way you can buy low is to buy stocks when they’re cheap enough. That usually requires some bad news to come out about the company you’re looking at or the industry it’s in.

When the rest of the world is selling stocks in a panic, great investors are calmly scooping up bargains amid the chaos.

Great investors were buying in 2009, after the market had fallen almost 60% from its October 2007 peak. Great investors were buying in late 2011, when the market was down 20% from its May highs.

Today, great investors are buying natural resources stocks… and looking for other resource-related opportunities in anticipation of a great buying opportunity.

Let me explain…

Bad news is all around, especially among commodity-related businesses.

Take iron ore, for example. Iron ore prices are hitting fresh five-and-a-half-year lows, around $63 per tonne. At that price, roughly a third of global iron ore producers are losing money.

High-cost producers are feeling the pain. Cliffs Natural Resources shut down both of its Canadian iron ore mines (with costs above $70 per tonne). One of them, the Bloom Lake mine in Quebec, just announced it’s seeking protection under the Canadian Companies Creditors Arrangement Act (like bankruptcy in the U.S.), just one day after Cliffs eliminated its dividend payment. Steel producer U.S. Steel sought the same protection in September.

Copper prices are hitting new five-and-a-half-year lows, too – under $2.50 per pound…

With such a drastic move, it’s little surprise the biggest U.S. copper miner, Freeport-McMoRan, recently said it’s cutting its 2015 capital budget again, this time from $7.5 billion to $6 billion, having already cut it from $9.5 billion.

So, why is all this bad news so wonderful?

Because bad news makes great stocks cheap. Great investors can take advantage of these “bad news” opportunities because they know what stocks they’d like to own before the market falls.

For example, we recently recommended a fantastic royalty stock in my Extreme Value newsletter…

I can’t tell you the name out of fairness to my subscribers. But this royalty stock hasn’t been this cheap in nearly six years. And it’s a royalty on one of the best-run mines in the world, which has another 50 years’ worth of metal in the ground today. So, it’ll be paying out cash to shareholders for a long, long time.

It’s insanely rare to get a royalty this good at a price this cheap. But we were ready for it. We knew this stock was out there, and we just waited until it got cheap enough. Now Extreme Value readers who buy it should enjoy a 9%-10% yield for years to come…

Wouldn’t it be great if you knew which stocks to buy every time the stock market went down a lot? Other people would be panicking. But you’d be buying with confidence, knowing you’re getting shares of a financially solid company with a great business, that will survive downturns, keep growing, and that will take off when the market comes back (which it always does).

That’s exactly what you should be training yourself to do today.

I can’t know exactly when iron ore, copper, or other natural resource stocks will start rising again, but I suspect that it will be sometime this year. Right now, many solid resource businesses are trading at their lowest prices since the financial crisis, more than five years ago.

Investors who can look past the bad news today and single out great resource businesses selling at great prices have an incredible opportunity to make a lot of money over the next few years.

These investors, like my Extreme Value readers, will be better-prepared when stocks turn down (as they always do eventually), and some of the richest when they turn back up (which they always do eventually).

P.S. This is truly the best opportunity I’ve seen in my entire career. I believe certain stocks in the natural resource sector will rise as much as 1,000% over the next few years. You just have to know what to look for. In my latest presentation, I’ve outlined the current opportunity in resource stocks – along with the one trait all the best resource businesses share. Don’t wait, because after tonight we’re taking this presentation down forever. You can watch it in full right here. (If you’d rather read the transcript, you can do so here.)

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You won’t believe the latest subprime scam

From Bill Bonner, Chairman, Bonner & Partners: 

The best things in life are free
But you can keep them for the birds and bees
Now give me money?That’s what I want

– “Money (That’s What I Want)” by Berry Gordy

We have high hopes for 2015. It is starting off so well. Only a few weeks in and we almost tore a stomach muscle laughing.

So many unwitting comedians. So many political pratfalls and financial gags. No fraud or no foolishness is too absurd. And the spectators are willing not only to suspend disbelief but also to chuck it out the window.

Recently came news that U.S. auto sales were increasing. Everyone hailed this as good news. Then it emerged that auto sales have become the latest subprime finance scheme. Bloomberg:

Automakers are increasingly selling vehicles with 84-month loans that reduce monthly payments while making it tougher to repay faster than cars lose value, John Mendel, Honda’s U.S. sales chief, said in an interview. 

The Tokyo-based company will avoid longer-term loans even as Nissan tries to supplant it as the fifth-biggest automaker in the U.S., he said.

Sales will keep growing as the Federal Reserve’s zero-interest-rate policy encourages investors to collect yield from auto loans, said Tom Webb, chief economist at Manheim Consulting.

“We’ve seen this movie before, we know how it ends, and it’s not pretty,” Webb told reporters at an event before last week’s show. 

“It can have some negative impact on the market in creating a vicious cycle of negative equity if the consumer doesn’t hold onto their vehicle long enough,” Melinda Zabritski, senior director of automotive finance for Experian, said by phone.

“Something has to be done to keep the market affordable, or consumer buying is going to have to change and we’ll have to return to less frequent purchases.”

“Negative equity?”

In other words, auto buyers will be underwater… in their cars. They have, in effect, “taken out” the equity from their wheels just as they once did their bedrooms.

Fair Shot, Fair Share?

We were just recovering from a good bout of laughter over that when President Obama delivered his State of the Union address.

Middle-class economics means helping working families feel more secure in a world of constant change. […] That means helping folks afford child care, college, health care, a home, retirement – and my budget will address each of these issues, lowering the taxes of working families and putting thousands of dollars back into their pockets each year.

Hillary Clinton, in line to succeed the commander-in-chief, tweeted her response:

@BarackObama #SOTU pointed way to an economy that works for all. Now we need to step up & deliver for the middle class. #FairShot #FairShare

Political speeches are as hollow as a dry gourd. It is a waste of time to try to analyze them. You might as likely find an ice cube in the Sahara as any trace of real wit or meaning in them. Still, they can be funny.

The U.S. federal government is bankrupt.

According to Boston University economics professor Laurence Kotlikoff, whom Chris recently interviewed for Bonner & Partners Investor Network, if you include its “off balance sheet” liabilities, Washington is on the hook for $210 trillion.

So, the president now proposes to give more of what it doesn’t have to people who have no business taking it…

Dancing to the Same Tune

Still, promising other people’s money is the only course of action open to an ambitious politician.

Republicans and Democrats dance to the same tune. It is the music of the Berry Gordy song – later sung by The Beatles – “Money (That’s What I Want).”

Voters vote for what they want. And circa 2015, it’s hard to find a voter who doesn’t have his hand out. Which is not surprising. They need the money. Bloomberg:

Americans have continued to lose ground since the 18-month recession ended in June 2009. Median household income fell 3.9% to $51,939 in 2013 compared with 2009 when Obama took office, U.S. Census Bureau data show. The poorest fifth fared even worse, with incomes dropping 5.9% to $20,900.

And here our chuckle turns to a look of deep concern and puzzlement.

How could the greatest economy ever created… with technological breakthroughs coming as frequently as STDs… and capital for research, development, and investment available almost at no cost…

… make people poorer?

We don’t know whether to laugh… or reach for a drink.

Berry Gordy wrote his song in 1960. By the end of that decade, the U.S. had changed.

The American Enterprise Institute’s Nicholas Eberstadt:

During the 1960s […] America’s traditional aversion to the welfare state and all its works largely collapsed. President Johnson’s “War on Poverty” (declared in 1964) and his “Great Society” pledge of the same year ushered in a new era for America, in which Washington finally commenced in earnest the construction of a massive welfare state.

The comedy continues…

Regards,

Bill

Crux note: To get the big picture on America’s slow decline, you won’t find a better guide than Bill’s fantastic book, The New Empire of Debt. It tells the secret story of how and why the U.S. got itself into the worst financial crisis since 1929… And more important, how you can protect yourself – and your savings – from the fallout.

You’re entitled to a FREE hardcover copy. All Bill asks is that you cover shipping. Claim your copy right here.


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Gold UPDATE: This could be the most important “test” since the bull market began

From Chris Kimble at Kimble Charting Solutions:

CLICK ON CHART TO ENLARGE

Gold is now testing the underside of an old 10-year support line, now as resistance. This line is also being joined by another resistance line at current price levels.

The “X” marks the spot that looks critical for the future of long-term gold prices.

Keep a close eye on what happens here because it could determine if gold gets out of its three-year downward funk or it gets a breath of fresh air on a breakout.

FYI ? Members have specific plans in mind for gold due to this situation!


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Warning: Our worst fears about the market are coming true

From Sean Goldsmith in The Stansberry Digest: 

Today’s Digest carries a grave warning: Our worst fears about the global monetary system are coming true. The wheels are starting to fall off. A crash could be just around the corner.

Below, we’ll show you the specific steps we’re taking to prepare… and how you can do the same. But first, we need to explain how and why the global monetary system is coming unglued. We do this by explaining what’s going on in the giant global market that you probably know nothing about.

Most investors don’t pay any attention to the currency market. But they should.

The currency market is the world’s largest, most important market. It’s where governments, corporations, and investors execute trillions of dollars’ worth of transactions every day. It’s where a Japanese carmaker goes to exchange money earned in American dollars to pay expenses in Japanese yen. It’s where a U.S.-based hotel chain must exchange euros earned in Germany into dollars that can sit in its U.S. bank account. It’s where nations buy and sell currencies by the billions in the normal course of doing business.

The currency market is far, far larger than the stock market. After all, it’s the market for money. When there are real problems in the economy, you see them clearly in the currency market.

We realize the currency market isn’t as exciting as the next Apple or the next Facebook. It doesn’t have the allure of making a killing in a big oil strike. You won’t hear your brother-in-law opining on the likely direction of the Australian dollar.

But ignoring this market – and the messages it is sending right now – is a huge mistake that could bankrupt you and your family.

As you’re about to see, many of the world’s major currencies are plummeting in value right now. They’re plummeting in response to insane government policies that constitute the largest monetary experiment in human history. Monetary experts like Jim Rickards say these policies constitute “currency wars.” This is where the politicians of major economies actively devalue their currencies in order to make their exports cheaper to the rest of the world… and make it so they can pay off debts with devalued currencies. It’s truly a “race to zero.”

The result of this experiment will be financial disaster. And you must take steps to protect yourself.

For example… you may have heard the value of the Japanese yen is declining. But do you know why?

A nation’s currency is like a rough “stock price” of that nation. Generally speaking, if a country manages its finances well and engages in productive behavior, its currency appreciates over the long term. If a country racks up huge debts and runs its finances like a drug addict, its currency depreciates over the long term.

For example, Zimbabwe and Venezuela are two of the worst-managed economies of the last decade. The leaders of these nations treated the national coffers as a personal piggy bank… While they got rich, their constituents toiled in poverty and suffered hyperinflation. Zimbabwe’s currency has lost nearly 75% of its value since 2009 (when its currency was reissued). Venezuela’s currency has lost 70% of its value over the past 10 years.

This brings us to Japan. Japan is the world’s third-largest economy. It’s a leader in automobile and electronics production. But the country announced it officially entered a recession in November… The country’s GDP shrank an annualized 7.1% in the second quarter of 2014 from the previous quarter.

This recession hit despite Prime Minister Shinzo Abe’s massive quantitative easing (QE) in an effort to stimulate Japan’s economy. Beginning in 2012, Abe printed 60 trillion to 70 trillion yen a year (nearly $600 billion). Following the recent recession announcement, Abe said he would up the QE to 80 trillion yen ($676 billion).

Bank of Japan Governor Haruhiko Kuroda said the increased QE “shows our unwavering determination to end deflation.” In other words, Japan will print and print and print…

Recklessly expanding a country’s monetary base is disastrous for its currency. And Abe’s efforts have caused a huge decline in the trade value of the Japanese yen. It’s in a clear downtrend.

The yen lost 33% of its value since late 2012, hitting a seven-year low against the dollar. This is an enormous move for a major currency.

And how about the euro, currency of the world’s largest economic bloc, the European Union?

Regular Digest readers know the European economy is struggling. The high-tax welfare states of France, Spain, Portugal, Italy, and Greece are drowning in debt. Their economies are slowing and deflation is taking hold. Unemployment is soaring. And like Japan, this dire outcome follows massive easing from the European Central Bank.

These economies simply can’t compete with Asia and North America. Naturally, the central bankers are responding with more stimulus and currency devaluation.

Just last week, European Central Bank President Mario Draghi announced he would flood the European currency union with more than $1 trillion in newly created money. It’s a desperate attempt from a desperate group of politicians. Instead of asking citizens to make needed changes in government policy – so-called “austerity” like less welfare – the politicians chose currency devaluation. This sent the euro to an 11-year low against the dollar. It has plummeted 19% since April…

Please keep in mind the enormity of this move. A 19% decline is a stupendous move for a major currency. This isn’t a high-flying tech stock. It’s not a speculative gold stock. This is the value of bank accounts. This is the value of debts. This is the currency of the world’s largest economic bloc. And it’s falling apart.

But it’s not just happening in Europe and Japan. Almost every major currency (save the U.S. dollar) is getting destroyed.

The plunge in oil prices has killed the Canadian dollar. And Canada’s central bank, the Bank of Canada, worsened the decline this month when it cut its benchmark interest rate by 0.25 percentage points to 0.75%.

The Australian dollar plunged 17% from its 52-week high on July 1. And investors believe the Reserve Bank of Australia will cut rates to a record low from today’s 2.5%.

Falling oil prices, a war with Ukraine, and economic sanctions from the U.S. have destroyed the Russian ruble.

And in one of the wildest currency moves in history, the Swiss franc soared as much as 39% against the euro in one day following the Swiss National Bank’s removal of its peg to the euro.

Unlike the rest of the currencies we discussed today, the Swiss franc – a longtime safe-haven asset – appreciated. We’re simply noting that the currency of a stodgy, economically sound country like Switzerland should never experience such volatility.

Something is wrong in the currency markets today…

Despite the madness, we are seeing one bright spot: Gold.

Expansion of the global money supply is generally bullish for the precious metal. Still, the price has slumped. But, as we discussed in the January 20 Digest and the January 21 Digest, gold is forming a bottom.

As you can see from the chart below, gold is breaking out…

Steve Sjuggerud, Matt Badiali, and Jeff Clark are all urging their subscribers to invest in gold right now.

In short, governments can print more money, but they can’t print more gold. And with interest rates across the world at record lows (and in some cases, negative), gold is even more attractive.

Many readers have asked why gold and the U.S. dollar are moving up in lockstep… They believe gold is the “anti-dollar.” But that’s not the case.

Gold is performing well for two main reasons…

First, gold is a currency. In our opinion, it’s the safest currency by a mile because it has no counterparty risk. And again, you can’t print more of it. People are starting to realize this and they’re diversifying into the precious metal.

Second, gold benefits from the “fear trade.” When people get scared of what’s happening in the markets, they want the security of owning gold.

As you can see from the charts above, the world is losing faith in fiat money… so people are rushing to safe-haven assets like the world’s reserve currency (the dollar) and gold.

We’ve been warning about this event for years. We knew global central banks couldn’t continue to boost their economies via quantitative easing forever. Eventually, those debts come due… Eventually, the world loses faith in manipulated fiat currencies.

But what happens then?

As Porter said last week on an episode of Stansberry Radio, “We are in the early stages of the complete collapse of global capitalism.” He thinks stocks could fall by 50% or more.

Regardless of when the market correction comes, you have an incredible opportunity to buy gold today.

The metal is trading for less than $1,300 an ounce, down from its 2011 high of $1,900. We think it could easily hit $2,000 an ounce this year. Jim Rickards, who wrote the book Currency Wars and is an expert on this topic, believes gold will hit $7,000 an ounce one day.

And that’s based on the actions already taken by central banks.

But we’ll undoubtedly see many more shocks to the system in coming years…

For example, it’s possible the euro will disband.

The anti-austerity party Syriza just won the elections in Greece. The party, led by Alexis Tsipras, rallied support by saying Greece would not repay the hundreds of billions of dollars it owes to the “troika” – the Eurpean Central Bank, International Monetary Fund, and European Union (EU).

Upon election, Tsipras softened his language, saying he plans to write Greece’s debt down while abandoning the budget constraints that were part of Greece’s bailout. He also said Greece will stay in the European currency union.

Given politicians’ long history of false statements, we’re not putting much weight in Tsipras’ claims.

Even if Greece does stay in the euro bloc, we’ll see shocks to the system throughout these negotiations. And we’ll likely see more and more Europeans join the “anti-austerity” mindset – with more fringe parties winning elections in the EU.

And the global race to zero is still on… Central banks will continue doing what they’ve always done – printing money. But the consequences are only getting more severe.

So… what actions should you take?

Porter advises everyone to have at least 10% of your net worth in physical gold before you put a penny in the stock market.

If you still need to purchase physical gold, we recommend using two dealers: Van Simmons at David Hall Rare Coins and Rich Checkan at Asset Strategies International.

As we always remind readers, we receive no compensation for recommending their services. You can reach Van at 1-800-759-7575 or by e-mail at van@davidhall.com, and you can reach Rich at 1-800-831-0007 or by e-mail at contactus@assetstrategies.com.

Following that, you should definitely own gold stocks. And when it comes to gold stocks, one man’s track record has outperformed the rest… His name is John Doody.

John’s proprietary method for investing in gold stocks has returned 636% since 2001 – double the gains of bullion.

And right now, John is imploring his subscribers to purchase gold stocks. (He also put his money where his mouth is and personally invested a fortune in the sector.)

But outside of a small group of investors, not many people know about John’s investment strategies.

That’s why a self-proclaimed “financial survivalist” recently published the details online…

Giant profit opportunities don’t come around often in gold stocks. And when they do, it’s important you take advantage… because these stocks soar when the trend moves up.

You can get all the details right here.


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Sell oil, buy gold and invest in tech revolutions – MarketWatch (blog)

Sell oil, buy gold and invest in tech revolutions
MarketWatch (blog)
I don't know why we have to try to catch a bottom in energy stocks. It could take a very long time for energy to bottom and for these energy stocks to ever make a sustained comeback. Let's find the next Apple (AAPL), Google (GOOG) or Facebook (FB) – or

and more »

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5th Annual INVEST LIKE A LEGEND – The Globe and Mail

5th Annual INVEST LIKE A LEGEND
The Globe and Mail
With our fifth annual guide to making money, we sought advice from a Nobel-winning economist, the papa of all bears, a guy who plays an investor on TV (and actually is one in real life), a diehard gold bug, and possibly the wackiest venture capitalist

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Michael Fowler Says Forget the Majors, Buy the Midtiers

January 29, 2015 (Investorideas.com Mining stocks newswire) According to Michael Fowler, senior mining analyst with Loewen, Ondaatje & McCutcheon, the major gold producers have gorged on debt and sold off their seed corn.

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Brien Lundin Plays the M&A Game

January 29, 2015 (Investorideas.com Mining stocks newswire) Mining investors love to talk M&A. The speculation. The buzz.

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