Why the Falling Dollar Is Good News for This Asset

 
When the U.S. dollar is going down, the price of gold goes up.
 
The reason is simple… It's basic math.
 
Gold is priced in U.S. dollars… so if the U.S. dollar is weakening, it takes more dollars to buy the same ounce of gold.
 
That's the logic, anyway. But does the logic actually work in the financial markets?
 
Sometimes it doesn't… As the economist John Maynard Keynes famously said, "The market can remain irrational longer than you can remain solvent."
 
But as it turns out, the logic works with gold and the dollar…
 
Gold's compound annual return since the early 1970s has been about 6.9% a year. But when the dollar is weakening, gold goes up at 12.2% a year. And when the dollar is strengthening, gold only goes up 1.8% a year.
 
This table shows it simply…
 
Compound Annual Gains in Gold
All periods
6.9%
During a dollar downtrend
12.2%
During a dollar uptrend
1.8%
To identify uptrends and downtrends, we looked at whether the dollar was above or below its 10-month moving average at the end of a month. Then, starting at the date of that signal, we measured gold's performance over the following month.
 
You can see dollar downtrends led to strong gains in gold…
 
So… why is this important today?
 
Because we are now in one of those times when gold has historically delivered double-digit compound annual gains.
 
"The dollar could be starting a multiyear bear market," my colleague Brett Eversole wrote yesterday…
 
The greenback recently hit its lowest level since early 2015. It has now clearly broken down from a multiyear uptrend…
 
Major currencies tend to move glacially. They have slow, long-term moves higher or lower… not drastic crashes or spikes.
 

So this year's decline isn't something that happens often. The dollar is down 9% in just the first eight months of the year – a massive fall for a major currency.

 
His conclusion was that the dollar could decline for the next two years.

 
If that's true, then gold could be starting a multiyear bull market.
 
Don't be too worried about the short-term fluctuations… We actually think the dollar could go up a bit more before it resumes its fall. But the dollar's long-term trend is clearly down. And we are finally on board with gold again.
 
Gold could be starting a multiyear bull market. You want to be on board.
 
Good investing,
 
Steve
 

Source: DailyWealth

The Dollar Could Be Starting a Multiyear Bear Market

 
The U.S. dollar's plunge has been one of the major financial stories of 2017…
 
The dollar soared from 2011 to 2016. But things changed this year.
 
The greenback recently hit its lowest level since early 2015. It has now clearly broken down from a multiyear uptrend. And history says this downtrend will likely continue.
 
The dollar could continue falling for another two years.
 
Let me explain…
 
Major currencies tend to move glacially. They have slow, long-term moves higher or lower… not drastic crashes or spikes.
 
So this year's decline isn't something that happens often. The dollar is down 9% in just the first eight months of the year – a massive fall for a major currency.
 
This is also a major break in the dollar's previous trend. Take a look…
 
This quick fall could be a sign of a much larger downtrend.
 
History says that this kind of decline – 9%-plus in eight months – means a new downtrend is here. And that's a bad sign for the dollar over the next few months… and potentially years.
 
Since 1980, similar quick dollar declines led to further declines over the next two years. The table below shows the full details. Take a look…
 
 
6-Month
1-Year
2-Year
After extreme
-1.6%
-4.7%
-7.0%
All periods
0.1%
0.2%
0.4%
Like many currencies, the dollar hasn't moved much over the long term. But large declines tend to lead to further falls.
 
After 9%-plus declines like we saw recently, the dollar went on to fall 1.6% in six months, 4.7% in one year, and 7% over the next two years.
 
That may not sound like much… But it's a huge fall for a world currency.
 
More important, this signal tells us that the dollar's decline will likely continue… potentially for years.
 
Now, in the short term, the dollar is overly hated by investors. And as contrarians, we know that could mean a bounce in the near future. But that's the short-term picture…
 
Today, the long-term trend is clearly down… And the recent decline we've seen points to more losses ahead, based on history.
 
This isn't all bad news… If we see a multiyear fall in the dollar, one way to profit is through foreign stocks. A falling dollar is a tailwind for stocks outside the U.S.
 
Gold also typically soars when the dollar falls. The metal has already entered a solid uptrend.
 
In any case, the greenback's decline could just be getting started. Don't be surprised if this is the beginning of a multiyear downtrend.
 
Good investing,
 
Brett Eversole
 

Source: DailyWealth

The Most Unusual Gift We've Ever Offered

The Weekend Edition is pulled from the daily Stansberry Digest. The Digest comes free with a subscription to any of our premium products.
 
 In early 2016, I (Porter) was invited to dinner with one of the most powerful men in the world – the "Metropolitan Man"…
 
We met on the top floor of New York City's Metropolitan Club. There, he warned me that the potential for negative interest rates threatened the entire global financial system.
 
These insights led directly to the launch of my first precious-metals advisory, Stansberry Gold & Silver Investor. Our initial results were fantastic. Lately, our results are again strong. The stocks in its model portfolio boast an average gain of 24% and include 10 double-digit winners  thanks to gold's move to more than $1,300 an ounce and what looks more and more like a new bull market in commodities.
 
Meetings like this – with incredibly powerful investors – are rare. They don't always lead directly to market-moving or strategy-changing decisions. But something unusual happens every time.
 
 Today, I want to share with you a secret about big-time investors and their ideas…
 
It's one of the few real investment secrets that I've learned completely on my own, directly from my own experience.
 
You can learn something valuable from major investors, whether it's from meeting with them face to face or simply reading what they've said at an investment conference.
 
Trust me… this secret is not what you think.
 
But before we go any further, let me give away one part of the "big reveal" right here.
 
I've spent the last several days traveling to New York City and negotiating with a legendary investment figure, all to deliver an amazing opportunity to you… for free.
 
I hope you'll read carefully. I'm certain that this essay could be the start of a life-changing adventure for you.
 
 Let me start at the beginning…
 
More than 20 years ago, when I first began writing about finance, everyone I met or talked to who was anyone important asked me the same question… Whether it was dinner with Jim Rogers in New Orleans or meeting Bill Bonner for the first time, I kept hearing about another writer – Jim Grant – and his newsletter, Grant's Interest Rate Observer.
 
Over my entire career in finance, this simple question – "Do you read Jim Grant?" – has defined whether you were an investing pro or a complete novice. Knowing about Jim and reading his newsletter was kind of like a secret handshake on Wall Street.
 
If you were "in," then you were a value investor. You were contrarian. You understood gold. And you were deeply skeptical of Wall Street's big institutions. But most of all, you were extremely smart and successful. You had to be to even know about this newsletter (and to afford it).
 
See, Jim doesn't advertise. And he has a small number of subscribers. His newsletter comes out twice a month. Everything about Jim and his business is old-fashioned.
 
But the world's best investors – old and young – all read his newsletter. Paul Volcker, for example, the legendary Federal Reserve chairman who beat inflation in the early 1980s, is a longtime reader. The young Peter Thiel, of PayPal and Facebook fame, spoke at the spring 2014 Grant's conference.
 
 Every newsletter writer and publisher in the world claims that everyone who matters in global finance is a friend, contact, or at least a subscriber…
 
But in Jim's case, it's true. How powerful is this newsletter?
 
Grant's Interest Rate Observer is the only newsletter specifically mentioned in The Big Short.
 
That's Michael Lewis' book (and movie) that detailed how some investors made billions of dollars by shorting mortgage bonds and mortgage bankers during the financial crisis.
 
Jim introduced most of these investors to the core trade of The Big Short, which was shorting an index of subprime mortgage bonds. Investors who really know that trade – who really know how billions were made during that crisis – know that Jim and his newsletter played a huge role in getting investors into it.
 
In our mailbag at the bottom of every Digest, we refer to our readers as being "paid-up subscribers." The catchphrase comes from Grant's Interest Rate Observer. It's a tongue-in-cheek reference that Jim makes to acknowledge that his subscribers are usually far wealthier and more powerful than the author of the newsletter.
 
We adopted the convention as an homage to Jim… and to signal to the more sophisticated members of our audience that we also were fans of Grant's in a subtle, secret-handshake kind of way.
 
 That's the backstory…
 
As you know, my job as chairman of Stansberry Research is to make sure I do my best to give you the information I'd want if our roles were reversed. If that's true, then why haven't I told you about Jim's newsletter before? Well, I have.
 
From time to time, I'll reference Jim's work and credit him for ideas that we share.
 
But honestly, for most of you, reading Jim's newsletter wouldn't be easy. His writing style is idiosyncratic. It's not designed to be welcoming to new subscribers or easy for nonprofessional investors to read.
 
For example, Jim never says "buy XYZ stock up to such-and-such a price." He knows his audience doesn't need his specific advice. Investors buy Grant's Interest Rate Observer because no one publishes better ideas more consistently or has access to more elite investors than Jim does. Like I said… it's like being part of a secret club.
 
One part of being in that club is simply irreplaceable. This is something I couldn't give to you any other way. It's something that only Jim Grant could do.
 
 Next month, I'll attend the most exclusive investment-group meeting in the world…
 
This meeting happens twice a year in New York at one of the world's most expensive hotels. I try to attend both meetings every year. As I'll describe in detail, I'll be sitting face to face with the world's most important, most powerful, and wealthiest investors.
 
But trust me… the point of this essay isn't to name-drop.
 
I'm writing today to teach you a much more important lesson. It has nothing to do with wealth, fame, or reputation. It isn't really even about track records, either. Something far more important is at stake. It's something you will never learn any other way.
 
As I often say, there is no teaching, only learning. You'll have to read carefully and keep an open mind.
 
What I'm offering today is by far the most extreme example you'll ever find of me doing everything I can – literally everything I can – to give you the information I'd want if our roles were reversed.
 
In this case, it's information nobody else wants you to have. That's what makes this offer unique.
 
 As I said, I'll attend a small, private meeting in New York next month…
 
Alan Greenspan will be among the most important and well-known attendees. I'm sure you recognize his name. He is a former chairman of the Federal Reserve. During his tenure, he oversaw a huge boom in Wall Street's average leverage. These changes played a major role in causing the financial crisis of 2008.
 
I'm looking forward to meeting with Alan again, as I previously had a chance to sit down with him a few years ago in New Orleans. Back then, he was gravely concerned about the risk of a major looming inflation and the potential for a catastrophic collapse in the value of the dollar. I expect him to update this view.
 
I'll also speak with Paul Singer. I wouldn't be surprised if you haven't heard of him before…
 
Back in 1977, Paul set up a small, $1.3 million investment fund with money from his friends and family. His idea was similar to that of Carl Icahn's – find companies in trouble, buy their stock, and help improve their results. Since those early days, Paul has had just two down years… and he has produced average annual returns of around 13.5%.
 
For new investors who have only seen the boom times of the last few years, that might not sound like much. But earning those kinds of solid double-digit returns (with almost no down years) will produce a huge fortune over a 40-year span. Thus, Paul is worth several billion dollars personally. His firm – Elliott Management – currently has another $33 billion under management.
 
But even more important, Elliott Management is among the world's best distressed-debt investment firms. Paul keeps a substantial portion of the company's assets in corporate bonds – an area of the market that is far less risky than stocks. As a result, his firm hasn't merely outperformed the benchmark S&P 500 Index by a huge margin, it did so with only one-third of the volatility. Said another way, even with one hand tied behind his back (with a lot of money in cash and bonds), Paul has beaten practically every other investor in the world over the last 40 years.
 
 I'm a firm believer in hedging your investments in the stock market…
 
Anyone who has been with us for any amount of time knows my stance. And it's especially true for retired investors who can't afford another wipeout in the markets.
 
Like me, Paul believes that day of reckoning is close at hand. As he wrote in a letter to investors a few years ago…
 
Nobody can predict how long governments can get away with fake growth, fake money, fake jobs, fake financial stability, fake inflation numbers and fake income growth… When confidence is lost, that loss can be severe, sudden and simultaneous across a number of markets and sectors.
It's rare to meet a major money manager who will speak so plainly about the kinds of issues that concern all of us. That's one of the main reasons I'm going to attend this meeting.
 
 Another reason is Jim Chanos…
 
No other financial analyst in the world has ferreted out bigger or more important problems for investors than Chanos. He made his name by shorting and warning about telecom giant WorldCom. Next came his bet against energy firm Enron, which made him even more renowned.
 
His latest short, troubled drug firm Valeant Pharmaceuticals (VRX), wiped out dozens of major hedge funds, including a slew of famous value investors. I'm sure most people who had the opportunity to sit down with Chanos would ask him for his next big trade. And although I do expect to speak with him about his new ideas, I'll be listening closely for something else…
 
Like Chanos, I've had some success spotting troubled companies by looking for firms that are using new accounting conventions to aggressively inflate their earnings. There's never only one cockroach in the kitchen. As soon as one company has pushed through a new accounting rule, dozens of companies begin to abuse it. (See our research on wireless-telecom operators for a recent example.)
 
So at this meeting, the most important thing I'll be listening for (and asking about) is Chanos' take on any new accounting rules. No other investors will have this information… or know how to use it.
 
*** Another world-class short-seller will be there, too…
 
You probably don't recognize Marc Cohodes' name, but his most recent big success involved shorting major Canadian mortgage bank Home Capital. The stock fell 60% in one day this spring, about six months after Cohodes revealed its fraudulent practices at last year's meeting. Eventually, the stock fell more than 80% (from $32 to about $6).
 
But like Chanos, I'm interested in far more than Marc's latest solid short-sell idea. The housing bubble in Canada is a serious problem that's only beginning to develop. I'm interested to hear what he thinks about it today, and I know nobody has done more high-quality research on the subject.
 
 I don't have time to mention everyone I'm likely to speak with or hear from while I'm at this meeting…
 
When I say that everyone who matters in finance will be there, I'm not exaggerating.
 
Among the luminaries I've spotted: JPMorgan Chase (JPM) CEO Jamie Dimon, Tiger Management co-founder Julian Robertson, Taconic Capital co-founder Frank Brosens, Vanguard founder John Bogle, Pershing Square Capital founder Bill Ackman, Duquesne Capital founder Stanley Druckenmiller, Greenlight Capital co-founder David Einhorn, billionaire real estate investor Sam Zell, and, as I mentioned earlier, Thiel and Volcker.
 
Jim Grant invites his subscribers (and only his subscribers) to this meeting. The entire "in the know" investment crowd comes from around the world to be there for it. I attend for some obvious reasons – to find good investment ideas and themes. But that's not the real reason.
 
 Something else happens at these meetings that's incredibly important…
 
Almost every year, one (or more) of these top finance minds will speak about a big investment he's making where his assumptions are clearly and obviously wrong.
 
Like when Ackman was pushing his turnaround at struggling mall retailer JC Penney (JCP)… Or when he first explained his short of multilevel-marketing firm Herbalife (HLF). Another good example was Einhorn's ill-fated big bet in buying shares of automaker General Motors (GM).
 
I attend Jim's meetings because they're the most exclusive events I'm invited to every year. I also attend because these guys are often very, very wrong. I've learned more from watching their mistakes (and avoiding them) than anything else I get from the conference.
 
How do I know when the speakers are wrong? It's easy. At lunch, during breaks, and at the cocktail parties and dinners that follow, I get to talk about the ideas that were presented with a few hundred of the world's best investors. They punch holes through the presentations that are a mile wide. And I learn a ton.
 
I'd love to share this experience with you. If I could personally take you to the conference next month, I'd sit next to you and explain the jargon and the ideas in the presentations that you're not familiar with. I'd introduce you to the folks at my table at lunch. During the breaks, I'd pull aside friends like Jim Rogers and talk about the ideas we've heard so far. You'd walk away with a level of understanding that you've never, ever had before. It's not what you learned in school. It's how the world really works.
 
 I'd also introduce you to Jim Grant…
 
For many, many years, Jim wouldn't return my calls. He thought our newsletter advertisements were gaudy and "shouted" far too much. Like many intellectuals, he had no interest in fame. He was reluctant to even be mentioned in my newsletter.
 
However, over many years, I kept sharing our best work with him… and kept explaining my sincere interest in helping our subscribers become better investors.
 
After nearly 20 years of demonstrating this sincere goodwill, Jim recently became a subscriber to our newsletters at Stansberry Research. He has been reading… and he has been impressed with some of our ideas.
 
He even invited me to have lunch with him last December at the uber-private Racquet and Tennis Club on Park Avenue (the "R&T," for those of you in the know). Last week, Jim took me and a mutual friend out to dinner in Manhattan. We had a wonderful time together, and I pitched Jim on an unusual idea…
 
Jim, I wish my subscribers could join me at your conference. I know they would need some mentoring to fully understand some of the more advanced presentations… but I'd like to guide them through it.

Jim listened patiently and then objected, as always, to the idea of introducing the broad public to his newsletter or his private meetings. "There's no room for the public," he said. "They won't understand the complex presentations. We're not stock touts," he protested.
 
 I thought about Jim's objections. And I thought I could overcome them…
 
So here's the deal we've made…
 
First, no one is welcome to join me at the conference who isn't a Grant's subscriber. That's non-negotiable. Like me, Jim puts his subscribers first. If you're not a subscriber, he's not interested in allowing you access to the meeting. I agree with that – subscribers have to come first.
 
Second, there really isn't enough room for everyone to attend. The Plaza Hotel, where the meeting is being held, can only accommodate a few hundred people. And the seats are going fast (for $2,150).
 
And obviously, I can't physically sit next to each of my subscribers and show them around in person. I could maybe handle three or four people, but after that I'd look like some poor tour guide at Disney World. We'd disrupt the entire meeting.
 
So we came up with a solution: Jim's staff does a great job of broadcasting the event to subscribers over the Internet. He charges $1,750 for subscribers to see each of the presentations and the question-and-answer sessions that follow.
 
I want to provide you access to the October 10 meeting, in the same way, for free.
 
Furthermore, I'll attend the meeting with several of my analysts. We'll pay the full cost to attend ($2,150 each). While we're sitting in the meeting, we'll take a lot of notes about each presentation. We'll send you these notes, in real time. We'll also document the "scuttlebutt" at the meeting about each of the investment ideas given. We'll tell you what we're hearing.
 
And following the meeting, we'll host our own Q&A webinar with Jim and our staff.
 
We'll make sure that all of your questions are answered. You'll leave the "meeting" with every bit of knowledge that I can glean.
 
 What's the catch?
 
There isn't one.
 
I've known about the greatest secret on Wall Street – Grant's Interest Rate Observer – for more than 20 years. It's an expensive publication ($1,175 per year) that most people will find challenging to read. (I think it's the most beautifully written prose on finance available anywhere… but it's not really for novice investors.)
 
However, you will learn a ton by reading this publication – far more sophisticated things than you will learn anywhere else. I'm so dedicated to getting you access to this information that I'm going to attend Jim's conference with you and make sure you understand the opportunities that are being discussed. There's always at least one idea that's dead wrong, and we'll talk about that, too.
 
And again, to make sure everyone has every question answered, I'll host our own group's Q&A following the meeting to make sure you get everything you need from it. You just need to sign up for an e-mail-only subscription to Jim's newsletter.
 
All of this – access to the meeting (a $1,750 value), plus my staff's notes and comments (in real time), plus the Q&A after the meeting – will be FREE.
 
 The only thing I can't negotiate on your behalf is the cost to subscribe…
 
Like I said, Jim is old-fashioned. He's charging a premium price for his work, which is a premium product. I admit that charging $1,175 per year for a newsletter is expensive.
 
But think of it this way: That's a little more than half as much as people attending the meeting will pay just to attend the meeting itself in person.
 
I've gotten you a red-carpet, VIP-level invitation to the most exclusive investment meeting in the world… for about half the regular price.
 
And remember, you'll get my real-time reporting from the event, including all of the scuttlebutt and my personal take on the presentations and the investment ideas.
 
Then, you'll have access to a private Q&A session with me, my staff, and the legend himself, Jim Grant.
 
Nobody else will have anything like this kind of access – all for about a little more than half of the regular price of the meeting.
 
And you'll get a year's worth of Grant's Interest Rate Observer, too.
 
 This is unlike anything Jim has ever offered before…
 
And in all sincerity, he most likely will never do this again.
 
I've spent at least 10 years trying to build a relationship with Jim to bring you an offer like this… and this kind of advertising is completely foreign to him. He's worried it might harm the cache of his business or erode the special reputation he has on Wall Street.
 
Most of all, Jim genuinely doesn't want to disappoint anyone… or feel pressured to change the way he goes about his work. He's worried that "retail" investors won't understand or appreciate his newsletter, and he'll have to spend valuable time and resources dealing with refunds or cancellations.
 
That's why I've agreed to take all of the risk.
 
To get this deal done, I've agreed to shoulder the full burden of any refunds.
 
Attend the conference. See if I live up to my promise to make sure that you understand everything. Read the current issue of Grant's Interest Rate Observer. Read a few of the back issues. (I'll flag the most important ones for you.) Spend 30 days evaluating whether or not Grant's is everything I believe it to be – the most valuable newsletter about the financial markets published anywhere, by anyone.
 
If it's not everything I've claimed it would be… or if it's not right for you for any reason… simply call my office (not Jim's) and request a full credit toward a Stansberry Research product for every penny you've paid for Grant's.
 
Of course, this offer depends upon your good faith. But I'm willing to bet that when you see everything I've done to help you get access to this information and this experience, you'll treat me fairly in return.
 
 One more thing…
 
I hope you can tell how important this is to me personally. Out of everything I've learned over 20 years in the financial markets, Jim's newsletter has been the single most valuable resource I've ever discovered. I personally read every issue the minute it hits my desk, and I never miss an issue. I've wanted to help introduce you to this incredible resource for more than 10 years, but could never convince Jim to help me make it happen. Now, finally, I have.
 
Please don't miss this no-risk opportunity to attend the world's most exclusive financial meeting and to get a year's worth of the world's most exclusive financial newsletter.
 
I'm willing to personally guarantee your satisfaction. You have nothing to lose. To take me up on this offer, click here.
 
Regards,
 
Porter Stansberry
 
Editor's note: If you've ever taken a risk with us before – whether it was buying discounted corporate bonds, buying gold stocks, or maybe selling options for the first time, you know that we do our best to give you the strategies and the knowledge we'd most want if our roles were reversed. Sometimes, that means asking you to take a chance… and to do something that's a little outside of your comfort zone.
 
That's what we're asking you to do today. We promise you… this will be the greatest gift you'll ever get from us. Click here to get started.

Source: DailyWealth

This 'Stealth' Bull Market Could See Triple-Digit Gains

 
The investing public hasn't been paying attention this year…
 
Most folks have been too enthralled with stories about President Trump and bitcoin to notice what's going on. But gold has entered a "stealth" bull market.
 
The metal is soaring in 2017. And it's now on pace to outperform stocks for the first time since 2011.
 
Our colleague Justin Brill touched on this recently in our Weekend Edition. But the biggest news here is that this could be a major turning point for gold. We could see dramatically higher prices in the coming months, if things go anything like last time.
 
Let me explain…
 
Since bottoming last December, gold has moved consistently higher.
 
Last month, it broke above $1,300 an ounce for the first time in more than a year. That breakout made the headlines… But something interesting is happening "under the hood" that could be even more important to gold going forward…
 
You see, folks have been ignoring gold in part because of the massive rally in U.S. stocks. The U.S. stock market is having another fantastic year… up double digits as of the end of August. It's on pace to finish with its ninth straight winning year… a monumental feat.
 
This is where things get interesting…
 
Stocks may be having another fantastic year… But for the first time in a long time, gold is on pace to outperform stocks. The metal is up around 15% so far this year, versus around 13% for the S&P 500 Index.
 
This could be the first year gold outperforms stocks since 2011. Take a look…
 
 
Gold
S&P 500
2008
5.8%
-37.0%
2009
24.4%
26.5%
2010
29.5%
15.1%
2011
10.1%
2.1%
2012
7.1%
16.0%
2013
-28.0%
32.4%
2014
-1.7%
13.7%
2015
-10.4%
1.4%
2016
8.6%
12.0%
2017
14.7%
11.9%
This is big…
 
As you can see in the table, gold went on a five-year slump of underperformance from 2012 to 2016. It fell 26% during that period.
 
The metal is on pace to break that trend this year. And that alone could be a major sign that huge gains are possible from here.
 
You see, the last time gold broke out of a five-plus year slump versus the stock market was the late 1990s…
 
Gold underperformed stocks for six straight years from 1994 through 1999… And like today, it fell 26% during that slump.
 
Gold's massive bull market didn't start immediately after that… The metal still lost money in 2000.
 
But, in 2001, it started a 12-year streak of positive returns. Take a look…
 
Overall, gold rose more than 500% from 2001 to 2012. (The S&P 500 increased just 36% over the same 12-year stretch.)
 
Today, gold is on the verge of outperforming stocks for the first time in six years. The last time we saw a similar losing streak end was the early 2000s… And that happened before a massive bull market started in gold.
 
We can't know if that's what's happening now… But gold hasn't looked this good in years. The metal has entered a solid uptrend. And this outperformance could be the turning point for big gains going forward.
 
Good investing,
 
Steve
 

Source: DailyWealth

How to Profit From the Rising Global Middle Class

 
It's one of the biggest trends in the world today… the rise of the global middle class.
 
All over the world, populations are earning more money. This is increasing disposable incomes and consumer spending… and improving living conditions in these countries.
 
We've talked a lot about this trend in China. But it's also creating plenty of investment opportunities elsewhere…
 
The gap between developed markets and emerging markets is closing.
 
This growth means millions of people will be joining the middle class over the next 30 years… especially in India and China.
 
I've talked a lot about how China is seeing a massive middle-class boom… Back in 2000, just 4% of China's urban population was considered middle class. By 2022, that figure will be a whopping 76% – or 550 million people. That would make China's middle class big enough to be the third-most populous country in the world.
 
But India's not far behind… According to the World Economic Forum, India's middle class could grow larger than China's by 2027.
 
The Brookings Institute – a non-partisan think tank – suggests that by 2030, two-thirds of the global middle class will be living in Asia.
 
And all of these new middle-class consumers plan on spending more money – a lot more.
 
By 2030, China's average urban per-household disposable income is expected to double, according to consultancy McKinsey & Company. This will push Chinese consumer spending up 55% by 2020. That's an increase of $2.3 trillion – which is like adding a new consumer market 1.3 times larger than the U.K.'s current consumer market.
 
Meanwhile, India's average per-capita urban disposable income is expected to grow from around $1,000 in 2010 to around $3,700 in 2030. That might not sound like much if you live in the West. But it will drive Indian consumption to $4 trillion by 2025… making India the third-largest consumer market in absolute terms in the world – just behind the U.S. and China.
 
By 2030, Asia as a whole will account for nearly 60% of middle-class consumption. (To put that in perspective: In 2010, North America and Europe accounted for a little over 60% of middle-class consumption.)
 
What do people do when they suddenly get more money?
 
They spend more on leisure, health care, and looking good. But one of the biggest things they spend on is travel…
 
There's massive pent-up demand for travel in places like China and India.
 
It's similar to the pent-up demand that I remember seeing firsthand in Russia in the 1990s…
 
For decades, citizens of the former Soviet Union hadn't been allowed to travel, except in special circumstances.
 
After the end of the Soviet Union in 1991, travel restrictions were eased. But it wasn't until the economy stabilized years later, and people began to have more money, that international travel took off. Eventually, the then-emerging Russian middle class started to fly to European destinations on holiday – rather than to resorts in Russia and the former Soviet Union, which had been the extent of vacation options for their parents. Today, you'll hear Russian spoken in tourist spots all over the world.
 
And similarly, almost anywhere in the world – from Auckland, to Paris, to Buenos Aires – millions of new tourists from China and India are changing the global travel industry.
 
China is set to pass the U.S. to become the world's largest aviation market by passengers by 2024. And Chinese air passenger traffic will almost double to 927 million passengers a year by 2025 (compared to the U.S.'s 904 million by 2025). By 2035, the number will hit 1.3 billion.
 
Meanwhile, India is predicted to become the world's third-largest aviation market by 2025. Indian air passenger traffic is expected to increase to 500 million passengers per year over the next 10 to 15 years.
 
In other words, tourism in China and India is booming.
 
But it's only one of the industries set to profit from a rising global middle class.
 
As the world's middle class grows – along with their disposable incomes – consumers will buy things at a rate never seen before. And smart investors know that if they invest properly, this is the type of trend that can make them life-changing amounts of money.
 
Good investing,
 
Kim Iskyan
 
Editor's note: The growth in China and India is creating incredible opportunities right now. Kim's newest publication, International Capitalist, is focused on exactly these kinds of "off the radar" investment ideas, happening in some of the most dynamic and fastest-growing economies on earth – ideas that could earn as much as 500% in a few months. Click here to learn more.

Source: DailyWealth

These Three Fast-Growing Markets Need to Be on Your Radar Today

 
If you want to make big gains in the market, you need to invest in growth.
 
Just consider the gains you could have made during the U.S. consumer boom in the 1950s…
 
From 1950 to 2015, U.S. gross domestic product (GDP) per capita rose 690%, adjusted for inflation.
 
During that time, the S&P 500 soared 11,700% (not including reinvested dividends).
 
Over the course of this boom, a handful of individual stocks made many regular investors a fortune – and turned some into millionaires. For example…
 
•   $1,000 invested in oil titan Standard Oil (Exxon) in 1950 would have become $2.4 million by 2016
   
•   $1,000 invested in tobacco giant Philip Morris (PM) in 1957 would have become $5.5 million by 2007
   
$1,000 invested in soda behemoth Coca-Cola (KO) in 1962 would have become $221,445 by 2016
   
•   $1,000 invested in fast-food icon McDonald's (MCD) in 1965 would have become $4.1 million by 2016
That's the power of investing in growth early on…
 
Right now, we're seeing massive growth in China's middle class.
 
But three other fast-growing markets likely aren't on your radar: Vietnam, Bangladesh, and India.
 
According to a recent report by professional-services firm PricewaterhouseCoopers (PwC), these three markets could be the fastest-growing economies through 2050 – averaging real economic growth of around 5% a year.
 
That might not sound like much. But consider that the U.S., the U.K., and Japan are all expected to grow less than 2% a year during the same period.
 
Thanks to this growth, India is expected to be the second-largest economy in the world by 2050 – eclipsing the U.S. and only finishing behind China (which will inevitably see its growth rate decline from current levels). Vietnam is forecast to move from the 32nd-largest economy to the 20th-largest. And Bangladesh could move from the 31st-largest economy to the 23rd-largest.
 
Economic growth comes from two sources: population growth and efficiency growth. (Broadly speaking, economic growth is a function of the number of workers in an economy and their productivity.)
 
Shifting demographics drive economic growth. While population growth is falling in many major economies like China and Japan (reducing the labor pool and damaging productivity over the long term), it is forecast to rise in many other parts of the world. Countries in Southeast Asia in particular have good reason to be optimistic… And changing demographics in this region will likely boost economic growth over the next several decades.
 
For economies, productivity is often measured as the percent increase in GDP per hour worked. This can come from people working more efficiently – for example, through technological innovation. Higher productivity means a growing economy.
 
GDP in these countries will also grow thanks to their youthful and fast-growing working-age populations, as shown in the chart below. More young workers boost output.
 
The easiest way to invest in each of these countries is through exchange-traded funds ("ETFs").
 
For Bangladesh, there's the db x-trackers MSCI Bangladesh IM Index UCITS Fund (XBAN on the London Stock Exchange). This fund tracks the performance of the MSCI Bangladesh Investable Market Total Return Net Index, which is designed to reflect the performance of a broad range of companies in Bangladesh.
 
For India, one ETF is the iShares MSCI India Fund (INDA). This fund tracks the MSCI India Index, which measures the performance of companies whose market capitalizations represent the top 85% of the Indian equities market.
 
In Vietnam, some ETFs badly underperform their benchmark index (known as tracking error). This is a particular problem there because the government (through state-owned enterprises) owns most of the shares in many publicly traded companies. This makes shares of those companies very illiquid (they don't trade much) and very volatile. And that makes it difficult for fund managers to accurately replicate the performance of the index.
 
If you do want to invest in a Vietnam ETF, one option is the VanEck Vectors Vietnam Fund (VNM). This fund tracks the performance of the MVIS Vietnam Index. Companies in this fund must be incorporated in Vietnam, generate half their income in Vietnam, or have half their assets in Vietnam. Another option in Vietnam is to invest in actively managed funds, like the AFC Vietnam Fund (AFCVIET), an open-ended fund that focuses on small- to medium-sized companies in the country.
 
Good investing,
 
Kim Iskyan
 
Editor's note: Most people will never experience the thrill of being the first to invest in a market. But with Kim's newest publication, International Capitalist, you can get in on high-upside opportunities in exciting markets around the world that could earn high triple-digit returns within months. This service is launching for the first time today… Click here to learn more.

Source: DailyWealth

This 'Obama Retirement Account' Is Dead – Good Riddance

 
Seventy million dollars… down the drain.
 
The government wasted a massive amount of money with President Obama's myRA retirement savings account. In late July, the Treasury Department finally shut it down.
 
Good riddance.
 
The myRA accounts were structured like Roth IRAs, but with far fewer earnings for savers. The savings in a myRA could only earn the Treasury rate of return, which was extremely low. MyRA investors would have earned around 2% per year since the January 2014 launch.
 
In the meantime, the S&P 500 stock market index earned more than 40% with dividends reinvested (for 10.4% per year) – more than four times the myRA return.
 
These accounts simply won't do for folks saving for retirement…
 
Missing out on the returns of stocks and bonds makes it difficult to build up a nest egg, especially with the constant threat of inflation. The promise was that these accounts could help folks with low incomes get started saving – but apparently they weren't interested.
 
All told, about 20,000 folks opened myRA accounts… And participants only contributed $34 million. That's right… the government spent $70 million to get folks to save $34 million.
 
Spending $2 to save $1 never works out in the long run. And another 10,000 folks opened an account and never contributed a dime.
 
If you did have a myRA, you can roll your assets over to a Roth IRA – a far better choice for retirement savers. Smart IRA and 401(k) decisions can mean the difference between living a comfortable retirement filled with abundance… or just barely getting by in your old age.
 
If you don't have an IRA or a Roth IRA, you're leaving money on the table…
 
Opening one is as easy as opening any other brokerage account. You can do it with any broker. I like TD Ameritrade and Fidelity, but I've also heard good things about Interactive Brokers. Of course, we don't have a financial relationship with any broker – we work for you.
 
When registering, you simply select either a traditional IRA or a Roth IRA as the account type…
 
•   A traditional IRA most benefits people who expect to be in a lower tax bracket when they retire than when they are working.
 
•   A Roth IRA works best for people in the opposite situation. If you expect that your taxes will be higher as a retiree than as a working person, a Roth is perfect for you.
We often recommend opening both a traditional and a Roth IRA if you are unsure what your tax situation will be in your retirement. That way, you get the benefits of both methods.
 
Alternatively, a more advanced strategy is to convert a traditional IRA to a Roth. You won't need to pay income taxes on subsequent withdrawals, but you will need to pay a lump-sum tax when you do the conversion. This can get tricky, so we recommend talking with your financial planner about your options.
 
Opening an IRA will save you tens or even hundreds of thousands of dollars over just a decade or two of retirement savings. That's the real benefit…
 
When you put money in a traditional IRA, you get a tax deduction for the initial deposit… And the government defers taxes on the money until you withdraw it, typically sometime between ages 59 and a half and 70 and a half.
 
Deferring taxes saves more than you think…
 
If there are two people, each with $10,000, and one invests in an IRA while the other invests in a trading account and pays taxes, we can see the power of not paying taxes. After 30 years, the tax-deferred account will be worth $996,964. The taxed account will be worth $791,347. That's more than $200,000 extra just by avoiding taxes.
 
If you've been on the fence about opening an IRA, it's time to ask yourself one question: "What am I waiting for?"
 
Here's to our health, wealth, and a great retirement,
 
Dr. David Eifrig
 
Editor's note: President Trump is planning a "One-Day Cash Event" that could deliver cash to your mailbox before Thanksgiving. If you had taken advantage of this the last time the government offered it back in 2012, you could have collected separate, one-time payments of $3,620… $2,844… and $1,383… while barely lifting a finger. Get the details here.

Source: DailyWealth

Why $6.2 Billion Will Flow Into Alibaba – From Just Two Buyers

 
My friend Brendan Ahern at KraneShares sometimes describes himself as an "index nerd."
 
While you and I might read through the football scores over the weekend, Brendan will be reading the latest 100-page changes in index methodologies from the big stock-index providers.
 
It's incredibly dry reading. But Brendan discovers some extraordinary stuff in there…
 
His latest discovery is what's about to happen to what he calls China's "index orphans." And it could mean billions of dollars are about to flow into a handful of Chinese stocks in the coming months.
 
Let me explain…
 
An index orphan is a huge company that isn't part of a benchmark index yet. When it gets adopted by a major index, a ton of money flows into the stock.
 
It's a technical point – but it means real money. Chinese tech giant Alibaba (BABA) is a great example.
 
Alibaba is the sixth-largest company in the world by market value, with a market cap of more than $400 billion. (It's the largest non-U.S. public company in the world.)
 
But as Brendan explained to me recently, Alibaba is missing from some of the major indexes.
 
It trades in the U.S. But it isn't a part of the U.S. benchmark S&P 500 Index because it isn't a U.S. company.
 
So where does it belong?
 
The world's second-largest index provider has the answer…
 
FTSE Russell currently doesn't include U.S.-listed Chinese companies in its China indexes. But that's about to change.
 
According to Brendan, FTSE Russell is about to include companies like Alibaba in its China indexes, its emerging markets indexes, and its global indexes.
 
This is a big deal…
 
As Brendan explained to me, the largest emerging markets exchange-traded fund – the Vanguard FTSE Emerging Markets Fund (VWO) – has about $80 billion in assets. Its largest holding is Tencent (TCEHY), with roughly $3.5 billion worth of Tencent shares (a weighting of almost 4.5%).
 
"Because Alibaba is roughly the same size as Tencent, the Vanguard index fund ought to have to buy roughly the same amount as Tencent," Brendan explained.
 
If he's right, that's $3.5 billion that will have to flow into Alibaba – all because of one buyer.
 
But it's not just the Vanguard FTSE Emerging Markets Fund…
 
The Vanguard Total International Stock Fund (VXUS) is almost FOUR TIMES the size of VWO – with roughly $300 billion in assets. Tencent is one of the top five holdings in this fund. This fund holds about $2.7 billion of Tencent. Therefore, Brendan says this fund will have to buy about $2.7 billion worth of Alibaba.
 
That's $6.2 billion that will have to flow into Alibaba – in just two funds.
 
The story is much bigger here, too…
 
Longtime DailyWealth readers know I've written a lot about MSCI's recent decision to include local Chinese stocks in its benchmark emerging markets index. That will mean hundreds of billions of dollars flowing into China's local stock market.
 
I expect more and more of these index inclusions over the next few years. That means more and more money will flow into China. And that's one big reason why I remain bullish on Chinese stocks over the long term.
 
Make sure you have your money there first.
 
Good investing,
 
Steve
 
P.S. I just released a brief video presentation explaining how you can buy shares of Tencent at a huge discount. If you're interested, you must act quickly. Get the details here.

Source: DailyWealth

Gold Just Did This for the First Time Since 2011… Did You Notice?

The Weekend Edition is pulled from the daily Stansberry Digest. The Digest comes free with a subscription to any of our premium products.
 
 Gold is quietly leading again…
 
In the August 24 Digest, we noted that gold is on pace to beat the S&P 500 for the first time in years…
 
You wouldn't know it from the financial headlines, but gold is quietly having a great year. As you can see below, it's on pace to beat the broad market for the first time in six years…
 
Gold is up 12.4%, compared with just 9.2% in the S&P 500. This hasn't happened since gold's last great bull market ended in 2011.
 But gold isn't just beating stocks this year…
 
The precious metal is also beating bonds. And when we say bonds, we aren't just referring to a particular corner of the bond market… We mean virtually all of them.
 
As you can see in the following chart, gold is beating long-term Treasury bonds, 10-year Treasury notes, investment-grade corporate bonds, high-yield (or "junk") corporate bonds, and even Treasury Inflation-Protected Securities (or "TIPS")…
 
This, too, hasn't happened since gold's last bull market ended six years ago. And it's an undeniably bullish sign.
 
Gold's recent outperformance versus long-term Treasury bonds is particularly noteworthy. After a brutal six years, it suggests gold is finally resuming its traditional "safe haven" role once again.
 
 Another month, another big decline in auto sales…
 
Last week, we learned that U.S. vehicle sales plunged again in August. As economic-data firm Econoday reported…
 
Unit vehicle sales faded noticeably in August, to a 16.1 million annualized rate from 16.7 million in July. This is the lowest rate since February 2014.
 
Sales of domestic-made vehicles fell to 12.7 million from 13.2 million with imports at 3.5 million from 3.6 million. Sales of both cars and light trucks showed declines. These results point to a sharp August reversal from what were unusually strong vehicle sales in the retail sales report for July.

The data suggest that sales of sport utility vehicles ("SUVs") and trucks – a longtime relative bright spot for the industry – are now slowing, too.
 
 What about Hurricane Harvey?
 
Some readers have asked if the storm could save the industry from this trend. After all, if hundreds of thousands of vehicles were destroyed, won't that lead to big demand for new vehicles to replace them?
 
These folks aren't alone. The financial media are widely predicting the same thing. As Bloomberg reported earlier this month…
 
After an initial lull period to take stock of the devastation and reopen dealerships, the boost to sales over the next several months could be significant. Harvey may have done more vehicle damage than any storm in U.S. history, destroying as many as half a million autos, according to Cox Automotive.
 
In addition to seeing replacement demand from the heavily vehicle-dependent city of Houston, manufacturers led by Ford Motor, General Motors, and Fiat Chrysler are expected to sell more pickups, both to support reconstruction efforts and meet demand from a market that already loves trucks. The shares of the three largest U.S. automakers rallied Friday even as the industrywide sales pace missed estimates…
 
To meet replacement demand in Texas, carmakers may have to crank up assembly lines just as they did after Hurricane Sandy hit the New York metro area in 2012, and after Hurricane Katrina battered New Orleans in 2005. Boosting production would be welcome change for a U.S. auto industry that's been laying off workers at passenger-car plants as demand contracts following a record seven-year growth spurt.

We suspect the auto bulls will be disappointed… Remember, we heard similar arguments when hundreds of thousands of vehicles were damaged during Hurricane Sandy in 2012. Yet the reality was a little different.
 
Data show the storm had no lasting impact on auto sales. In fact, as you can see in the following chart – courtesy of Daniel Ruiz of the excellent automotive blog Blinders Off – the post-Sandy spike in sales was nearly indistinguishable from the seasonal spikes in other years…
 
So yes, we could see a short-term boost in sales as vehicles are replaced. But history suggests that's all it will be.
 
 A big win for Tencent…
 
Finally, regular DailyWealth readers know our colleague Steve Sjuggerud believes "New China" leader Tencent Holdings (TCEHY) will one day surpass Apple (AAPL) to become the world's largest and most dominant company.
 
It's already well on its way… The company has grown from the 169th-largest publicly traded company just eight years ago to the eighth-largest today.
 
But a little-publicized announcement late last month shows Tencent is already challenging its bigger rival's dominance. As the Wall Street Journal reported…
 
Apple is now allowing Chinese customers to use popular local mobile-payment system WeChat Pay for purchases in its App Store, underscoring the expanding reach of the service owned by technology titan Tencent.
 
Apple's decision to accept payments from the service came despite recent tensions with Tencent, including over the Chinese company's rollout this year of a "mini-program" system that has been seen as a competitor to the App Store.
 
"We are committed to offering customers across our ecosystem a variety of payment options that are simple and convenient," Apple said in a statement.

Apple has recently referred to Tencent as a "partner," and says it hopes to work with the company "even more" in the future. But the reality is Apple only agreed to this arrangement after its own mobile-payment system – Apple Pay – failed to gain traction in China.
 
In other words, it appears Apple has finally realized – and accepted – what Steve noted following his trip to China more than one year ago. As he wrote in the August 2016 issue of True Wealth (emphasis added)…
 
"Get the WeChat app, Steve," China fund manager Brendan Ahern told me as we hit the ground running in Beijing.
 
"Why?" I asked. "I don't need another messaging app."
 
"Because you can't do business in China without it," he said.

 Steve is still incredibly bullish on Tencent today…
 
Even though his True Wealth subscribers are up 48% since March, and his True Wealth China Opportunities subscribers are up 55% since last September, Steve believes Tencent still has triple-digit upside over the next several years.
 
But if you don't yet own shares of Tencent, there's something you should know.
 
While Steve still rates Tencent a "buy" today, he has found even better and more profitable way to invest in this opportunity…
 
In short, it's a little-known way to own Tencent at a huge discount to what other investors are paying in the market right now. And it's available to virtually any investor… no matter your experience or the size of your portfolio. In fact, it's as simple as buying a stock.
 
This is Steve's favorite investment opportunity in the world today by far. But if you're interested in taking advantage, you must act quickly… Steve says it's only a matter of time before Wall Street catches on and this opportunity disappears forever. Get all the details right here.
 
Regards,
 
Justin Brill
 
Editor's note: Steve recently found a way to buy Tencent at a big discount to 99% of regular investors. But this "anomaly" won't last forever. That's why Steve just released an urgent video presentation where he details everything you need to know. Watch it here.
 

Source: DailyWealth

This Technology Will Upend the Entire Automotive Industry

 
Self-driving technology is about to completely upend the global automotive industry, which shipped 73.9 million vehicles in 2015.
 
That represents a more than $2 trillion market. And that's just the beginning…
 
As you can see in the chart below, the $2 trillion market for vehicles is multiples larger than the consumer market for televisions, personal computers, or smartphones…
 
Now, you might think that self-driving cars won't be here until far off in the future. I wouldn't blame you, either. In a Wall Street Journal article I read recently, a professor from Duke University stated, "We're a good 15 to 20 years out from [self-driving cars]…"
 
I've also heard similar comments at industry conferences that I've attended from executives who work for the "old school" automotive companies.
 
But you may be surprised to hear that the technology is actually available today, in production, and being used by tens of thousands of people.
 
Around where I live, in Silicon Valley, I typically see one or two of these vehicles driving around every single day. Yes, cars without a driver in the front seat. Every day.
 
These vehicles are produced by Alphabet (GOOGL), the parent company of Google. They are used to shuttle employees around, and they need no driver at all – just room for two or three people to sit in the back of the car.
 
Very few people understand how quickly this autonomous-driving technology is advancing. It will come as quite a surprise to most to see a fully autonomous passenger car on the market – in 2017. But it's the reality.
 
The innovation that has taken place in semiconductors, specifically graphics processing units (or "GPUs"), is responsible for this truly exponential development. GPUs can use radar, cameras, and sensors to detect objects and safely navigate around them – something that was not possible before.
 
Last year was also a record year for funding early stage technology companies primarily focused on self-driving vehicles and related systems. In 2016, 87 deals took place at a value of more than $1 billion.
 
On top of that, the U.S. House of Representatives just passed the SELF DRIVE Act on Wednesday. The legislation supports the deployment of driverless vehicles and, at the same time, blocks states from preventing these deployments. Given the pace of the progress, it is entirely possible that the bill could become law before the end of the year.
 
This is such an exciting time. Every month that passes brings major improvements in autonomous technology, more data, and more proof that the technology is already several times safer than human drivers.
 
And the impact that autonomous technology will have on our society is remarkable. Once self-driving vehicles become the new norm, it is projected that…
 
•   1.2 million lives could be saved every year due to a massive reduction in traffic accidents caused by driver error
    
•   Car ownership is set to fall dramatically, potentially to a level where there is only one car per every 12 people
    
•   Auto insurance could decrease by at least 60%
    
•   Lower fuel consumption could result in a 90% decrease in emissions
 
In total, it is estimated that the adoption of autonomous cars will save $1.3 trillion. The savings will be driven by productivity gains, fuel savings, and accident avoidance.
 
With such a strong tailwind, it is likely that children born during the next 10 years will never need to learn to drive a car.
 
We are now at the very beginning of this explosive trend, but the potential is enormous… The self-driving vehicle technology market is forecast at $87 billion by 2030.
 
Fully self-driving cars are on the verge of mass adoption. Not 10 years from now – right now. In 2017.
 
So get ready… The future is here.
 
Regards,
 
Jeff Brown
 
Editor's note: This is just a short rundown of the self-driving car industry. Jeff recently put together a presentation to delve into all the incredible developments in this space. He has found this life-changing trend's three most profitable investment opportunities… And none of them are Tesla or Alphabet. Click here to learn more.

Source: DailyWealth