America’s “Gold Standard” Is Making A Comeback

If you’re a fan of gold… and wish America brought back the “gold standard”… this will be the most exciting piece of news you’ve read in years.

Several high-ranking officials and U.S. businessmen just met in private (over three days) to discuss a new “gold standard”…

Backed by 21st Century technology.

What’s even more incredible:

There’s already a prototype in place… …and it’s been tested in 142 U.S. cities ! (Not by governments… yet… but by private enterprise.)

The Governor of Texas has already switched part of his savings to this new “prototype” currency. And California’s Lieutenant Governor has placed up to $116,800 into it.

This is going to be revolutionary. and for those who position themselves correctly–before the rest of America’s cities make the switch–I blieve several new fortunes will be made.


Nick Rokke
Analyst, The Palm Beach Daily

Where to Find Wall Street’s Hidden Payments

Over the past four years, military contractor TransDigm (TDG) paid three massive dividends of 8.7%, 8.5%, and 12.7%.

That’s an average of 10%—5.5 times greater than the average yield of the S&P 500.

But you probably wouldn’t know that if you researched the company online…

These yields don’t show up on Yahoo! Finance. They don’t even appear on the $25,000-plus-per-year Bloomberg Terminal service I, and many professional traders, use.

In fact, they show TDG paying a 0% yield.

Few investors realize this, but there are a lot of hidden gems like TDG out there.

The market hides them by saying they pay no (or small) dividends.

Yet they’re still some of the best dividend-paying stocks out there.

At the Daily, we know our readers like income-generating investments, especially if you’re retired or near retirement. That extra income can cover bills and unexpected expenses, or even pay for a vacation.

Today, I’ll show you how to find these hidden gems. But first…

Dividends Are Skimpy

It’s hard to generate income from the markets today… especially when traditional income investments like the 10-year U.S. Treasury only yield a paltry 2.8%.

Stocks yields are near historical lows as well. As you can tell from the chart below, stock yields were only lower from 1996–2004.

So the hunt for income is real…

When hedge funds or wealth managers look for dividend-paying stocks to add to their portfolios, they’ll often do a stock screen.

Of course, the first criterion is that the stock pays a dividend. After that, they might filter out unprofitable companies or look for companies increasing their dividends.

Then, they’ll take that list and look for the stocks they think will perform the best.

However, no matter how sophisticated the screen, a company like TransDigm won’t appear on their lists.

That’s because TransDigm’s yield is hidden. You see, it pays a “special dividend.” (It paid out these special cash dividends in June 2014, October 2016, and September 2017.)

Special dividends are non-recurring distributions (usually in the form of cash) that companies make to shareholders. Companies pay them for several reasons.

They can occur when a company has exceptionally strong earnings results… when a company wants to make changes to its financial structure… or when a company wants to spin off a subsidiary company to its shareholders.

In other cases, companies may want to avoid the financial pressure of paying regular dividends. This is especially true of companies with cyclical or uneven cashflows.

As I mentioned above, special dividend payers usually don’t show up on the screens used by most stock pickers. If they do, they show smaller yields than they actually have.

So if Wall Street can’t find these hidden gems, most Main Street investors won’t, either.

That’s why you turn to the Daily.

Extra Dividends

Special dividends are generally paid in the form of cash payouts. And they’re often larger than regular dividends.

Even better, some companies pay special dividends on top of their regular dividends. So their yields are much higher than they’d appear on a stock screen.

One example is the CME Group (CME)—the parent company of the Chicago Mercantile Exchange.

CME has a stated dividend of 1.6%. But last year, it paid a special dividend of $3.50 per share, giving it a combined yield of 3.7%.

Below is a list of the 2018 yields for the five biggest companies that pay out special dividends.

If you want to search for more special dividend-paying companies, MarketBeat keeps a list of recent special dividend announcements. You can view the list right here.

Always remember to do your homework before buying any company.

Good luck on your hunt for yield.


Nick Rokke
Analyst, The Palm Beach Daily

The Largest Infrastructure Buildout in History Is Underway

If you take Route 309 North from Allentown, Pennsylvania for an hour and 15 minutes, you’ll eventually run into Mahanoy City.

It’s a small town—so small that you could stroll right down the 20 blocks or so that compose Centre Street in about 15 minutes if you took your time.

As such, it seems like an unusual spot to be the birthplace of an $81 billion industry.

Yet, in fact, it was.

In 1948, a local entrepreneur set out to solve an important problem. Broadcast television signal reception was poor for the folks in Mahanoy City due to the surrounding mountains. The solution was to take those television signals from the top of a mountain and then distribute them over a new kind of network.

That network became known as community antenna television, otherwise known as cable TV or CATV. And no one could have guessed how large the industry would become.

Over the course of the next 60 years, companies like TCI, Cablevision, Continental, Time Warner, AT&T, and many others spent hundreds of billions of dollars racing to connect every home in the United States to their CATV networks in hopes of selling them multi-channel television services and, eventually, internet access.

It was a massive undertaking, and one in which hundreds of companies profited from greatly over the years.

And just as important, it was one of the first projects of this scale that wasn’t about roads, bridges, or canals. It opened the doors to a whole new way of thinking about infrastructure.

The New Infrastructure Boom

Right now, the world is embarking on another, similar project. Like cable TV, it’s a massive infrastructure buildout, perhaps the biggest in history: the construction of fifth-generation (5G) wireless networks.

A wireless network buildout is akin to the cable TV buildout, just without the cables. Wireless infrastructure enables our phones and other electronics to communicate with each other via the internet. This is done through the construction of cell towers.

If you have a modern smartphone in the U.S.—or the developed world, for that matter—it’s likely that you’re using a fourth-generation (4G) wireless network. About once every 10 years, the world goes through a major wireless infrastructure buildout.

In the 1990s, it was second-generation (2G) technology. In the 2000s, it was third-generation (3G) technology. And in the current decade, it’s been fourth-generation (4G) wireless technology.

But as we can see in the chart below, the number of 4G subscribers will peak this year and is at the earliest stages of decline. And 5G is the reason why… It’s coming a couple of years earlier than previous generations.

You see, the world now has an insatiable demand for more connectivity. More internet browsing, more messages, more video chats, more streaming video… all on wireless-connected smartphones and tablets. This demand has accelerated the migration from 4G to 5G.

What’s more, 4G wireless networks are congested… resulting in poor speeds, dropped calls, and frustrated customers. As a result, subscriber growth on 5G networks will be on an exponential growth trajectory over the next five years; it’s scheduled to overtake 4G subscribers by 2024.

And for good reason… 5G technology promises connection speeds up to 1,000 times faster than what we have today. For perspective, with 5G, it’ll take mere seconds to download a feature-length movie—something that would take close to an hour today.

To make this 5G network construction happen as fast as possible, wireless carriers are going to have to rely on infrastructure companies to support this undertaking. Naturally, this will translate into tremendous investment in those companies… and windfall profits for early investors.

A Revolutionary Step

Of course, the bigger question of 5G is whether anyone will use it. After all, new technologies live and die by their mainstream adoption.

With 5G, this is a no-brainer. Far beyond simply making our connection speeds faster, the technology will lay the groundwork for entirely new innovations…

  • Self-driving cars will be connected in real time over wireless networks.
  • Companies will be piloting trucks for logistics remotely, just as drones can be flown from halfway around the world over satellite networks.
  • We’ll be able to surf the internet and make phone calls while riding on a high-speed train up to 310 miles per hour.
  • Consumers will be able to “sit in” on meetings by projecting themselves using holographic images in real time with no video or audio delay.
  • And there will effectively be no latency (delay) over 5G networks. Latency will drop by 99% from more than 100 milliseconds down to a mere millisecond. A latency reduction like this would enable a doctor to operate on a patient with robotic surgery… over a wireless network.
  • Clearly, 5G wireless networking technology is not just evolutionary, it’s revolutionary. And it’s all happening right now… this year—not two or three years from now.

    Verizon has already begun investment in building out 5G networks in five cities around the U.S., the first being in Sacramento, California. These cities will begin offering services in the “second half of 2018.”

    AT&T announced that it would begin offering 5G to customers in a dozen cities by the end of the year, with notable deployments in Dallas, Atlanta, and Waco, Texas.

    T-Mobile came out trying to upstage the other two with plans to offer 5G in 30 cities before the end of the year, including New York and Los Angeles.

    This is what most investors are missing. They see 5G as something that won’t really hit the mainstream for another few years… and they’re right.

    But when it comes to infrastructure buildouts like this, the biggest money is made in the early innings. Placing stakes in the companies working on 5G now will pay out windfall returns in a short time.

    For a simple way to profit off this trend, the big cell tower companies are the first place you should look. American Tower (AMT) is an easy way to gain exposure… and it stands to benefit as 5G infrastructure continues to be built.

    This is one of the most exciting trends on my radar today. And I’d be doing you a disservice if I didn’t put it on yours, as well..


    Jeff Brown
    Editor, The Near Future Report

    The Threat to the Market No One Is Talking About

    Companies in the S&P 500 reported a record net profit margin of 11.6% in the first quarter of 2018.

    It’s the highest net profit margin for the S&P 500 since financial data firm FactSet began tracking it in the third quarter of 2008.

    But clouds may be on the horizon.

    That’s because a new concern is cropping up in their earnings calls: rising costs.

    There’s no shortage of examples from last quarter…

  • “We expect steel and other commodity costs to be a headwind all year.” That came from Caterpillar, a farming and construction equipment manufacturer.
  • Soda and snack maker PepsiCo is feeling rising costs, too. “Our expectation is that we will continue to see some levels of gross margin compression from inflationary input costs.”
  • Same with Tyson Foods, the owner of popular brands such as Hillshire Farm and Jimmy Dean. It said, “Increased freight costs affected all four segments,” and “We are seeing increased labor costs.”
  • We’re seeing comments like this from various companies.

    Hershey, UPS, and Procter & Gamble, to name a few, made similar comments.

    And it points to one thing: rising inflation.

    In fact, as I’ll show you in a moment, input costs are rising at their fastest level in six years.

    Longtime readers know we’ve been warning about inflation since the beginning of the year.

    That’s why we’ve recommended that readers should look for safe stock market income opportunities. But first, let me show you the devastating impact inflation can have on your finances.

    Inflation Destroys Your Buying Power

    It’s been a long time since the U.S. has seen any substantial inflation. The last inflationary period was between 1965 and 1982.

    In the years leading up to 1965, inflation remained well below 2%. But by 1969, inflation was over 5%. By 1974, it was over 10%. And by 1980, it reached close to 15%.

    Inflation that high can wreak havoc on your finances. It’s like a hidden tax on your buying power.

    In other words, as time goes by, you can buy less and less with the same amount of money.

    Let’s see how that worked out over the last inflationary period.

    For example, let’s say you had $100,000 in savings at the beginning of 1965. That $100,000 would buy you $100,000 worth of goods at that time.

    But how much is it going to buy you in the future?

  • By 1969, that same $100,000 worth of goods would cost you $116,000.
  • By 1974, it would cost you $156,000.
  • By 1981, it would cost you $288,000.
  • It’s clear that inflation destroys your buying power over time.

    And the signs today are pointing to rising inflation ahead.

    Wholesale Prices See Their Biggest Rise in Six Years

    The comments from the companies mentioned above all highlight rising input costs. These are the costs that go into the production of goods and services for consumers.

    They’re measured by the Producer Price Index (PPI), which is released by the Bureau of Labor Statistics every month.

    Many are familiar with the CPI, or Consumer Price Index. The CPI measures the prices of consumer goods purchased by households.

    The PPI is a bit different. It measures prices at the wholesale, or producer, level.

    In other words, it’s a measurement of the cost of raw materials to companies that produce goods. And the PPI just had its biggest increase in over six years.

    Here’s why that’s significant. Those higher input costs will result in higher product costs. And that means you’ll be paying more in the future.

    It’s part of what we call Income Extermination. That’s the combination of rising interest rates and rising inflation that destroys the wealth of retirees and savers.

    Two Steps to Beat Inflation

    First, you want to identify and remove red flags from your portfolio. Red flags are investments that are vulnerable to Income Extermination.

    At the top of this list are long-term and high-yield bonds.

    The last time we saw this lethal combination of rising rates and inflation was in 1981. The bond market fell 19% that year.

    The next step is to identify the right investments.

    You want investments in which real capital appreciation will exceed inflation. That way, you maintain your purchasing power.

    At The Palm Beach Letter, we like to buy high-yielding closed-end funds (CEFs) that are trading at a discount to their assets.

    That’s our favorite strategy to beat Income Extermination.

    CEFs are an investment structure with shares traded on the open market. They’re similar to exchange-traded funds (ETFs)… But there’s one main difference: CEFs do not issue shares daily.

    That means CEFs can trade on the market at prices different from the value of their assets, called the net asset value (NAV).

    When a CEF trades for less than its NAV, you can buy it at a discount. This means you could buy, for example, $1 worth of assets for 90 cents.

    Since adding CEFs to the PBL portfolio in 2016, we’ve averaged realized gains of 18.4%, which beats the S&P 500 by 16.5% during that span. And the yields collected over that time were an average of 300% greater (or more) than the S&P 500’s.

    If you’re a PBL subscriber, can view our buyable CEF recommendations right here…

    And if you’re not a PBL subscriber, we recently showed you our three-step strategy to find your own quality CEFs right here…


    Greg Wilson
    Analyst, The Palm Beach Letter

    Why the Bull Market Isn’t Done Breaking Records Yet

    We’re in the longest bull market in history… at least according to some people.

    The Wall Street Journal says Wednesday marked a record 3,453 days since the S&P 500 hit its low of 666 on March 9, 2009. That’s nine years, five months, and 13 days.

    But, Forbes says the market hasn’t reached a milestone—yet.

    The magazine says the longest bull run belongs to the 12 1/2-year period running from October 1987 through March 2000. The current bull market would need to run through 2021 to break that record.

    Part of the problem is that defining a bull market is difficult.

    Market analysts generally define a bull market as a period when stocks keep going up without falling more than 20%.

    But that number is arbitrary…

    For example, on October 11, 1990, the market fell by 19.9%, which technically isn’t the end of a bull market. Some analysts round up to 20% and say the rally ended there. (Seriously, that’s the debate some journalists are having right now.)

    We won’t get into semantics… What’s important is that the bull market is nine years old and counting.

    Of course, people who see the glass half empty think we’re “due” for a big pullback… or even a bear market.

    But just because we’ve been in a record-long (depending on whom you ask) bull market doesn’t mean it will end soon.

    In fact, we could see even higher gains from here. That means there’s more time for you to profit…

    These Three Signals Are Still Flashing Green

    Regular readers know we’re bullish at the Daily.

    It’s not because we get caught up in the headlines… We’re bullish because the data backs us up. Right now, three of our favorite indicators are flashing buys.

    The first is Dow Theory. We told you about this indicator back in July 2017.

    Dow Theory compares the action of the Dow Jones Industrial Average (big manufacturing companies) with the less popular Dow Jones Transportation Average (big companies that transport goods).

    When both indexes are in uptrends, Dow Theory says you should buy.

    Today, both indexes are in confirmed uptrends. In fact, the transportation index closed at a new high on Tuesday.

    Another signal we look at is credit growth. As long as people are borrowing, the economy is growing.

    And credit is still growing. According to the Federal Reserve Bank of New York, credit grew to a new all-time high in 2018.

    The third indicator we look at is corporate profits.

    As I wrote in August 2017, the market usually rises in tandem with the profits of S&P 500 companies.

    And with President Trump’s tax cuts coming into full effect this year, we expect profits to surge 33%. The market typically doesn’t go through a major decline when profits are surging.

    The fundamentals are pointing to a continued bull market. That means you should continue to own stocks.

    When Will the Ride Be Over?

    You’ll hear many pundits trying to call a top of the market. Ignore every one of them. Instead, watch for the signs I mentioned above…

    If you’re wondering when to sell, there’s no hard and fast rule. But one thing I like to watch is price action. It’s often a great indicator of market psychology.

    Two simple ways to follow price action is to watch market trend lines (see here) and 170-week moving averages (see here).

    As long as the S&P 500 stays above these lines, we’re in a bull market… and you should continue to hold onto your stocks.


    Nick Rokke
    Analyst, The Palm Beach Daily

    What This “Help Wanted” Sign Means for Investors

    WISCONSIN RAPIDS – I’m back on the road…

    Right now, I’m in the sleepy central Wisconsin town of Wisconsin Rapids. And as I drove down the main drag, my jaw dropped when I saw this sign…

    The job market here is apparently so hot that McDonald’s is offering a $250 bonus to new workers. And it’s not alone.

    In nearby Stevens Point, the UPS service center can’t find enough part-time package handlers. It’s a 20-hour-per-week position… UPS is also offering a $100 weekly bonus—averaging out to a $5 per hour bonus.

    If that’s not enough, most new hires are eligible for tuition reimbursement… up to $5,250 a year. That’s almost enough to be a full-time student at the nearby college.

    This isn’t just a Wisconsin thing…

    Convenience store chain Buc-ee’s is advertising above-market wages, benefits, and vacation plans.

    National Construction Rentals is offering a $1,500 bonus to new fence installers—$500 paid on the 18th day of employment.

    Registered nurses in the Tampa Bay area can get a $2,400 sign-on bonus if they work certain shifts.

    This shouldn’t come as a surprise to regular readers…

    During my Rust Belt Tour last year, I showed you the economy was getting better in most parts of the country…

    I wanted to see how well this trend was holding up. So I set out across the country again this summer to see how things are going on Main Street—not Wall Street.

    And the signs I’m seeing aren’t just great for entry-level workers… They’re good news for investors, too.

    People Are Getting Paid More

    According to the Bureau of Labor Statistics (BLS), average worker wages are growing faster now than any time in the past eight years.

    More people are working, too.

    According to the BLS, the U.S. has 2.5 million more full-time workers than it did last year—a 1.5% increase.

    More workers are earning more money and pumping it into the economy. And we’re seeing new evidence of this spending…

    On August 13, the National Retail Federation raised its expectations for sales by 4.5% from last year.

    Here’s what CEO Matthew Shay had to say:

    Higher wages, gains in disposable income, a strong job market and record-high household net worth have all set the stage for very robust growth in the nation’s consumer-driven economy.

    That’s what I’ve been telling you since my first Rust Belt Tour last year: The U.S. consumer is strong. And despite what you hear, the economy is very strong, too.

    But it’s not just stores that are getting a boost…

    According to the U.S. Department of Commerce, second-quarter restaurant sales surged 25% higher than during the same time last year. That’s the biggest gain in the 26 years the department has tracked restaurant sales.

    These numbers are starting to come through in earnings reports as well…

    Most notable is Walmart. Last week, the giant retailer reported 4.5% sales growth for the past quarter. Walmart has $500 billion in annual sales… so that’s a huge gain (and double what experts predicted).

    Walmart’s stock rose 10% at the open of that day—which was its biggest one-day move since 2008.

    This bodes well for all of retail. And there’s a simple way to play this trend.

    How to Play the Booming Economy

    In September 2017, I told readers to ignore the gloom-and-doom about a retail apocalypse… In fact, I wrote that retail was headed for a turnaround.

    I brought the SPDR S&P Retail ETF (XRT) to readers’ attention. Since then, it’s up over 25%.

    Institutions are starting to catch on, too…

    Palm Beach Trader editor Jason Bodner is our Wall Street insider. Each morning, his proprietary system pulls more than 120 data points on over 4,000 U.S. stocks to find which companies big institutions are buying.

    His system started signaling big buying in retail in June 2018… and he predicted the sector would gain momentum (see our June 22 “Chart Watch”).

    Jason was right… A recent Reuters article reported that multibillion-dollar hedge funds (such as Third Point Management and Greenlight Capital) are pouring into retail stocks.

    The “smart money” is following us into the retail trade and pushing the sector up. They see what we see—a strong consumer and economy.

    If you own XRT, continue to hold.

    If you don’t own XRT, don’t worry… I’ll be touring the country looking for more money-making opportunities you won’t find in the mainstream press.

    Stay tuned…


    Nick Rokke
    Analyst, The Palm Beach Daily

    Not Even the Bond King Can Escape Income Exodus

    Income Exodus is here… And it’s taking no prisoners.

    Bill Gross—the “Bond King”—has lost more than a half-billion dollars so far this year in his bond fund. That makes 2018 one of the worst years of his storied investment career.

    Gross earned the Bond King nickname because of his impressive performance. His PIMCO Total Return Fund earned almost 8% annually over the 27 years he managed it.

    By the time he left in 2014, the fund had $293 billion under management… making it the world’s largest bond fund at the time.

    He’s so well respected that the Fixed Income Analysts Society inducted him into its Hall of Fame in 1996. And he received the Bond Market Association’s Distinguished Service Award in 2000.

    But not even he can make money as Income Exodus approaches. That’s when rising interest rates crush the bond market.

    If the world’s best bond investor is struggling in this environment, that means it’s time for ordinary investors to find “safer” alternatives.

    The One Sure Thing in Investing

    In the markets, there are very few sure things. But one thing you can count on is that when interest rates rise, bond prices fall.

    Right now, interest rates are on the rise… Not even the Bond King can make money in this environment.

    Investors are fleeing his Janus Henderson Global Unconstrained Bond Fund, which saw more than $580 million in outflows this year. That’s a 7% drop… one of the worst of his career.

    These outflows will push bond yields higher… which means bond prices will continue to fall.

    That’s why we’ve been telling you to avoid bonds. We don’t think the situation is going to get any better… In fact, it could get a lot worse.

    The last time we had a rising interest rate environment was in the 1970s. During that decade, bond investors lost 60% of their wealth.

    Palm Beach Letter editor Teeka Tiwari has been warning about Income Exodus for years. Here’s what he told me in a March 2018 interview:

    I know many readers are retirees or at least nearing retirement… and are dying for yield. But don’t buy into bonds yet. Things are probably going to get worse.

    And we’re not the only ones sounding the alarm…

    Jamie Dimon is CEO of JPMorgan Chase. Last week, he said he expected the 10-year yield to nearly double—going from 2.8% to 5%.

    If that happens, long-term bondholders will see double-digit losses in their supposedly “safe” bond portfolios.

    Where to Find Income During Income Exodus

    Our advice remains steady…

    If you’re looking for safe income plays, you can consider buying short-term government bonds. These are bonds that mature in two years or less.

    The par value on these bonds won’t decline as much as interest rates rise. That’s because the closer the bond is to maturing, the less its price fluctuates due to changing rates.

    Right now, you can get 2.6% on 2-year Treasuries. It’s not a lot, but it beats the 0.1% most large banks are offering on their savings accounts.

    If you want to generate bigger returns, you can consider buying closed-end funds (CEFs).

    It’s a strategy that Teeka has used over the last three years to sidestep Income Exodus.

    Since adding CEFs to the PBL portfolio in 2016, Teeka has averaged realized gains of 18.4%, which beats the S&P 500 by 16.5% during that span. And the yields collected over that time were an average of 300% greater (or more) than the S&P 500’s.


    Nick Rokke
    Analyst, The Palm Beach Daily

    Why Turks Are Buying Bitcoin

    For foreign tourists in Turkey, it’s a shopping bonanza.

    Upscale shops like Louis Vuitton and Chanel are seeing long lines outside their doors.

    “We’re buying clothes, we’re buying makeup, we’re buying brand names,” said Fatima Ali from Kuwait. “The prices are very cheap.”

    The long lines stem from Turkey’s currency crisis.

    Turkey’s currency, the lira, has lost 45% of its value against the U.S. dollar so far this year.

    Economists cite several causes for the currency’s slide: Turkey’s large current account deficit… corporate borrowings in foreign currencies… and sanctions by the U.S.

    For foreign tourists, this is great. Their money goes further in Turkey. But for the locals, it’s an alarming trend.

    Take Melike Turkes, a Turkish mother of three. She’s worried about feeding her family.

    Said Turkes, “Even basic things like butter and vegetables have increased a lot over the last few months. It’s very worrying when you see the prices go up week by week.”

    To defend themselves, Turks are turning to a currency that’s not controlled by governments: bitcoin.

    I’ll tell you why they’re using bitcoin in a moment. But first, you need to understand that the Turkish lira crisis is not a one-off story.

    We’ve Seen This Before

    Take Cyprus, for example.

    From 2012–2013, Cypriot banks got into trouble lending money to Greece. When the Greek economy performed poorly, the banks went broke.

    In response, Cyprus asked the European Union for a bailout. But it ran into strong opposition.

    Instead, the Cypriot government came up with a bailout plan that raided people’s personal savings accounts. The initial plan was to seize 9.9% of deposits over 100,000 euros ($113,934) and 6.75% of deposits under 100,000 euros (the insured amount).

    That led to a run on bank ATMs and bank holidays. And many Cypriots flocked to the streets to protest their government.

    The plan ultimately affected Cyprus’ two largest banks.

    The Bank of Cyprus seized 47.5% of assets over 100,000 euros in return for equity. And Laiki Bank customers lost all deposits over 100,000 euros.

    Now, Cypriots don’t trust their government like they did in the past.

    Another example is Venezuela.

    The country is seeing record hyperinflation. So far in 2018, the annual inflation rate in the country is over 25,000%.

    To put it into perspective, consider a cup of coffee in Venezuela. Two years ago, it cost 450 bolívars (less than a penny). Today, it costs 1 million bolívars ($4).

    The problem won’t get better anytime soon. The International Monetary Fund (IMF) estimates Venezuelan inflation could top 1 million percent before the year is out.

    If that’s the case, a cup of coffee in Venezuela could cost 4.5 million bolívars.

    It’s having a devastating effect on the country and its citizens. Most people are unable to afford basics like food and medicine. It’s a struggle to survive.

    Venezuelans lost faith in their government long ago.

    So what have Cypriots and Venezuelans done in response?

    They’ve both turned to a currency not controlled by a government: bitcoin.

    Back in 2013, bitcoin was still more of a financial curiosity. But that didn’t keep Cypriots affected by the crises from buying it.

    Bitcoin surged from $40 to over $180 in month.

    Venezuelans flocked—and continue to flock—to bitcoin as well. To them, bitcoin is a matter of survival.

    Many use the country’s free electricity to mine bitcoin. And many others take whatever bolívars they make and convert them to bitcoin.

    The LocalBitcoins volume in Venezuela continues to set records to this day.

    With that in mind, can you guess what Turkish citizens are buying now?

    Turkey Turns to Bitcoin

    It’s no surprise that Turks are turning to bitcoin as their currency crisis unfolds.

    Bitcoin trading at BtcTurk, a Turkish crypto exchange, is up 350% in recent days… And we expect the trend to continue.

    As one bitcoin user in Istanbul stated, “Cryptocurrency makes me feel much safer.”

    No government or bank owns bitcoin. And it has a fixed supply.

    Politicians and economists can’t inflate it away. And they can’t steal it from you.

    You never know when you’ll be part of a financial crisis. That’s why you should consider adding bitcoin to your portfolio today.

    Bitcoin and other cryptocurrencies can be volatile. So we always recommend taking a small position size.


    Greg Wilson
    Analyst, Palm Beach Confidential

    Federal Hemp Bill Will Make This Niche Industry Surge

    “We’ve seen her flatline in the hospital and say goodbye… I don’t think she’s going to survive this.”

    These are the words of Charlotte Figi’s father, recalling what it was like to see his five-year-old daughter’s heart stop beating.

    At the time, Charlotte was having over 40 seizures a day. The seizures reduced her to a vegetative state and pushed her near death.

    A few years earlier, Charlotte had been diagnosed with Dravet syndrome. It’s a rare form of severe epilepsy with no known cure. It lasts a lifetime and often kills young children.

    Charlotte’s parents had tried everything to help their daughter. They made lifestyle changes. They gave her powerful prescription drugs. But traditional drugs only made the situation worse.

    At one point, Charlotte could no longer walk or talk. Eventually, she couldn’t even eat. Doctors said the only option was to put her in a medically induced coma.

    Desperate, her father researched alternative treatments. Eventually, he discovered a video about another family with a young child suffering from seizures. Medical marijuana was the one thing that worked for them.

    Initially, Charlotte’s parents thought medical marijuana was impractical because of its complicated legal situation. Nevertheless, they decided to pursue it. They’d already exhausted every other option.

    The first step was relocating to Colorado, one of the first states to legalize medical marijuana. Then they had to convince two doctors to prescribe it. (The state required two doctors to sign off on marijuana prescriptions for children.)

    Both doctors were reluctant. But they knew Charlotte was on the brink of death. So they gave it a shot.

    Prescription in hand, Charlotte’s parents still needed to find a special strain of cannabis—one with a low amount of THC (the compound that gets people high), but a high amount of CBD (cannabidiol).

    CBD has medicinal properties, but no intoxicating effects. Doctors think it can help stabilize chemical and electrical activity in the brain, producing an anticonvulsant effect.

    Eventually, Charlotte’s parents found growers who could help. After years of crossbreeding a strain of marijuana with industrial hemp, they had developed a strain with less THC and more CBD than typical varieties of marijuana.

    The next step was extracting the oil from the dried cannabis flowers. Then they could give the cannabis oil to Charlotte.

    The results were shocking. On the first day of treatment, she didn’t have any seizures. None. Normally, she would have had over 40.

    Using the cannabis oil, Charlotte went a week without seizures. Without it, she normally would have had over 300.

    It didn’t take long for Charlotte to start eating again… then feeding herself… then talking and walking. Within a year of starting CBD treatments, Charlotte learned how to ride a bike.

    Charlotte has continued to take CBD treatments daily. Now, six years later, she lives a mostly normal life.

    The marijuana growers that grew the high-CBD, low-THC strain of cannabis for Charlotte named it “Charlotte’s Web.”

    Charlotte’s story has helped pave the way for countless other children and adults suffering from seizures. It was featured on CNN.

    It’s also helped galvanize national support for cannabis legalization.

    Promising New CBD Research

    So far, 30 states have legalized medical marijuana. Nine have also legalized recreational use.

    But marijuana is still illegal at the federal level. For the time being, the U.S. federal government classifies it as a Schedule I drug. Heroin and LSD are in the same category.

    Marijuana’s Schedule I status means the feds believe it has “no accepted medical use.” That’s about as absurd as saying the Earth is flat. But this has been their official view for decades.

    This is why it’s been so difficult to study marijuana’s medicinal properties, despite its obvious health benefits. But that’s finally starting to change.

    According to three clinical studies—two published in The New England Journal of Medicine and one in The Lancet—CBD was found to significantly reduce seizures.

    And in June, the Food and Drug Administration (FDA) finally approved its first prescription CBD medicine to treat epilepsy… nearly five years after CNN aired Charlotte’s story.

    There’s good reason to think CBD has a wider range of medicinal benefits. It’s already been used to help treat conditions like Parkinson’s disease, glaucoma, migraines, cancer, and arthritis, among others.

    CBD is also thought to have therapeutic benefits. It can help with immunosuppression, neuroprotection, and appetite and bone-growth stimulation.

    Because of its many applications, the market for CBD consumer products and pharmaceuticals is enormous.

    Market research suggests that the U.S. CBD market is currently worth around $140 million.

    But it could easily skyrocket to over $1 billion within the next three years.

    As impressive as that sounds, I think it’s probably conservative. Sales of Epidiolex, the CBD drug that the FDA just approved, are expected to reach $1.3 billion over a similar time frame. And that’s just one drug.

    Trump Likely to Sign Hemp Bill This Summer

    In the past couple of months, federal cannabis prohibition has started to erode at an unprecedented pace.

    Shortly after the FDA approved Epidiolex, the Drug Enforcement Administration (DEA) confirmed that some sort of rescheduling of cannabis could be imminent. This has to happen before U.S. patients can actually get Epidiolex.

    The public affairs officer for the DEA recently told the media: “We don’t have a choice… It absolutely has to become Schedule II or III.” I expect this to happen before October.

    There’s also been another huge development recently, one that I’m particularly excited about. I think it could totally transform the U.S. CBD market.

    Earlier this year, Senate Majority Leader Mitch McConnell—the most powerful Republican on Capitol Hill—introduced a bipartisan bill to legalize industrial hemp nationwide.

    (Recall that Charlotte’s Web is a crossbreed of marijuana and industrial hemp, used for its rich CBD content.)

    The bill passed the Senate in late June in a landslide 86-11 vote. It still needs to pass the House—and Trump needs to sign it—before it becomes law. Both are likely to happen within a matter of weeks.

    I expect legalized hemp to be the next domino to fall on the path to full federal legalization of cannabis.

    Big Tobacco is already on board. Alliance One International—a large, global tobacco firm—recently bought a 40% stake in a hemp producer for $10 million. Alliance One said it made the move to become a major producer of CBD.

    This of course, is just the beginning. Once hemp is legal on the federal level, I expect the CBD oil market to explode.

    The Hemp-Marijuana Divide

    As you may know, hemp and marijuana are the same plant species, Cannabis sativa. However, they are separate strains with distinct compositions and uses.

    Hemp has negligible concentrations of THC. It’s pretty much impossible to get high from it. It also has a higher CBD content than marijuana. This is why it’s particularly useful for producing CBD oil.

    Industrial hemp fibers are also exceptionally strong. This gives the plant a wide variety of uses.

    Americans already spend over $700 million on retail products that contain hemp every year. You can see the breakdown in the graph below.

    Bear in mind, the Controlled Substances Act (CSA) makes certain parts of any cannabis plant—regardless of its THC content—an illegal Schedule I substance. This includes hemp.

    However, certain components of the cannabis plant, like the mature stalks, aren’t considered illegal. But you can’t grow the legal parts without also growing the illegal parts.

    Hemp products sold in the U.S. are all produced abroad—mainly in China and Canada. Then U.S. companies import the legal components for various uses.

    However, that’s all likely to change very soon…

    If McConnell’s hemp legalization bill becomes law, it would open the floodgates for hemp production, as well CBD oil extraction, on a massive industrial scale in the U.S.

    I think the U.S. CBD market could easily grow 10 times larger in the years ahead.

    Shares of select publicly traded companies in the CBD industry could surge even higher.

    This is presenting investors with another new, huge opportunity to profit from the legal cannabis megatrend. The time to position yourself is now.


    Nick Giambruno

    Editor, Crisis Investing

    Silicon Valley’s Plan to Transform the Mining Industry

    “Mining? You mean, like, digging stuff out of the ground? That’s so cool!” said the young fellow in the sports jacket and track pants.

    That’s not usually the kind of reaction I get when I tell people I’m in the mining business. But then again, I’m usually talking to people who know the mining business.

    The young fellow in front of me was not one of those people.

    He was a tech investor—a member of the Silicon Valley inner circle that populates the San Francisco Bay Area, where I’d stopped on my way down to South America to look at copper projects.

    But he was very interested in mining—pressing me with questions about finding and producing metals like nickel and lithium.

    After talking awhile, I realized he knew quite a bit about these metals. In fact, he told me he’d been following these markets closely ever since he heard Tesla’s CEO Elon Musk talk about them as part of the company’s earnings conference call.

    This wasn’t just academic curiosity. He wanted to know how he could get investment exposure to metals that firms like Tesla use in the batteries for their electric vehicles (EVs).

    Seeing tech professionals like this interested in an “old world” business like mining is notable.

    Up until recently, metals might as well have appeared from a Stargate or been created by nanobots in a laboratory for all the average Silicon Valley professional knew or cared.

    • But the EV revolution is shifting the tech sector’s attention to mining in a very big way…

    You see, EV batteries require a lot of specialty metals like lithium, nickel, and manganese.

    And these metals aren’t easy to find.

    Only four countries on Earth produce lithium in significant quantities: Australia, Chile, Argentina, and China. Manganese also has a skinny list of sources, which includes locales like Gabon and South Africa.

    So what happens when limited supply meets wildly rising demand for metals from the EV battery space? After all, the EV battery industry is projected to grow by 32% yearly for at least the next decade.

    Turns out, faced with metals shortages, tech companies started taking matters into their own hands.

    April 2018 saw the beginning of an abrupt pivot in sourcing strategy for tech firms. That’s when Japanese tech giant SoftBank Group—which manages a $100 billion technology fund—announced it was buying directly into mining.

    SoftBank got into the game by investing $99 million into mining firm Nemaska Lithium, taking up to 9.9% control of the company. (To be clear, I don’t recommend buying Nemaska Lithium today… but it shows just how big the trend for metals used in electronic vehicle batteries is becoming.)

    More important than corporate ownership, SoftBank also has the right to buy 20% of the lithium supply coming out of Nemaska’s mine each year.

    • These end users were going straight to the source…

    And it’s not just SoftBank…

    A few months later in June, Bloomberg reported that Apple was in talks to buy battery metals directly from miners. This shows that even industry giants are worried about access to scarce battery components.

    Geopolitical intelligence platform Stratfor summed up tech’s new love affair with mining in a July article, saying that “makers and users of the world’s batteries are scrambling to secure the vital raw materials needed to produce the lithium-ion cells that will power electric vehicles around the globe.”

    • That’s a huge development for the mining business…

    A tech group like SoftBank single-handedly has access to capital equal to the amount that flowed into the entire global mining industry in 2017.

    Add in Apple, Tesla, Panasonic, and other battery makers and users, and the amount of capital hunting for mining investments becomes absolutely staggering.

    Not only do tech firms need metals—they need them from the right places on the planet.

    This means countries that are legally and ethically acceptable, especially to politically correct peers in Silicon Valley.

    This means a lot of attention is coming to mines and projects in places that are less dangerous, including the U.S., Canada, Australia, and Finland. Watch for more tech-backed deals coming down the pipe as Silicon Valley unfolds its plan to revolutionize mining.

    I believe tech investors like SoftBank and others are going to focus on battery metals mining companies which are in the process of building new mines.

    For a simple way to capitalize on this major trend, you can invest in the Global X Lithium & Battery Tech Fund (LIT). It invests in a broad basket of companies involved in lithium mining, lithium refining, and battery production.

    We also have a number of plays that fit the bill in our International Speculator portfolio, and we’ll be searching for the very best investments in this space and covering all the details going forward.


    David Forest
    Editor, International Speculator

    How One Bad Idea Bought an Early Retirement

    I was only 19 years old when I made my first options trade.

    I had a gut feeling the market was going to go higher… so I bought four S&P 100 call options at $1.50—a total investment of $600. A few hours later, the options were trading at $4.50. I sold and took the $1,200 profit—a 200% gain. And I was hooked on options forever.

    My next trade was in IBM. I bought 10 calls for $1. This time, it took a couple days to double my money. Next, I bought Digital Equipment put options… which nearly tripled in just a few days.

    I made 17 trades during my first six weeks as a trader. Every single one was a winner.

    Going 17 for 17 was a remarkable feat for a rookie trader—especially since I wasn’t using any sort of fundamental or technical analysis. I was just going with my gut.

    But I was careful not to put more than $1,000 or $2,000 into any single trade. And I still managed to turn my $5,000 brokerage account into $50,000 in just six weeks…

    And then I decided it was time to get serious. No more tiny trades. I was too good for the small stuff. For whatever reason, I had figured out a way to beat the market.

    Heck, I had just rattled off 17 straight triple-digit winners. So I decided to take the $50,000 in my account, add to it my $25,000 in savings, and put it into a handful of options trades.

    You can probably guess what happened next.

    The stock market has a habit of humbling folks who think they’ve figured it out. For me, the humbling started right away.

    At first, the positions started slightly moving against me. It was nothing to be concerned about. One good day would put everything back in the profit column.

    But then, one by one, each position blew up on me. It was too painful to watch. I kept the television off and avoided reading the newspaper for fear I’d see something bad about the stock market and my positions.

    When I finally got up enough courage to call the branch manager and check on the status of my account, I learned all the gains I had built up over the previous six weeks were gone.

    “Just sell everything,” I said.

    That was an expensive lesson to learn. But it’s one every options trader learns at some point. I was just fortunate it happened to me early in my career.

    You see, that experience changed how I looked at trading. Instead of using options as vehicles for speculation—a way to juice my returns and get more bang for my buck—I started using them the way they were intended to be used: as a way to reduce risk.

    Today, I still do my fair share of speculating. But I’m not focused on how much money I can make. I’m focused on how little I can lose.

    That’s a huge difference. It has allowed me to trade options successfully for nearly three decades. And it allowed me to retire at 42.

    Best regards and good trading,

    Jeff Clark
    Editor, Market Minute

    Why You Should Still Bet on Cryptos

    Take a look at the two charts below…

    Most investors would probably panic and sell both companies after seeing massive drops like these.

    They also would be making the biggest investment mistake of their lives.

    Here’s why…

    Company 1 is Apple. Earlier this month, Apple became the first U.S. company to reach a $1 trillion market cap.

    But on its way to $1 trillion, Apple fell 82% after the dot-com bubble burst in 2000…

    Over a three-year period, shares plummeted from a split-adjusted $5.15 to 93 cents.

    (Much like bitcoin today, people were calling for the death of Apple. The “Apple Death Knell Counter” counts at least 71 premature obituaries.)

    Apple investors in 2000 who didn’t panic-sell and saw the big picture would have turned every $1,000 into $23,747,800 today.

    Company 2 is Amazon.

    On its way to becoming the second-largest publicly traded company in the world, the online retailer took a 96% nosedive during the 2000 tech wreck.

    But investors in 1999 who had foresight and held during the crash would have turned every $1,000 worth of Amazon stock into $31,488,939 today.

    Here’s the key takeaway…

    Young technology companies see these kinds of falls all the time. And that’s exactly what’s happening in the cryptocurrency market.

    Today, I’m going to tell you what’s going on in the crypto market… and more importantly, why you should ride out the volatility.

    What’s Behind the Beatdown

    Since Monday, the crypto market is down 6%. Much of that volatility was due to the selling of ether, the second-largest crypto behind bitcoin.

    Ethereum is the most popular blockchain for launching initial coin offerings (ICOs). ICOs are similar to initial public offerings (IPOs) held by traditional companies.

    Just like IPOs, blockchain projects use ICOs to raise funds.

    This year, blockchain start-ups have raised $17.9 billion from ICOs. That’s already more than all of last year combined.

    That’s a great sign that the overall crypto market is growing. But it’s a short-term problem for Ethereum.

    Palm Beach Confidential editor Teeka Tiwari—who just left a meeting of crypto insiders in Switzerland for another in Moscow—explained the problem during an update to his subscribers on Tuesday:

    I had a very late-night meeting with the head of a Swiss family office that runs an enormous amount of money here in Switzerland.

    We’re finding out what’s happening right now; so the reason we’re seeing a big sell-off—especially in Ethereum—is this year, we’ve seen companies raise more money in initial coin offerings than all of last year. And the primary funding currency that they’ve used to raise that money has been Ethereum.

    As ether prices have started to come in, the folks in these ICOs have started to panic. This is their funding; if you raised money when ether was at $800, then it went to $400, and now it’s at $260… the panic starts to set in. Because you originally raised $30 million, then it was worth $15 million, and now it’s worth $7.5 million. So these guys are seeing their runways just evaporate.

    As Teeka noted, these projects thought they had raised enough funds to last them for the next two years… At the current market price, those funds will last less than a year. That’s why they’re panic-selling.

    We’ve seen similar situations in the stock market… like Apple and Amazon in 2000.

    In 2008, American Express fell from $65 to $8… and from 2007–2009, Las Vegas Sands fell from $144 to $1.38. Both were great companies pushed down because of panic-selling. And both eventually recovered.

    We don’t have a crystal ball… so we can’t say when the panic-selling will end.

    But we know that quality companies will eventually rebound and go even higher—just like Apple and Amazon did after the dot-com bust.

    What to Do Now

    No one knows how long this current crypto downturn will last…

    Over the past two-and-a-half years, the PBC crypto portfolio has seen five drawdowns of around 85%. However, the overall portfolio is up 828%.

    This is just another bout of volatility.

    As we’ve written before, the blockchain technology behind cryptos continues to improve… just like the technology behind Apple and Amazon improved during their drawdowns.

    And there are a number of tailwinds behind cryptos … It just hasn’t been priced into the market yet.

    That’s why we recommend you take small position sizes with cryptocurrencies. As Teeka advised his subscribers:

    If you use big position sizes, you can’t sit through this type of volatility. You panic, you sell, and you’re up all night worrying about what the market is doing. This is something that you should not be worrying about. You put your positions on, you leave them on, and you let the market do what it’s going to do. Neither you nor I can control what the market does on a day-to-day basis.

    That’s what smart investors who held onto Amazon and Apple did through their crashes. And that’s what crypto investors should do today.


    Nick Rokke
    Analyst, The Palm Beach Daily

    How to Play the China Side of the Trade War

    The market has spoken… And right now, China is losing the trade war.

    As you can see in the chart above, the U.S. stock market is up over 6% since January 2018… while the Chinese market is down nearly 15%.

    Regular readers know we’re not fans of tariffs. And we don’t like to get bogged down in geopolitical spats. But we play the hand we’re dealt…

    One of our favorite plays to take advantage of the trade war has been U.S. small-cap companies. Since June 2017, the iShares Russell 2000 ETF (which tracks small caps) is up 20%. That’s compared to 16% for the large-cap S&P 500 ETF.

    Meanwhile, Chinese stocks are down. When I see a sector beaten down this much, my contrarian side comes out.

    I like to buy stocks when they’re on sale—and Chinese stocks are 20% cheaper than they were at the end of January.

    As we’ve written repeatedly, we think the media has sensationalized the trade war… and that it will wind down later this year. (See my July 10 Daily, “Trump’s Trade War Master Plan.”) When it does, the Chinese and U.S. stock markets will rally.

    But Chinese stocks are trading at half the cost of their U.S. counterparts. So they could see an even larger rally when tensions cool off.

    In a moment, I’ll show you how to play this. But first, let me show you how cheap Chinese stocks are.

    China Is Cheap

    Germany-based asset manager Star Capital is one of the best resources for world stock valuations. According to its rankings, China is the second-cheapest market in the world (behind only Russia; the U.S. is the 34th most expensive out of 40 nations in the index).

    Metrics bear that out…

    The price-to-book (P/B) ratio measures the price of a business relative to the price of its total assets. A P/B ratio under 1 generally means a company is cheap. And a P/B ratio over 2 generally means a company is expensive.

    China’s market is trading at a P/B ratio of 0.9. That means you can buy it for less than the cost of its assets. That’s a value investor’s dream.

    By comparison, U.S. stocks trade at P/B ratio of 3.3. Based on this measure, Chinese stocks are trading at about 25% of the cost of U.S. stocks.

    The price-to-earnings (P/E) ratio measures how much you pay for $1 of earnings. The P/E ratio for Chinese stocks is 7.4. U.S. companies trade at a P/E ratio of 21.8.

    By this measure, Chinese stocks are trading at nearly one-third the cost of U.S. stocks.

    No matter how you slice it, Chinese companies are cheaper. But the price of Chinese stocks has nothing to do with performance.

    Both the Chinese and U.S. stock markets grew profits by about 18% over the past two years.

    The main reason Chinese stocks are trading so cheaply is the trade war. But if it winds down, we can expect Chinese stocks to return to their average valuations (or higher).

    If valuations do return to their 10-year average, that implies the Chinese market will rise 65%.

    So what’s the best way to play this?

    China’s Tech Sector Is Booming

    To find out the best way to invest in China, I turned to Brendan Ahern, the chief investment officer at KraneShares.

    KraneShares is an investment firm that specializes in one thing and one thing only: China.

    Brendan is an expert in global financial markets with a focus on China. He’s been interviewed by CNBC, Bloomberg, The Wall Street Journal and Investor’s Business Daily.

    During our talk, he gave me his favorite way to play China… one that should thrive even if the trade war unexpectedly drags on.

    Right now, Brendan says Chinese techs stocks are the best place to be.

    “In China, wi-fi and internet are ubiquitous,” he said. “People have their wallets on their phones. Tech is being adopted quicker there than just about anywhere else in the world.”

    According to Brendan, the Chinese online marketplace is twice the size of the U.S. online marketplace. And he expects China’s online sales to grow 32% this year… compared to 16% in the U.S.

    That’s good news for Chinese tech stocks like Baidu, Alibaba, Tencent, and Sina (the so-called Chinese BATS). These companies are similar to U.S. FANG stocks (Facebook, Amazon, Netflix, and Google’s parent company Alphabet).

    Plus, these companies get most of their revenues from inside China. So even if the trade war continues, they won’t be affected as much.

    One way to gain exposure to Chinese tech stocks is through the KraneShares CSI China Internet ETF (KWEB). It owns a basket of Chinese tech companies.

    If the trade war rhetoric dies down—like we predict—the entire Chinese market should rocket higher. And these stocks will go along for the ride.

    They’re as close as we can get to winning no matter what happens in geopolitics.


    Nick Rokke
    Analyst, The Palm Beach Daily

    The Crypto Market Just Handed Us a Gift

    Nick’s Note: Last week, one of the biggest players in global finance got behind bitcoin. World-renowned cryptocurrency expert and former hedge fund manager Teeka Tiwari believes it’s one of the biggest stories of the year… But the market hasn’t reacted to the news—yet.

    Below, Teeka tells me what this new development means for bitcoin and the cryptocurrency space… and why the market’s delayed reaction is good news for crypto investors…

    By Nick Rokke, analyst, The Palm Beach Daily

    Nick: T, we just got some big news about a project involving bitcoin. Can you enlighten us?

    Teeka: Last Friday, the Intercontinental Exchange (ICE) announced it’s working with Microsoft to create a new platform for cryptocurrencies.

    Everyone knows Microsoft is a major technology player. But most people don’t know that ICE owns the New York Stock Exchange and is a major player in global finance.

    It also runs 23 other exchanges around the world, including exchanges in Chicago, San Francisco, London, and Singapore.

    ICE is one of the most respected companies in the world… And it’s responsible for the smooth operation of dozens of major global financial markets.

    Now, ICE has developed a platform that will allow institutions to buy bitcoin. It plans to launch the exchange in November if it gets approval from regulators.

    I can’t tell you how incredibly bullish this is for bitcoin…

    Nick: What’s the name of the project?

    Teeka: It’s called Bakkt (pronounced “backed”). ICE chose that name because the platform will issue futures contracts backed by bitcoin.

    That means institutions can buy bitcoin contracts and settle them with actual bitcoin.

    This is different from the Chicago Board Options Exchange (CBOE) bitcoin futures contracts issued in December 2017.

    The CBOE contracts settle in cash. No bitcoins actually exchange hands.

    The ICE contracts will create even more demand in the bitcoin market because they settle in actual bitcoin… That should push prices up even further.

    Nick: That’s exciting. But I have a concern… If I bought this contract, how would I know I would get the bitcoin when it settles?

    Teeka: The same way you would know you’ll receive a stock when you buy it. Or the same way a large oil refinery knows it will receive a barrel of oil when it buys one.

    ICE is a clearinghouse. Clearinghouses are an important part of financial markets. They guarantee the transaction happens for both parties.

    When you buy a stock, a clearinghouse guarantees you’ll receive your stock. And if you sell a stock, it guarantees you’ll receive the cash.

    Normally, this process goes off without a hitch…

    But let’s say someone buys your stock and doesn’t have the funds to pay for it. It’s now ICE’s problem. ICE will give you the cash and go after the other person for the money.

    It will do the same thing for bitcoin.

    If you want to sell a bitcoin contract on the Bakkt exchange, you’ll have to deliver your bitcoin. Bakkt will take custody of the bitcoin and hold it in a safe place.

    When the contract settles, Bakkt will deliver that bitcoin to the buyer’s account.

    Nick: It sounds like ICE has solved the bitcoin custody problem…

    Teeka: That barrier for buying bitcoin will be gone in November.

    We’ve been talking about the custodial issues for a while. That’s because you and I are former hedge fund guys.

    We know that hedge funds and pension funds can’t buy securities if there are custodial problems. Custodians ensure that securities are safely held. They reduce the risk of theft or loss.

    Starting in November, institutions will have one of the world’s most trusted third parties guaranteeing the safety of their bitcoins.

    That’ll drive a ton of new demand for bitcoin… and that demand is going to come into the actual bitcoin market.

    Nick: I also hear that the Bakkt project will make it easier to spend bitcoin. Any thoughts on that?

    Teeka: Along with Microsoft, Starbucks is a major partner of the Bakkt project.

    Starbucks wants to expand the digital options people use to buy its coffee.

    Millions of people go to Starbucks every day… And if they have Bakkt accounts, they’ll be able to buy coffee with bitcoins using their smartphones.

    It’ll be as easy as using Apple Pay. And that’ll open bitcoin to millions of new users.

    Merchants like Starbucks are going to love this service… As soon as the transaction happens, Bakkt will convert the bitcoin to dollars for Starbucks.

    That means Starbucks won’t have any exchange risk. Starbucks isn’t in the business of owning bitcoin… and it doesn’t want to be.

    Bakkt fees will be lower than credit card fees. That’s one reason why Starbucks will want to use this system.

    This is like the birth of the modern credit card. I truly believe Bakkt is that important for cryptos.

    I’ve always said that ease of use will drive the value of cryptocurrencies higher. Bakkt will make bitcoin much easier to use.

    Nick: Do you think this will also drive the value of other cryptocurrencies higher?

    Teeka: What’s good for bitcoin is good for the entire market. The pattern is the same… People get their feet wet with bitcoin, then venture into the smaller coins. As more people buy bitcoin, it naturally lifts the entire cryptocurrency market.

    Nick: Why is the market ignoring this news?

    Teeka: Crypto is an immature market made up of young participants. Many have no idea what “custody” is or how important ICE is. That is why the market has overlooked this so far.

    I saw the same thing happen in July 2017, when the Commodity Futures Trading Commission (CFTC) announced bitcoin futures trading. The market yawned and then dropped 30%! I was pounding the table to buy bitcoin, saying it would hit $10,000. By December, it was at almost $20,000.

    So this delayed reaction is a gift for all of us to go and buy some bitcoin before this new demand hits the market.

    I still have a $40,000 end-of-year price target on bitcoin. That implies a 600%-plus gain from today’s prices.

    Remember, cryptocurrencies are a volatile asset. That’s why I recommend keeping your position sizes small, so you can weather any volatility the market gives us.

    Nick: Thanks for your time, T.

    Teeka: You’re welcome.

    Teeka Tiwari on Inflation and the Income Exodus

    Nick’s Note: On Mondays, we turn over the reins of the Daily to Palm Beach Research Group guru and former hedge fund manager Teeka Tiwari for his big-picture view of the markets. It’s a feature you’ll only find right here.

    In today’s interview, Teeka elaborates on the Income Exodus. It’s a theme we’re following very closely here at PBRG headquarters. Last Thursday, I sent you a warning about a “dangerous cocktail” brewing in the bond market. As we showed you, even the Bond King himself, Jeffrey Gundlach, is concerned about the state of U.S. Treasuries…

    But Teeka’s been all over this for a couple years. He’s warned Palm Beach Letter subscribers to dump bonds—and helps them find alternative sources of income to secure their financial futures.

    Here’s what he had to say…

    Nick: T, we haven’t talked about the Income Exodus lately…

    It’s a theme you’ve been following for a while now… Any new developments?

    Teeka: Absolutely. Inflation just came in at multi-year highs. The Consumer Price Index (CPI) just came in with a 2.9% increase. The CPI is a good proxy for the rate of inflation.

    The last time inflation rose this fast was February 2012.

    Bondholders need to pay close attention to inflation. They receive a fixed dollar amount in interest payments and principal when the bond matures.

    When inflation rises, the real value of those payments declines. That’s why bond investors fear inflation.

    Nick: So should we expect bondholders to demand higher yields as inflation rises?

    Teeka: Absolutely. I’m not sure how much longer the 10-year yield can stay low.

    Big bond investors have two inputs into what the 10-year yield should be. You take GDP plus inflation.

    Right now, GDP is growing at 4%. Inflation is nearly 3%. That means the 10-year yield should be 7%, not 3%. The yield has a lot higher to go. And if the 10-year yield does go to 7%, current holders will lose around 20% of their money.

    Nick: But investors seem to be willing to accept this low amount of interest. What do you think will change this?

    Teeka: The three biggest buyers/holders of Treasuries are turning into sellers.

    Contrary to what many believe, the biggest holder of Treasuries is not China. It’s actually the Social Security Trust Fund. It holds something like $2.8 trillion in Treasuries.

    But just this year, the fund went into a deficit… And it’s projected to be in a deficit for the next 75 years. Soon, it’ll be the biggest seller of Treasuries.

    The second-biggest holder of Treasuries is the Federal Reserve. It holds about $2.4 trillion.

    This was part of the quantitative easing plan to inject liquidity into the market. The Fed bought these Treasuries from banks, hoping they would invest their money elsewhere. Supposedly, this helped get us out of the Great Recession in 2008–2009.

    But now we’re heading toward quantitative tightening. Or, as the Fed is calling it, “maturation strategy.”

    Since QE ended in October 2014, the Federal Reserve’s holdings of Treasury securities remained stable. It did this by reinvesting money from maturing bonds.

    But starting last October, the Fed stopped reinvesting everything. Every month, they reinvest $6 billion less than the full amount of maturing Treasuries.

    Now, it’s still buying a lot of Treasuries… but other investors are going to need to step in to buy an additional $6 billion a month of Treasuries. And that $6 billion number is scheduled to increase… all the way up to $30 billion a month.

    The third-biggest holder of Treasuries is the Chinese government. The Chinese hold $1.2 trillion of our debt.

    It’s debatable whether or not this is a good thing. We’re not going there today. We’re going to stick with facts.

    The reason China has been able to accumulate so much of our debt is because of the trade surplus it has with us. It has to invest that extra money somewhere.

    Now that President Trump is doing his best to shrink the trade deficit, China will have less to invest in our Treasuries.

    So China will be buying less (or even selling) U.S. Treasuries.

    Nick: And you don’t think other investors will be able to step up and fill the void left by these three institutions?

    Teeka: Not with current yields. Most people I know aren’t going to lock up their money for years at current yields. They are going to demand much higher yields.

    And as I stated earlier, I think the yield on the 10-year Treasury should be closer to 7% than 3%. Bond yields are going up. So investors need to prepare for that eventuality.

    The first thing to do is to get rid of any long-term bonds. They’re going to get crushed.

    The second thing to do is find a way to earn income that isn’t fixed. In The Palm Beach Letter, we do that with closed-end funds (CEFs).

    We buy these CEFs at a discount to the value of their holdings. We’re paying something like 85 cents for every dollar of assets these CEFs hold.

    And we’re doing quite well. Even as dividend stocks like Johnson & Johnson and Procter & Gamble have gotten hammered, we’re still up.

    In our Closed-End Fund Income Portfolio, we have an average yield of 7.5% on the seven CEFs that we hold. That’s two-and-a-half times what the 10-year Treasury is paying.

    Anyone looking for income in their investments has very few options in the market today. CEFs are one spot where you can still earn income and preserve your capital.

    Nick: Thanks again for talking to us, T. Always appreciate your time.

    Teeka: My pleasure, Nick.

    Nick’s Note: Like Teeka said, Palm Beach Letter subscribers are enjoying an average yield of 7.5% in their CEF portfolio. And he’s always on the lookout for quality CEFs that pass his strict investment criteria.


    Teeka Tiwari on How Cryptocurrencies Will Fund Your Retirement

    Nick’s Note: Regular readers know that world-renowned cryptocurrency expert Teeka Tiwari is a globetrotter. When there’s a major blockchain event or an exclusive insider meeting, he boards a plane and heads to where the action is.

    Last month, I met up with Teeka in Vancouver. He had just flown in from Tuscany, Italy, where he attended an invitation-only meeting with a small group of prominent players in the blockchain space…


    Nick: T, you were pretty excited about your recent Tuscany excursion. Can you tell readers about what went on?

    Teeka: I was invited to Tuscany to meet with some of the biggest investors and programmers in the blockchain space. But before we get into the biggest thing I took away, let me set the stage first.

    We were in the hills of Tuscany. I would walk out of my room and see rolling hills filled with grape vines. And the meeting was held in a 10th century castle.

    The castle had massive windows overlooking the valley, which is rare for a castle from that time. But since the walls are made of six feet of solid rock, they could support these windows.

    It was hot there this time of year. I’m talking South Florida hot. But it stayed cool inside the walls of the castle. It was the perfect place to hold a low-key meeting and talk about the future of blockchain investing.

    Nick: Sounds amazing. Italy is on my top 5 list of places to visit… So what did you learn at the meeting?

    Teeka: I learned a lot there… But the most exciting thing I learned is that pension funds are getting closer to investing in cryptocurrencies.

    I met with a guy who manages billions of dollars of pension fund money. He was making a fortune doing this. But he gave up that cushy job to do something different—to start a fund to help pension plans invest in cryptos.

    This sounds crazy to some—pension plans are the most conservative money in the world. People rely on them for their income during retirement.

    But pensions will start investing in cryptos. They’re already branching into alternative investments like hedge funds and private equity. They’re performance-chasing—and they have to. Here’s why…

    We’ve warned readers that these pension plans are grossly underfunded—even after one of the longest bull markets in history. I mean, if they’re not fully funded now, when will they be?

    According to one report, federal, state, and local employee pension plans have a combined $7 trillion in unfunded liabilities.

    They need to get more returns, and one of the few places in the market you can do that right now is in cryptos.

    Nick: I’ve done some work with pension funds in the past. And custody—who holds the assets in these plans—is a huge deal. There’s no way these funds are going to hold onto cryptos if there’s no custody solution for them… Do you see that coming soon?

    Teeka: Nick, you’re absolutely right… And that’s what this guy I met is going to remedy. He’s going to create what’s called a “fund of funds.” A fund of funds is a hedge fund that invests in other hedge funds.

    This may sound minor, but it’s not. A pension can invest in a crypto fund of funds because then, it will just own shares in other hedge funds. It won’t directly invest in cryptos.

    Now, these pension funds can go to their trustees and say, “We just own shares of hedge funds.” They don’t have to say they’re invested directly in cryptos.

    This guy is just one of about 100 people starting these crypto funds of funds.

    Funds of funds are nothing new. They’ve been around for a couple of decades. But a crypto fund of funds will allow billions of dollars of pension fund money to flow into the space.

    And a good portion of this money will flow into the crypto coin market. These funds will gear toward certain cryptos that appeal to institutions—projects that have highly credible teams that are solving big problems.

    These are exactly the types of projects I’ve been recommending to my subscribers for almost three years. And despite the recent pullback, we’re up an average of 728.6%. Once pension fund money comes in, I expect those returns to skyrocket even more.

    Now obviously, bitcoin will get a lot of attention from these types of funds. But there are many other cryptos that will attract pension fund money.

    Nick: Thanks for giving us a peek into your insider network, T.

    Teeka: You’re welcome.