December 28, 2012
- The “dire threat” to the U.S. economy that’s not the fiscal cliff. But no worries, there’s a bogus paper clip-and-rubber band fix for this one too!
- How China will propel gold toward $5,000 in 2015… and the catalyst that could push the metal halfway there next year…
- After the bust… our team spots bargain-basement opportunities in hotels and office space…
- Pickup line then: “What’s your sign?” Pickup line now: “What’s your FICO score?”
- “Only in Washington”: reader’s last fiscal cliff takeaway for the year! wee-woo!… kind feedback on our new 5 PRO level of service… your final opportunity to snag “loyalty rewards“… and more!
The overhyped “fiscal cliff”? No… a strike by longshoremen. Thousands of dockworkers from Boston to Houston are threatening to go on strike this Sunday.
“If the port shuts down, nothing moves in or out,” says Jonathan Gold of the National Retail Federation tells the AP. Whenever the strike ends, “it’s going to take time to clear out that backlog, and we don’t know how long that it’s going to take.”
Aw, what’s the fuss all about? It’s nothing that couldn’t be resolved by a graphic on CNBC urging the two sides to “Rise Above”… or Starbucks baristas scribbling “Come Together” on the side of coffee cups.
Late Update: We now see the longshoremen and their masters have taken a cue from Congress and have tentatively agreed to kick the can down the road with a 30-day contract extension, “buying time to iron out their differences.”
Major U.S. stock indexes are down today. We’re experiencing deja vu from yesterday, as we see the Dow is about 25 points above 13,000.
Volatility as measured by the VIX has popped above 20 for the first time since July.
“Be cautious about reading too much into the action this week or Monday,” counsels Vancouver fave Barry Ritholtz on his Big Picture blog this morning. Rookies are manning the trading desks while the pros are skiing or sunning themselves. Long ago, Ritholtz was one of those rookies: “No one wanted to have to explain it to the boss on Jan. 2 why we had a huge loss.”
Thus did the Dow shed more than 100 points yesterday, only to recover and close flat.
Precious metals remain stuck where they’ve been most of the week – gold at $1,655, silver oscillating around $30.
“My tally of national central banks that have been buying gold in recent days,” says Byron King, “includes Russia, India, Brazil, Mexico, Saudi Arabia and Vietnam.”
“Of course,” he adds, “China is also building a gold stash, but not bragging about it.”
Not until they’re good and ready.
“China will send gold on the next leg to $5,000 by 2015,” we forecast in our latest Apogee… one of the six predictions laid out for 2013 and beyond.
Only twice in the last decade has the People’s Bank of China declared its gold holdings. In 2003, the total was 600 metric tons. In 2009, the stash had grown to 1,054 metric tons.
“Assuming another six-year lag,” our forecast continues, “China’s next announcement is due in 2015. Coincidentally, that’s the year the former governor of China’s central bank predicts his country will achieve full convertibility between the renminbi and other currencies.
“They can’t make that happen without a much larger gold stash.”
Long before China does announce their holdings, however, we expect them to begin pushing the gold price up — possibly by as soon as March 2013.
“March is the time of year when metals-sector analysts and researchers issue many of their annual reviews and outlooks. We have every reason to believe they’ll uncover evidence of massive under-the-radar gold accumulation by China.”
Some of that evidence already shows up in the import figures through Hong Kong that we pass along each month. The long-term trend is, to say the least, stunning…
“Gold could [even] hit $2,500 an ounce during 2013,” adds Byron in a recent chat with The Gold Report.
In addition to the China factor, Byron cites “the massive gold trade between Iran and Turkey for oil.” You’ll recall from yesterday’s 5 the gas-for-gold trade, now estimated at $15 billion a year.
“Just that little vignette underscores the point that whether the monetarists of the world like it or not, gold retains its usefulness as a means of lubricating transactions.”
“You want to buy when things are down and hold for inevitable rebounds,” our managing editor Chris Mayer advises if you’re looking for new opportunities in 2013… then steers us toward a sector where you’ll find the ground littered with deals.
“Much like the housing bubble,” he explains, “the hotel market also got bubbly. Though it never reached the heights of prior hotel booms, there are plenty of distressed hotels around for sale.
Mayer: “The up and down quality of the hotel market is clear.”
“Because the hotel market is weak, there isn’t a big rush to build new ones. In fact, the number of new hotels added to supply has steadily fallen since the crisis with a lag. People finished projects started in good times.
“You want to buy during those lulls,” Chris concludes. “We are in one of them now.” One of Chris’ recent hotel plays jumped 19% shortly after his recommendation. No… he’s not selling.
“The U.S. government is the second-largest landlord in the world,” says income specialist Kelly Green, unearthing another opportunity in commercial real estate. The largest, if you’re curious, is the Queen of England.
When the new Congress convenes next week, one of the first non-fiscal cliff items on its agenda will be a “reform” bill slapping scads of new rules on government-owned property. The details are eye-glazing, but the bottom line is that Uncle Sam will have a much harder time adding new office space to its extensive portfolio.
Instead, it will have to add to its long list of leased property.
“The U.S. government is one of the best tenants you could ask for,” Kelly points out. “It pays its bills on time, doesn’t do a whole lot of negotiating of prices and stays put for decades at a time. More importantly, it pays high rents and doesn’t care to look around for alternative spots.”
Our income team has pinpointed one of the fed’s most lucrative landlords, delivering investors a fat 7.5% yield guaranteed by law. It’s another example of channeling your tax dollars back into your own pocket — or as Addison calls it, “making the empire pay.”
As this is the last issue of The 5 in 2012, we feel obligated to alert you to a countdown you should not miss: Only a few hours remain in which you can secure access to our entire suite of buy-and-hold stock-picking services. It’s by far, the best deal you can get for the high-grade research Agora Financial publishes.
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Last today, how’s this for a sign of the times? Credit scores now come up on a first date.
We knew “saving” would one day become hip again, but this is… umn, scintillating.
The FICO score has “become a bigger factor in dating decisions,” says The New York Times, “sometimes eclipsing more traditional priorities like a good job, shared interests and physical chemistry. That’s according to interviews with more than 50 daters across the country, all under the age of 40.”
OK, so the sample size is suspect, and the whole article reeks of what Reuters’ perceptive media critic Jack Shafer calls a “bogus trend story.” But we’ll play along today, seeing as there are websites with names like Credit Score Dating and Date My Credit Score.
“Credit scores are like the dating equivalent of a sexually transmitted disease test,” Manisha Thakor of MoneyZen Wealth Management tells the Times. “It’s a shorthand way to get a sense of someone’s financial past the same way an STD test gives some information about a person’s sexual past.”
Business opportunity: Someone should develop a similar litmus test for new candidates running for Congress.
“In 2001,” writes a reader with our final comment for the year on the dreaded fiscal cliff, “Bush had to use a political maneuver to get the tax cuts passed because he did not have the 60 votes in the Senate needed to guarantee the changes would be permanent.
“At the time, the Democrats were strongly against the tax cuts. They used the 10-year statute of limitations to get them through with a simple majority. Now Congress must vote to extend it each year. [And that's why we get these phony year-end dramas].
“Isn’t it odd how Democrats who lobbied so hard against these tax cuts 11 years ago are now blaming the Republicans if they are not extended again [at least for those earning under $250,000]? This could only happen in Washington.”
The 5: Yes, it is odd.
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P.S. We’re off on Monday and Tuesday. The 5 will return to kick off the new year on Wednesday, Jan. 2, 2013. Final reminder: Your “loyalty reward” — your best deal on all Agora Financial’s best stock recommendations, for one price — expires tonight at midnight. To redeem, follow this link.