Here’s The Only Oil Stock You Should Own Right Now

By Justin Spittler

It was the most important oil meeting in years. The world was watching closely on Sunday as 16 major oil nations met in Doha, Qatar. Saudi Arabia and Russia, two of the world’s biggest oil producers, were among the heavyweights in attendance. The purpose of the meeting: to reach an agreement to “freeze” oil production at current levels. It was the first time in fifteen years that OPEC, a cartel of 13 oil producing countries, met with nonmembers to discuss freezing output.

As you likely know, the price of oil has crashed 75% since June 2014. Thanks to new methods like “fracking,” the world has too much oil. According to the International Energy Association, oil companies produce about 1.4 million more barrels of oil a day than the global economy consumes. 

In February, oil hits its lowest price since 2003. Low oil prices have slammed economies that depend on oil. For example, Saudi Arabia posted its largest budget deficit in history last year. And Russia’s currency has lost 49% of its value since oil prices began to decline.

Low oil prices have slammed major oil companies, too. Last year, British oil giant BP (BP) recorded its biggest annual loss ever. U.S. oil giants Exxon Mobil (XOM) and Chevron (CVX) earned their lowest annual profits since 2002 last year. Since June 2014, shares of these three oil companies are down 27% on average.

Many experts hoped an agreement to freeze production would support oil prices…
But the countries failed to reach an agreement. Bloomberg Business explained why.

Discussions broke down after Saudi Arabia and other Gulf countries rejected any deal unless all OPEC members joined including Iran…

Iran didn’t even attend the meeting in Doha…
For years, economic sanctions have cut off Iran from the global economy. These sanctions were put in place to prevent Iran from building a nuclear bomb. They crippled Iran's economy in the process. Iran’s oil exports have plunged 45% since 2011.

The U.S. and five other countries lifted these sanctions last year. With the sanctions gone, Iran plans to significantly boost its oil production. In March, Iran pumped 3.3 million barrels per day (bpd), which made it the world’s sixth-biggest oil producer. It hopes to soon increase that to 4 million bpd.
Iran also plans to double its oil exports. In February, Iran sold oil to Europe for the first time since 2012. Bloomberg Business explains:

Iran’s oil minister called a proposal by Saudi Arabia and Russia to freeze oil production “ridiculous” as it seeks to boost output after years of sanctions constrained sales.

Yesterday, the price of oil plunged 6.4% on the bad news…
But it recovered almost all its losses, ending the day down just 0.7%. Today, it’s up 3.2% Oil stocks shrugged off the bad news, too. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP), which tracks major U.S. oil producers, rose 2% yesterday. We see this as an important bullish sign for oil stocks. This bad news could have easily pushed oil below $30 a barrel. Instead, oil is trading higher today than it was yesterday.

It looks like the worst is over for oil stocks…
Although we’re not “calling the bottom” in oil stocks, we do think the oil market has entered a new phase.
You see, when an industry crashes as hard as oil has over the past 18 months, all stocks in the industry usually tank. Even the best companies suffer big losses. But when a crashing market nears a bottom, things start to change. Investors looking for bargains begin to buy top quality companies. Strong companies start to separate themselves from the weak. That’s happening in the oil sector now.

For example, Exxon, the world’s largest publicly traded oil company, has jumped 14% this year. Chevron, the second largest, has jumped 11%. These are both large, quality oil companies. Meanwhile, weaker companies are still fighting to survive. They’re bleeding cash. To make money, they need oil at $50 or higher. Yesterday, oil closed at $41.47…and that’s after a 50% rally since February. We’re not saying oil prices are ready to head higher. As we mentioned, the world is still oversupplied by about 1.4 million barrels per day. We’ll likely see more defaults and bankruptcies in the oil sector.

But we are saying now is a good time to start buying cheap, extremely high quality oil stocks…
Because oil is likely to stay low for at least several more months, it’s important to buy only the very best oil businesses. Stick with companies that have big margins, plenty of cash, and little debt. Only invest in companies that can make money even if oil stays low.

Nick Giambruno, editor of Crisis Investing, just recommended one such oil company. If you don’t know Nick, his specialty is buying quality assets for cheap, when no one else wants them. Following this strategy has allowed him to make large gains for subscribers, like the 210% gain he made on Cypriot hospitality business Lordos Hotels in the wake of that country’s banking crisis a few years back. Nick has been keeping a close eye on the oil industry for months…waiting for the right time to buy. And last month, he told his readers it was finally time to “pull the trigger.”

He recommended a world class oil company with “trophy assets” in America’s richest oil regions...a rock solid balance sheet…and some of the industry’s best profit margins. Most importantly, the company is making money. According to Nick, some of the company’s projects are profitable at as low as $35 oil.
Nick is certain this company will survive the current downturn. Its stock could deliver huge gains when oil prices recover past $50.

You can learn more about this opportunity by signing up for Crisis Investing. Click here to begin your risk-free trial.

Chart of the Day

Silver is having its best day in six months. If you’ve been reading the Dispatch, you know silver recently “broke out.” More specifically, it “carved a bottom.” That happens when an asset stops falling, forms a bottom for a period of time, and starts heading higher. Assets often keep rising after carving bottoms. As you can see below, that’s exactly what silver’s done. Today, silver skyrocketed 5.3%, its biggest jump since October. Silver is now up 23% on the year. It’s at its highest price since last April.

At risk of sounding like a broken record, we think silver is headed much higher. It could easily triple in the coming years. Silver stocks, which are leveraged to the price of silver, could go even higher. If you would like to speculate on higher silver prices, we recommend you watch a short video we just put together. It explains how you could grow your money by 10x or more in the coming years. If interested, you’ll want to watch this presentation soon. It will no longer be available after tomorrow.

Click here to watch.

The article Here’s The Only Oil Stock You Should Own Right Now was originally published at caseyresearch.com.

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The Answer to the Biggest Question in the Markets Right Now

By Justin Spittler

Are we in a bear market or a bull market? If you’ve been reading the Dispatch, you know that U.S. stocks have had a wild ride this year. The S&P got off to a horrible start in 2016, plunging 11% in just six weeks. But since mid-February, stocks have staged a huge bounce, climbing 13%. Regular readers know we’ve been skeptical of this big rally. We’ve argued that until the S&P 500 sets a new high, there’s little reason to be bullish. And we just got another clue that this rally is “suspect”.

The initial public offering (IPO) market is at financial-crisis lows.....
An IPO is when a private company goes public by selling stock to investors. The health of the IPO market can say a lot about the state of the stock market. Buying stock at its IPO is typically a high risk, high potential move. IPOs have a lot of potential because they’re often involved in a new or exciting business. Many investors who buy are hoping to get in early on the next Starbucks, Facebook, or Google.

However, IPOs are also very risky. The companies are often based on new or unproven business models. Many companies with an IPO are losing money every quarter. Some barely earn any revenue at all. More often than not, investors who buy IPOs are buying hopes and dreams, not stable, profitable business. When markets are healthy, investors are more willing to take a chance at buying an IPO. But when markets are shaky, IPOs tend to do poorly, as investors seek safer, more stable investments.

The number of U.S. IPOs plunged to a seven-year low last quarter.....
Investor’s Business Daily reported on Wednesday.

Just eight IPOs got out the door in Q1, down 76% from 34 in Q1 2015. That was the fewest IPOs since Q1 2009, which had just one. The $700 million in proceeds raised was the lowest total in 20 years, down 87% from the $5.5 billion raised in Q1 2015, according to Renaissance Capital, which manages two IPO-focused exchange traded funds.

Like us, The Wall Street Journal thinks this is a bad omen for the rest of the stock market.

[I]f the pace of IPOs doesn’t accelerate, it could be a warning sign for the rally.

The U.S. IPO market is heading toward its worst year since the financial crisis.....
On Tuesday, VentureBeat reported that just 24 companies have filed for IPOs this year. You can see in the chart below that the IPO market is on track to have its worst year since 2008.

We warned that the IPO market was slowing in October.....
Back then, the IPO market was just starting to show cracks. The S&P 500 was coming off its first 10% decline in four years. Companies are hesitant to go public when markets are volatile, because nervous investors are less likely to buy shares in an IPO. We also noted that several high profile companies either cancelled or postponed their IPOs. Supermarket chain Albertsons, which delayed going public in October, still hasn’t had its IPO.

Casey Research founder Doug Casey said to avoid one of the year’s most anticipated IPOs.…
The Italian carmaker Ferrari (RACE) went public on October 21. Days before the IPO, Doug urged readers of The Casey Report to not buy the stock.

Ferrari is going to have an IPO on its stock soon. A smart move on their part; when the ducks are quacking, you should feed them. I wouldn’t touch it if your broker offers you some…

Doug’s call was spot-on. Ferrari’s stock has plunged 25% since its IPO.

Most of last year’s IPOs have been huge disappointments..…
Investor’s Business Daily reports:

Among all IPOs of 2015, their stocks are down 18% on average from their IPO price and down 28% after the first trading day, Renaissance says.

Instead of buying IPOs, investors have been buying “defensive” stocks..…
For example, utility stocks have jumped 13% this year. The S&P 500 is up just 1%.
As Dispatch readers know, utilities tend to perform well when markets are shaky. No matter how bad the economy gets, folks still need running water, electricity, and gas to heat their homes. Investors often pile into utility stocks for safety.

Consumer staple stocks, which sell things like groceries, toothpaste, and laundry detergent, have also done well this year. The Consumer Staples Select Sector SPDR ETF (XLP), which tracks 39 consumer staple stocks, is up 5%. It hit an all-time high on Wednesday. Like water and electricity, folks buy these items no matter what’s happening with the economy.

Investors are also buying gold..…
As we often say, gold is money. It’s preserved wealth through economic depressions, currency crises, and every other kind of financial disaster. Investors often buy gold when they’re concerned about the economy or stocks. This year, the price of gold is up 16%. Yesterday, gold closed its best quarter since 1986.

Gold is the ultimate defensive asset.....
Even though utilities and consumer staple stocks are less risky than most stocks, they’re still stocks. They generally move with the rest of the market. During the 2008 financial crisis, the S&P 500 plunged 57%. Utilities fell 49%. Consumer staple stocks fell 34%. Gold only fell 29%. And in the aftermath of the crisis, gold recovered much more quickly than stocks. It went on to surge 167% from November 2008 to September 2011.

Today, gold is coming off a five-year bear market.....
It’s down 36% from its 2011 high. But as we mentioned earlier, gold has taken off this year. In case you missed it, Casey Research founder Doug Casey recently wrote an essay explaining why gold could easily triple. You can read it here.

There’s more risk than opportunity in U.S. stocks right now.....
The S&P 500 has climbed 205% since March 2009. That’s far more than the average gain of 136% for U.S. bull markets since 1932. The S&P 500 is also 56% more expensive than its historic average, according to the long term CAPE valuation ratio. U.S. stocks have only been more expensive three times in history: before the Great Depression...during the dot-com bubble...and leading up to the 2008 financial crisis.

Investors who buy U.S. stocks today are betting that the market keeps breaking records. That’s not a gamble we want to make. On top of owning gold, we encourage you to set aside cash. This will help you avoid major losses should U.S. stocks fall. And it will put you in a position to buy stocks when they get cheaper.

You could also make money “shorting” one of America’s most vulnerable industries.....
“Shorting” a stock is betting that it will go down. E.B. Tucker, editor of The Casey Report, recently recommended shorting a major American airline.The airline industry has been booming since the 2008–2009 financial crisis. But E.B. thinks the good times are coming to an end. In short, E.B. thinks the industry boomed on cheap credit, and that it will suffer huge losses when the easy money stops flowing.

E.B is targeting the most vulnerable U.S. airline. The company’s stock has surged an incredible 1,600% since March 2009. That’s eight times the return of the S&P 500. But like most stocks, it’s gone nowhere this year. It hasn’t set a new high since May. E.B. thinks this stock could plunge more than 50%. You can get in on this trade by signing up for The Casey Report. Click here to begin your risk-free trial.

Chart of the Day

Investors have turned bearish on biotech stocks. Today’s chart shows the performance of the iShares Biotechnology ETF (IBB), which tracks 189 biotechnology companies. Biotech companies develop or manufacture new drugs. Some of these companies are trying to cure diseases like cancer, HIV, and Alzheimer’s. Because a successful new drug can be worth billions of dollars, biotech stocks can soar hundreds of percent in short periods.

But they are also very risky. Most young biotech companies only have one or two products. And many biotech companies don’t make any money. Biotechs are the type of stocks investors like to own in a strong bull market. Between March 2009 and July 2015, IBB surged 574%. The S&P 500 gained 215% over that time. Since July, IBB has plunged 34%. It’s trading at its lowest price since October 2014.
The selloff in risky biotech stocks is more proof that investors have gone on the defensive.

The article The Answer to the Biggest Question in the Markets Right Now was originally published at caseyresearch.com.

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Gold and Oil Are Soaring…Justin says There is Only One You Should Buy

By Justin Spittler

Gold had a HUGE day yesterday. The price of gold jumped 2.5% to $1,263/oz. Gold is this year’s top performing asset. With a 19% gain since January, it’s off to its best start to a year since 1974, according to Bloomberg Business.

Casey Research founder Doug Casey thinks this is just the beginning.....
In case you missed it yesterday, Doug explained why gold is set to rise at least 200%...and possibly even 400% or 500%. It’s a “must-read” essay, especially if you’re worried about the fragile stock market, slowing economy, or reckless governments.

In short, Doug believes the government has set us up for a crisis that “will in many ways dwarf the Great Depression.” And Doug expects the coming economic disaster to ignite a historic gold bull market.

When people wake up and realize that most banks and governments are bankrupt, they’ll flock to gold…just as they’ve done for centuries. Gold will rise multiples of its current value. I expect a 200% rise from current levels, at the minimum. There are many reasons, which we don’t have room to cover here, why gold could see a 400% or 500% gain.

Gold stocks will soar even higher.....
Longtime readers know gold stocks offer leverage to the price of gold. A 200% jump in the price of gold could cause gold stocks to spike 400%...600%...or more. The Market Vectors Gold Miners ETF (GDX), which tracks large gold miners, has soared 52% this year. Yesterday, it closed at its highest level since February 2015.

But gold stocks are still extremely cheap..…
Doug is loading up on gold stocks right now.

Right now gold stocks are near a historic low. I’m buying them aggressively. At this point, it’s possible that the shares of a quality exploration company or a quality development company (i.e., one that has found a deposit and is advancing it toward production) could still go down 10, 20, 30, or even 50 percent. But there’s an excellent chance that the same stock will go up by 10, 50, or even 100 times.

If you’re interested in multiplying your money by 5x or 10x in the coming gold “mania,” now is the time to take a position in gold stocks. The window of opportunity won’t stay open long. As Doug said, gold stocks will skyrocket once people realize the financial system is doomed. Because this window of opportunity is small, we’re currently running a special $500 discount on our service that recommends gold stocks, International Speculator. Click here to learn more.

Crude Oil is also soaring.....
As Dispatch readers know, there’s been nothing but bad news in the oil sector for nearly two years. The price of oil crashed 75%. Two months ago, it hit its lowest price since 2003. But since then, oil has climbed 36%. It jumped 5.1% yesterday. Why the big reversal? We’ll get to that in a second. First, let’s recap the recent disaster in the oil industry.

The world has too much oil.....
From 1998 to 2008, the price of oil surged more than 1,200%. Last year, U.S. oil production surged to the highest level since the 1970s. Global output also reached record highs. High prices encouraged innovation. Oil companies developed new methods, like “fracking.” This unlocked billions of barrels of oil that were once impossible to extract from shale regions. Today, the global economy produces more oil than it consumes. Each day, oil companies produce about 1.9 million more barrels than the world needs.

Crude Oil companies have slashed spending to cope with low prices.....
They’ve sold assets, abandoned billion dollar projects, cut their dividends and laid off more than 250,000 workers since June 2014. According to investment bank Barclays, oil and gas producers cut spending by 23% last year. Barclays expects spending to fall another 15% in 2016. This would be the first time in two decades the industry has cut spending two years in a row. Last week, the number of U.S. rigs actively pumping oil and natural gas plummeted to its lowest level in 70 years.

With oil prices rising, many U.S. companies can’t bring rigs back online fast enough.....
They don’t have enough workers or equipment after all the spending cuts. The Wall Street Journal reports:

Some of the largest U.S. oilfield services firms have laid off 110,000 people in the past year, Evercore ISI analysts estimate, and many of those workers have no plans to return to the industry.

Close to 60% of the fracking equipment in the U.S. has been idled during the downturn, according to IHS Energy, which estimates it would take two months for some of that equipment to return.

The Wall Street Journal continues:

Still, even if prices return to levels where shale drillers can make money again, many companies are vowing to be cautious. Some are tempered by what occurred last spring, when producers jumped back into drilling new wells after oil prices briefly hit $60 a barrel, inadvertently worsening a supply glut that ultimately made prices worse.

This is a dramatic shift in thinking by the industry.....
Oil companies had been pumping near-record amounts of oil for almost two years, despite low prices. Many companies had no choice. When all your revenue comes from selling oil, you have to keep pumping and selling oil. Companies could either sell oil for cheap or go out of business.

With fewer rigs pumping oil today, oil prices are climbing..…
Still, the oil crisis is far from over. Even with the recent rally, the price of oil is 65% below its 2014 high. It’s trading around $38 a barrel. Many companies won’t earn a profit unless oil gets back to $50. According to The Wall Street Journal, one-third of U.S. oil producers could go bankrupt this year. A wave of bankruptcies would likely trigger another leg down in oil stocks.

The oil market is highly cyclical.....
It goes through big booms and busts. Today, the industry is going through its worst bust in decades. It will boom again...but not until the world works off its massive oversupply of oil. According to the International Energy Agency, the oil surplus could last into 2017.

Last month, Saudi Arabia, Russia, Qatar, and Venezuela agreed to cap oil output.....
Saudi Arabia and Russia are two of the world’s three largest oil-producing countries. Qatar and Venezuela are also major oil producers. These countries agreed to “freeze” their oil production at January levels. They quickly broke the agreement. On Monday, CNN Money reported that Saudi Arabia and Russia actually boosted output last month. Both countries are pumping record amounts of oil. They don’t have much choice. Oil makes up 80% of Saudi Arabia’s exports. It accounts for 52% of Russia’s exports.

Nick Giambruno, editor of Crisis Investing, doesn’t think Saudi Arabia will survive the crisis.....

But he says the U.S. shale industry will survive.

By keeping the market saturated with oil, the Saudis are driving down the price. They hope to drive it down low enough and long enough to bankrupt the shale industry…since shale oil costs more than Saudi oil to produce. The U.S. shale industry is a major source of competition.

In the 1990s, the U.S. imported close to 25% of its oil from Saudi Arabia. Today—because of high U.S. shale oil production—the U.S. imports only 5%. The Saudis are having some success. In the past year, at least 67 U.S. oil companies have filed for bankruptcy. Analysts estimate as many as 150 could follow. The shale oil industry is in ‘survival mode.’

The Saudis have damaged the U.S. shale oil industry. And they’ll continue to cause more damage. But they won’t bankrupt every producer. The shale industry has more staying power than Saudi Arabia. Some producers now say they’re profitable with $40 oil. And their pace of innovation will drive that even lower. The industry will survive.

The Saudis are playing a dangerous game.

If the Saudis don’t stop flooding the market—and there are no signs they will—they won’t be shooting themselves in the foot…but in the head. Saudi Arabia will either collapse or surrender—and stop flooding the market. Either way, oil will eventually go a lot higher.

Shale oil stocks are a train wreck right now. Occidental Petroleum Corporation (OXY), the largest shale oil producer, is down 30% since June 2014. EOG Resources Inc. (EOG), the second-largest shale oil producer, is down 35%.

Nick sees huge opportunity here. He often reminds readers that a crisis is the only time you can buy a dollar’s worth of assets for a dime or less. And shale oil stocks are in a major crisis right now. Nick has already picked out a “best of breed” U.S. shale oil company. But before pulling the trigger, Nick is waiting for the Saudi government to show signs of cracking. The point of maximum pessimism will present a “once-in-a-generation opportunity” to pick up this shale company at an absurdly cheap price.

You can get in on this opportunity by signing up for Crisis Investing. Click here to begin your 90-day risk-free trial.

Chart of the Day

Oil is still near its lowest level in years. As we mentioned earlier, oil has rallied 36% over the past few weeks. That’s a big jump in a short period. But oil isn’t in the clear yet.  Today’s chart shows the performance of oil since 2014. You can see that the price of oil is still well below its 2014 high. It’s trading at prices last seen during the last financial crisis. Many oil companies can’t survive with current oil prices. Some will go out of business. And a wave of bankruptcies will likely spark another leg down in oil stocks. We recommend avoiding oil stocks for now.

The article Gold and Oil Are Soaring…But There’s Only One You Should Buy Today was originally published at caseyresearch.com.

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Hillary’s Scary New Cash Tax

By Justin Spittler

Have you heard of “negative interest rates?” It’s become a phenomenon with economists and the media. There’s a good chance you’ve read an article about it. We’ve covered it many times in the Dispatch. I’m writing to tell you something about negative interest rates you haven’t heard. You certainly won’t hear about it in the mainstream press.

What’s coming at you is a historic event. It’s something our grandchildren will hear stories about...much like the Great Depression or the Cold War. What’s coming could send the price of gold much higher in the coming years...and hand gold stock owners 500%+ gains. If you know what’s coming, it could mean the difference between having lots of free cash in retirement or barely getting by.

To understand the gravity of this moment, let’s cover one of the most bizarre ideas in the world...Negative Interest Rates. In a normal world, your bank pays you interest on your savings. It takes your money, pools it with other people’s money, and loans it out. The bank makes money by paying out less in interest on your deposit than it earns in interest from borrowers.

For example, it might pay out 3% to depositors while earning 6% from borrowers. This is how it has worked for decades. Negative interest rates turn your “normal” bank account upside down. Negative interest rates could only exist in a crazy world where idiot politicians are in control. Unfortunately, that’s just what we’re dealing with right now. Politicians all over the world are ordering banks to charge depositors (you) a fee for storing cash.

It’s a perversion of saving. It’s a perversion of capitalism. It’s a perversion of planning for the future.
And it’s going to result in disaster. Politicians think that by making it unattractive for you to keep money in the bank, you’ll save less money. Instead, you’ll spend more money on things like smartphones and cars. You’ll invest in things like stocks and real estate. This would “stimulate” the economy.

This thinking is very, very wrong. No matter what the government does, it can’t force you to spend money. It can’t force you to make investments if you don’t see good opportunities. Forcing people to pay banks to hold their money is a tax. It is wealth confiscation for the digital age.

The government and the mainstream press won’t dare call it a tax. But that’s exactly what it is. A negative interest rate policy is a tax. Any time you hear a politician, central banker, or news anchor say “negative interest rates,” just think “TAX.” Think “TAX ON MY CASH”. I’ll say it again: Negative interest rates are going to result in financial disaster.

The coming disaster will wipe out many people. But you don’t have to be one them. I’ll explain how you can sidestep this disaster—and even make a lot of money as a result of it—in a moment. But let’s quickly cover one more thing about negative interest rates.

The Ugly Twin Sister of Negative Interest Rates

If the government makes it unattractive for you to keep cash in the bank, you can pull cash out of the bank. You can simply store it in a safe or under the mattress. Politicians know this. That’s why they’ve created another dangerous policy that works hand-in-glove with negative interest rates. That policy is banning cash.
You see, if you pull your money out of the banking system and stuff it under the mattress, you aren’t doing what the government wants you to do.

You’re not spending money or investing in stocks. This is a major reason why governments are banning large cash transactions and large denomination bills.

They are fighting a War on "Cash". In just the past few years…

• Spain banned cash transactions over 2,500 euros
• Italy banned cash transactions over 1,000 euros
• France banned cash transactions over 1,000 euros, down from the previous limit of 3,000 euros

And just a few weeks ago, former U.S. Treasury Secretary Larry Summers called for a ban on the $100 bill!
Historians aren’t surprised by Summers’ idea. Franklin Delano Roosevelt banned $500 and $1,000 bills in the 1930s. You can bet that Big Government types like Hillary Clinton and Donald Trump will do the same thing in a financial emergency.

By making it so difficult (or illegal) to buy and sell things with cash, the government wants to force people into the banking system. That way it can monitor us and coerce us into whatever it wants...like pay outrageous new taxes.

It’s all a dream come true for government central planners.

The governments say these new currency laws are for fighting terrorism, money laundering, and drugs.
But the ultimate goal is control of society…and to confiscate the wealth of private citizens. As congressman Ron Paul said, “The cashless society is the IRS’s dream: total knowledge of, and control over, the finances of every single American.”

Whether you agree with these regulations or not, the conclusion is obvious. By driving us more and more towards trackable digital payments, the government has made it much, much easier to confiscate our wealth. We’re like sheep that have been “herded” into a corral, ready for shearing. And Hillary Clinton (and her Big Government cronies) is holding the clippers. However, you don’t have to be sheared. You can avoid the shearing by learning how to navigate what will become the largest underground currency market in history.

Hillary Doesn’t Want Your Gold. She Wants Your Cash

On April 5th, 1933, president Franklin Delano Roosevelt issued one of the most controversial orders in U.S. history. It went by the name “Executive Order 6102” Not one American in 1,000 knows about this order. But to this day, many experts consider it to be one of the most destructive acts in U.S. history. It violated sacred principles held by our founding fathers. It impoverished millions and confiscated the savings of honest, hardworking Americans.

Executive Order 6102 made it illegal for private citizens to own gold. Citizens were ordered to turn in their gold to the government. Why would the government confiscate the wealth of private citizens? You can fill a book on the history surrounding Executive Order 6102. But in a nutshell, it was the act of a desperate government in the midst of a financial crisis. The government wanted the gold in order to increase the nation’s money supply. It believed an increase in the money supply would revive the struggling economy.

Please review those last two paragraphs.....

An increase in the money supply...a struggling economy...a desperate government. Sound similar to what is happening right now? Since the answer to that question is “YES,” we have to ask another question. Could such a confiscation happen again?

As the crisis develops, our deeply indebted government will act like a giant wounded beast, lashing out in all directions. It will grow more desperate for control. It will grow desperate for money. And just like FDR did in the 1930s, it will confiscate the wealth of private citizens. But Hillary Clinton (or Donald Trump, or whoever wins the election) won’t go after your gold. Nowadays, the gold market is very small compared to the overall economy.

Going after gold would be too much work for the government. The government is going to go after YOUR CASH. It will regulate your cash. It will tax your cash. It will take your cash. This has all kinds of implications for banking and the economy.

But here’s the most important thing you need to know as an investor. Negative interest rates and their partner, the War on Cash, will create a renewed interest in gold. This could cause gold to double or even triple in value. Even children know what the government is doing is crazy. And people aren’t going to take this lying down.

Rather than participate in the government’s mgovernment, onetary farce, people will go underground. They will pull cash out of banks and hoard it in safe places. And they will seek the safety, anonymity, and reliability of gold and silver. Gold and silver have served as money for centuries. Gold is the ultimate currency because it doesn’t rot or corrode...it is durable…easily divisible...portable...has intrinsic value…is consistent around the world...and it cannot be created from thin air. It cannot be debased by the government.

By enforcing negative interest rates and fighting a War on Cash, the government will create a huge underground currency market. And the ultimate underground currency will be gold and its sister metal, silver. Gold is trading for around $1,260 an ounce right now. As the government blunders into a negative interest rate disaster, gold will likely rise 50%...100%...possibly even 200% higher. There’s an underground currency market coming to your neighborhood.

If you own enough gold, you’ll be its king.
If you don’t yet own gold, buy it now.
If you own a lot of gold, buy more.

Regards,
Brian Hunt

---

Editor’s Note: Brian just alerted readers to an extremely rare opportunity in the gold market…one that could lead to 500%+ gains in a short period. This situation has only occurred a handful of times in the last 20 years. But every time it occurs, some investors see gains as large as 1,700%, 4,300%, and 5,000%.

If you’re interested in this idea, please act now. With gold prices surging, the window of opportunity won’t be open long. And once it closes, we likely won’t get another one for years. Read more here. The article Hillary’s Scary New Cash Tax was originally published at caseyresearch.com.


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These Important Stocks are Trading Like a Financial Crisis Has Begun

By Justin Spittler

European bank stocks are crashing. Deutsche Bank (DB), Germany’s largest bank, has plunged 36% this year. Its stock is at an all time low. Credit Suisse (CS), a major Swiss bank, has plummeted 40% this year to its lowest level since 1991. As you can see in the chart below, the STOXX Europe 600 Banks Index, which tracks Europe’s biggest banks, is down 27% this year. It’s fallen six weeks in a row, its longest losing streak since the 2008 financial crisis.

These are huge drops in a short six week period. It’s the kind of price action you’d expect to see during a major financial crisis. The sell off in Europe’s banks has dragged down other European stocks. The STOXX Europe 600 Index, which tracks 600 large European stocks, is down 15% this year to its lowest level since October 2013.

European banks are struggling to make money…..
Deutsche Bank lost €2.12 billion for the fourth quarter… after making a €437 million profit the year before. Credit Suisse lost €5.83 billion last quarter… after making a €691 million profit the year before. Profits at BNP Paribas (BNP.PA), France’s largest bank, plunged 52% last quarter.

Europe’s crazy monetary policies are starving banks of income..…
Dispatch readers know the Federal Reserve has held interest rates at effectively zero since 2008. The European Central Bank (ECB), Europe’s version of the Fed, also cut rates after the global financial crisis. Unlike the Fed, the ECB didn’t stop at zero. The ECB dropped its key rate to -0.1% in June 2014. It was the first major central bank to introduce negative interest rates. Today, its key rate is -0.3%.

The ECB’s key rate of -0.3% sets the tone for all interest rates in Europe..…
It forces banks to charge a rock-bottom interest rate on loans. This has eaten away at bank profits, as The Wall Street Journal reports:

Very low interest rates hurt the profits banks make on loans, especially when investors believe loose monetary policy is here to stay. Long term rates at which banks lend then fall to be little more than short-term ones at which banks borrow.

The idea of negative interest rates likely sounds bizarre to you..…
After all, the whole purpose of lending money is to earn interest. With negative rates, the lender pays the borrower. So, if you lend $100,000 at -1%, you’ll only get back $99,000.  Negative interest rates are a scheme to get people to spend more money.

According to mainstream economists, spending drives the economy. By cutting its key interest rate to less than zero, the ECB is making it impossible for people to earn interest on their savings. This discourages saving and encourages spending.

But as Casey Research founder Doug Casey says, this isn’t just wrong, it’s the exact opposite of what’s true. Spending doesn’t drive the economy. Production and saving drive the economy. You have to save to build capital, and capital is necessary for everything.

Negative rates haven’t helped Europe’s economy…
Europe’s economy grew at just 0.3% during the third quarter. Europe’s unemployment rate is up to 9%, nearly double the U.S. unemployment rate. And the euro has also lost 17% of its value against the U.S. dollar since June 2014.

If you’ve been reading the Dispatch, you know negative interest rates are a new government scheme..…
Until recently, negative interest rates didn’t exist. Governments invented them to push us further into “Alice in Wonderland.” That’s our nickname for today’s economy, where eight years of extremely low interest rates have warped prices of stocks, bonds, real estate, and nearly everything else.  

For months, we’ve been warning that negative rates are dangerous. Last month, Japan, the world’s third-largest economy, joined the list of countries using negative rates. Sweden, Denmark, and Switzerland all have negative rates, too. According to The Wall Street Journal, countries that account for 23% of global output now have negative interest rates. 

This has set the stage for a huge economic disaster..…
To avoid big losses, we recommend owning physical gold. Unlike paper money, central bankers can’t destroy gold’s value with bad policies. Instead, gold’s value usually rises when governments devalue their currencies.

For example, Europe’s currency (the euro) has lost 17% of its value against the dollar since June 2014. But the price of gold measured in euros is up 14% in the same period. We recently put a short presentation together that explains the best ways to “crisis proof” your wealth.  We encourage you to watch this free video here.

Chart of the Day

Deutsche Bank’s stock has been destroyed. Today’s chart shows Deutsche Bank plummeting 46% over the past year. Yesterday, it hit an all time low. Today, Deutsche Bank jumped 10% after the company said it’s considering a bond buyback program. The company hopes this will ease investor concerns.

E.B. Tucker, editor of The Casey Report, doesn’t think the plan will work:

Deutsche Bank is in trouble. It barely survived the last crisis. In the aftermath, it took tremendous risks to make as much profit as possible. But its winning streak is coming to an end… and it still has to pay for all its obligations. Deutsche Bank also has problems beyond its control. Europe isn’t growing. It’s also dealing with negative interest rates. This is a double whammy for big banks, especially ones that took on too much risk.

The article These Important Stocks are Trading Like a Financial Crisis Has Begun was originally published at caseyresearch.com.

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Here’s Why Crude Oil Stocks Haven’t Bottomed Yet

By Justin Spittler

Oil companies are hemorrhaging money. The oil market is in its worst downturn in decades. The price of oil has plummeted 72% since June 2014. Oil is trading below $30 a barrel for the first time since 2003.
If you’ve been reading the Dispatch, you know the world has too much oil. In recent years, technologies like “fracking” have unlocked billions of barrels of oil that were once impossible to extract from shale regions.
Global oil production has climbed 20% since 2000. Last year, global output hit an all time high. Yesterday, The Wall Street Journal reported the global oil market is oversupplied by 1.5 million barrels a day.
Because oil is leaving the ground faster than it’s being consumed, oil storage tanks are overflowing. 

Companies are now storing oil on tankers floating at sea, according to Bloomberg Business.

Low oil prices have slammed oil stocks..…
Since June 2014, Exxon Mobil (XOM), the world’s largest oil company, has dropped 27%. Chevron (CVX), the second biggest oil company, has plunged 38%. European oil giants Royal Dutch Shell (RDS-A), BP (BP), and Total S.A. (TOT) have plummeted 46%, on average, over the last 18 months. Together, these giant companies are known as the oil “supermajors.”

BP had a $3.3 billion net loss last quarter..…
And it lost $6.5 billion for the year, its worst annual loss in at least 30 years. Exxon sales fell 28% last quarter. Its profits plunged 58% to $2.78 billion, the company’s lowest quarterly profit since 2002. Chevron also booked its worst quarterly profit since 2002. Shell expects to report a 42% decline in profits for their fourth quarter.

Oil and gas companies slashed spending by 22% last year..…
Analysts expect another 12% cut this year to $522 billion, according to Reuters. The industry hasn’t spent that little since 2009…when the U.S. economy was going through its worst downturn in almost a century. More spending cuts are coming this year. Chevron plans to cut spending by 24% this year. The company laid off 10% of its employees in October. Exxon plans to cut spending by 25% in 2016. And BP plans to eliminate 9% of its jobs over the next two years.

The supermajors have not cut dividends yet..…
Regular readers know these oil giants pay some of the steadiest income streams on the planet. Shell hasn’t cut its dividend since World War II. Exxon and Chevron have both increased their annual dividends for at least the past 25 years, which earns them a spot in the “Dividend Aristocrats” club. Investors view these dividends as sacred. Some have even passed along their original shares to children and grandchildren, like grandma’s ring or the family farm. These giant oil companies have been paying regular dividends for decades, even through the 2001 dot com crash and 2008 financial crisis. Cutting their dividends would be a last resort.

The world’s oil giants may have to do the “unthinkable” if oil prices stay low..…
Financial Times reported in December,

…(J)ust weeks ago, BP and France’s Total each pledged to balance their books at $60 a barrel oil, saying they aimed to cover their dividends from “organic” cash flow by 2017.

…(E)ven at $60, the three biggest European majors will need to take further cost-cutting action to cover investor payouts…Total’s $6.8bn dividend would exceed its projected organic free cash flow by $800m two years from now. For BP, the cash shortfall is put at $500m…

These oil companies cut costs to be profitable at $60 oil. But with oil now at $30, they need to make even more drastic cuts.
BP is running out of places to cut spending according to Bloomberg Business.

While Chief Executive Officer Bob Dudley has trimmed billions of dollars of spending, cut thousands of jobs and deferred projects in response to the plunge in crude prices, BP’s cash flow still doesn’t cover investments and dividends…

BP has already cut “a lot” from capital expenditure, Chief Financial Officer Brian Gilvary said Tuesday at a press briefing in London. When asked how much room it has to reduce spending further before cutting into the bone, Gilvary said “we are around that zone.”

Standard & Poor’s (S&P) downgraded Chevron and Shell this week..…
Ratings agencies downgrade a company’s credit rating when they think the company’s financial health is getting worse. Like a person having a bad credit score, a downgrade can make it harder and more expensive for a company to borrow money. S&P cut Shell’s credit rating to the lowest level since 1990. S&P also put the debt of BP, Total, and Exxon on watch for downgrades.

S&P doesn’t think oil companies have cut spending enough. Bloomberg Business reported:

S&P’s moves come after the ratings company lowered its 2016 oil-price assumption Jan. 12, reducing Brent crude by $15 a barrel to $40. The 52 percent average price decline in 2015 won’t be matched by most companies’ cost and spending reductions, S&P said.

As regular readers know, the oil market is cyclical. It goes through big booms and busts. Eventually we’ll get an amazing opportunity to buy world-class oil companies at absurdly cheap prices. But with dividend cuts looming, the bottom likely isn’t in yet. We recommend avoiding oil stocks for now.

Louis James, editor of International Speculator, sees an opportunity to profit from cheap oil..…
Louis is our resource guru. He specializes in finding small miners with huge upside. Louis is an expert in the cyclical nature of commodities. He knows how to make money during booms and busts. And now, Louis sees opportunity in airlines. Jet fuel, which is made from oil, is a major operating expense for airlines. So, airline stocks often move up when oil drops. Last year, jet fuel prices fell by more than one-third. Major airlines are now raking in cash. The U.S. airline industry made $22 billion in profits during the first nine months of 2015, according to the Department of Transportation. That’s more than any entire year in its history.

In December, Louis recommended his favorite airline stock in International Speculator.....
The company has doubled its profits during the third quarter of 2015. On Monday, Louis said the company doubled its profits again last quarter.

The company just announced more-than-solid financial results for last quarter, doubling its quarterly profit. The company says it’s on track to hit the high end of its operational goals for the fiscal year. All great, but even better is that the stock rebounded from its recent slide on the news. That’s “proof of concept” that this stock can buck the market by delivering to the bottom line when other businesses are hurting, which was one of the main reasons we bought this stock.

The stock surged 4% with the quarterly news…and Louis thinks the stock will continue higher. You can learn more about Louis’ favorite airline by signing up for a risk-free trial to International Speculator.

Chart of the Day

BP just had its worst year in at least three decades. Today’s chart shows BP’s profits since 1985. Since then, the oil giant has made money in 27 years and lost money in 3. Last year, BP lost a record amount of money. It lost more than it did in 2010 when one of the company's oil rigs exploded in the Gulf of Mexico. BP has cut billions of dollars in spending. It’s laid off thousands of workers. Yet, it’s still bleeding cash. The company may soon have to do the unthinkable and cut its dividend.

The article Here’s Why Oil Stocks Haven’t Bottomed Yet was originally published at caseyresearch.com.

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Why Now Is the Best Time to Buy Gold in a While

By Justin Spittler

Bank stocks are slumping. Wells Fargo (WFC), the largest U.S. bank, has fallen 11% this year. JPMorgan Chase (JPM), the second largest, has fallen 14%. Bank of America (BAC), the third largest, has plunged 21%. And those are just the household names.

The Standard & Poor’s 500 Financials Index, which tracks 87 large U.S. financial stocks, has dropped 12% this year. For comparison, the S&P 500 has dropped 8%. On Monday, Bloomberg Business reported that financial stocks are off to their worst start in years.

The Standard & Poor’s 500 Financials Index has tumbled 11 percent in 2016, putting it on track for its worst month in more than four years. More than $360 billion of market value has been wiped out of financial companies in January, more than all but one month since data began in 1990.

The performance of banks says a lot about the health of an economy..…

Banks make money by loaning money to businesses and real estate buyers. The more good loans a bank makes, the more interest paid to the bank. But when an economy is doing badly, demand for loans falls. Also, when an economy is doing badly, some borrowers don’t pay loans back in full. This increases the cost of bad loans…which is one of a bank’s biggest expenses. This eats away profits from the bottom line.

When the economy slows, people cut back on extra expenses like vacations. People shop less. There are fewer dollars around at the end of each month, so less money ends up in the bank…giving the bank less money to loan out. Since banks “touch” almost every aspect of the economy, bad performance by banks is often an early sign that the economy is turning down.

While bank stocks are down big, bank profits are still solid..…

JPMorgan Chase’s profits jumped 10% from the prior year...Bank of America’s rose 9%...and Wells Fargo’s were flat. You’d expect to see much worse results in an industry where stocks are breaking down. This likely means investors are expecting bank profits to shrink soon. Markets tend to “price-in” things before they happen.

Bloomberg Business reports:

Commercial and industrial loans have flat lined in recent weeks after steadily climbing throughout 2015…Growth in such loans offers investors an idea of potential interest income, as C&I loans typically produce more revenue for banks than parking funds in cash or Treasuries.

Bloomberg Business also explained that banks are bracing for losses on oil loans.

Bigger picture uncertainties are weighing on the group, not least of which is how wounds at energy companies will bleed into this sector. Bank of America, Citigroup Inc., JPMorgan and Wells Fargo have set aside more than $2.5 billion to cover souring energy loans and will add to that if oil prices remain low.

If you’ve been reading the Dispatch, you know the oil industry is in crisis mode..…

The price of oil has plunged 70% since June 2014. Yesterday, oil closed at $32. Energy consulting company Wood Mackenzie estimates $1.5 trillion worth of oil projects in North America can’t make money even at $50 oil. With oil at $32 today, the value of money-losing projects has likely climbed above $2 trillion.

Many oil companies are struggling to pay back loans. Credit rating agency Fitch expects 11% of U.S. energy bonds to default this year. That would be the highest default rate for the energy sector since 1999. This is bad news for banks that have loaned money to oil companies.

Moving along, if you’ve been reading Crisis Investing, you know the “opening up” of Cuba is a huge investment opportunity..…

Nick Giambruno, editor of Crisis Investing, expects to make a lot of money investing in Cuba. Nick specializes in buying high-quality assets made cheap by crisis. According to Nick, a crisis is the only time you can be sure to get assets at bargain prices.

Cuba has been in a slow-motion crisis for decades. In short, its Communist government has wrecked the economy. And the United States’ ban on trade with Cuba killed any chance at economic growth. However, after decades of isolating Cuba, the U.S. government recently changed its policy. It reopened an embassy in Cuba in August. And last week, the U.S. took another promising step toward Cuba.

Here’s the New York Times:

The Obama administration announced Tuesday that it was removing major impediments to contact between the United States and Cuba by lifting restrictions on American financing of exports to the island nation and relaxing limits on the shipping of an array of products, from tractors to art supplies.

The revised rules that will take effect on Wednesday will allow United States banks to provide direct financing for the export of any product other than agricultural commodities, still walled off under the trade embargo.

Nick notes that American companies are pushing to do business in Cuba. He says the “cat’s out of the bag,” and Cuba will soon open up.

Cuba has over 2,000 miles of pristine coastline and the potential to be a top tourist destination. When the embargo ends, the U.S. government estimates 12 million Americans will visit Cuba within the first year.

There’s no denying it. If Cuba ever opens up, there’s potential to make a fortune. Doug Casey has long been interested in the investment potential of Cuba, and I couldn’t agree more that there is huge opportunity there.

You can learn how Nick is playing the “opening up” of Cuba by taking a risk-free trial of Crisis Investing. It’s an investment Americans can easily buy with a standard brokerage account…and it yields 9.3%.

Our friend Tom Dyson just came back from a trip to Cuba..…

If you don’t know Tom, he's founder of Palm Beach Research Group, a publishing company dedicated to helping readers get a little bit richer every day. Since he launched The Palm Beach Letter in 2011, it has built a reputation as one of the world’s most respected investment advisories. You can check it out here.

Tom was in Cuba looking for investment opportunities. Here’s his take…

There are billions of dollars just waiting to flood into Cuba the moment their economy opens. There’s a whole industry poised to invest in Cuba: Cuban people living in Florida and other parts of America...the big hotel chains...the big real estate companies.

Tom says it’s not easy for Americans to invest in Cuba yet…but the potential is huge.

It’s a beautiful island with amazing beaches. Cuba could also be a huge cruise ship destination. It could end up looking like Cancun.

Chart of the Day

Gold has climbed to a three month high. Yesterday, the price of gold closed at $1,125 an ounce, its highest level since November. Gold is also up 6.1% since the start of the year. U.S. stocks are down 8% in the same period.
Today’s chart shows that gold is “carving out a bottom”.  On Monday, we explained why “carved out bottoms” are important. An asset carves out a bottom when it stops falling…forms a bottom for a period of time…then starts climbing higher. A stock that’s carving out a bottom should hold above a certain price for a period of time. This is a key signal that buyers are stepping in at this price, giving it a floor.

Buying an asset that has carved out a bottom is much less risky than buying an asset that’s trending down. As you likely know, gold has been in a downtrend since 2011. However, since November, gold has stopped going down. It has held above $1,050. This is a clue that gold prices are heading higher.

Casey readers know we own gold because it preserves wealth over the long term. We try not to get caught up in its daily price movements. However, gold is at a potential “turning point” today. If you’ve been meaning to buy gold, now’s a good time.

The article Why Now Is the Best Time to Buy Gold in a While was originally published at caseyresearch.com.

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A Stunning Move by the World’s Largest Oil Company

By Justin Spittler

Oil still can’t find a bottom. As Dispatch readers know, the oil market is in crisis. Since June 2014, oil has plunged 69%. It dropped 31% in 2015 alone. So far, 2016 has been even worse. The price of oil has fallen every day this year. On Friday, it closed at $32.88 a barrel, its lowest price since February 2004. Oil is already down 11% this year.

In October, Doug Casey predicted lower oil prices at the Casey Research Summit in Tucson, Arizona. I don't know how long [oil prices] will stay low. But they're going lower for the time being. Production is stable to up, but consumption is headed down with a slowing economy.…I'm still short oil at the moment.

The world has too much oil…..
As you likely know, new technologies like “fracking” have unlocked billions of barrels of oil that were impossible to extract before. U.S. oil production has nearly doubled since 2008. In June, U.S. oil production hit its highest level since the 1970s. Global oil output hit an all time high in 2014.

Falling oil prices have slammed the world’s largest oil companies…..
The world’s five largest publicly traded oil companies – Exxon Mobil (XOM), Chevron (CVX), Royal Dutch Shell (RDS-A), BP (BP), and Total S.A. (TOT) – lost $205 billion in value last year, according to The Wall Street Journal. Shell, the worst performer of the five, dropped 24% in 2015. Total, the best performer, dropped 3%.

Oil services companies, which sell “picks and shovels” to the oil industry, have also tanked. The Market Vectors Oil Services ETF (OIH), which holds 26 oil service companies, has plunged 59% over the past 18 months. Schlumberger (SLB) and Halliburton (HAL), the two largest oil services companies, are down 39% and 44% in the same period.

Eventually, this cycle will end with absurdly low prices for oil stocks. We’ll get an amazing opportunity to buy oil stocks at fire sale prices. But, for now, we recommend staying away until the world works through some of its oversupply of oil.

Saudi Arabia is in crisis…..
Saudi Arabia depends more on oil revenues than any other country. Oil makes up 83% of its exports. And about 80% of the country’s government revenue come from oil sales. Last year, the Saudi government spent $98 billion more than it took in…its first budget deficit since 2009.

The International Monetary Fund (IMF) expects the Saudi government to post a budget deficit as high as -19% of GDP in 2016. For comparison, the U.S. government has not posted a deficit higher than -9.8% since World War II. The IMF says Saudi Arabia could burn through its $650 billion cash reserve by 2020 if oil prices stay low. Since oil crashed in the summer of 2014, the country has already withdrawn at least $70 billion from its cash reserve.

To raise cash, the Saudi government may sell its crown jewel…..
Saudi Aramco is Saudi Arabia’s government owned oil company. As the world’s largest oil company, it owns the biggest oil fields in the world, and produces 13% of the world’s oil. The Saudi government has controlled the country’s oil industry since the 1970s. Last week, Financial Times reported that Saudi Arabia is considering an initial public offering (IPO) for Aramco. An IPO is when a company sells shares to the public.

According to Financial Times, an IPO would likely value the company “in the trillions of dollars.” To put that in perspective, Apple (AAPL), the world’s largest publicly traded company, is worth just $538 billion. Some estimates put the value of Saudi Aramco at more than 10 times that of Exxon Mobil – the world’s largest publicly traded oil company.

Switching gears, the U.S. automobile industry is setting record highs..…
U.S. automakers sold an all time record 17.5 million vehicles in 2015. The industry sold 5.7% more vehicles last year than it did 2014. Auto sales have now grown six years in a row. Despite record sales, U.S. automaker stocks are struggling. Ford (F) was down 9.1% in 2015, and has only gained 17% since the beginning of 2012.

General Motors (GM) was down 2.6% in 2015, and has gained 46% since the beginning of 2012. Both stocks have performed worse than the S&P 500, which has gained 53% since the beginning of 2012. Companies that sell parts and services in the auto industry have done much better. Tire maker Goodyear (GT) has climbed 99% over the past four years. Repair and parts shop AutoZone (AZO) is up 119%.

Cheap credit has fueled the boom in the auto industry…..
Forbes reported last month: During the third quarter of 2015, Experian determined the average amount financed for a new vehicle was $28,936, which is up $1,137 from the same period in 2014. What’s more, 44 % of buyers are now taking out loans for between 61 and 72 months, with 27.5% extending their new-vehicle indebtedness to between 73 and 84 months, with the latter representing an increase of 17.1 percent over the past year.

As Casey readers know, the Federal Reserve has made it incredibly cheap to borrow money. In 2008, the Fed cut its key interest rate to effectively zero to fight the financial crisis. It has held its key rate at extremely low levels ever since. Today, its key rate is just 0.25%...far below the historical average of 5%. The average interest rate on a car loan is just 4.3% today. In 2007, the average car loan rate was 7.7%.

E.B. Tucker, editor of The Casey Report, isn’t surprised by the auto industry’s record year..…
Here’s E.B.: Of course the auto industry had a record year…how could it not? I've seen auto rates as low as 0% for 84 months. When money is free, people buy now and think later. The U.S. auto loan market has grown 18 quarters in a row. Last year, it topped $1 trillion for the first time ever. There is now 47% more auto debt outstanding than credit card debt in the U.S.

E.B. says this will end badly. The auto leasing market is also booming because of easy money. Leasing made up 27% of car sales during the first quarter of 2015. Those leases will expire 40 months from now. And someone has to buy those vehicles. This year, over 3 million leased cars will hit the market. Even more will hit the market next year and the year after. All these used cars will create a huge glut. If the free money dries up at the same time, things will get ugly fast. That’s how booms built on easy money come to an end.

Chart of the Day

Oil has plunged to its lowest level in 12 years. Today’s chart shows the price of oil going back to 2004. As you can see, oil has sunk to its lowest level since February 2004. It’s now down 77% from the all time high it set in 2008. As we’ve explained, the world simply has too much oil. Oil is now cheaper than it was during the worst of the global financial crisis in 2008-9.

The article A Stunning Move by the World’s Largest Oil Company was originally published at caseyresearch.com.

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By Far the Biggest Threat to Your Wealth in 2016

By Justin Spittler

Today, we begin with a warning. We’re going to tell you about a dangerous event that is very likely to happen within the next year. You’ve probably never thought about this threat. Until now, Casey Research has never discussed it in public. This threat isn’t a stock market collapse…it’s not a failure of the Social Security system…it’s not even a national debt or currency crisis. It’s much more dangerous and much more likely to happen than any of those things.

We’re talking about a major financial terrorist attack. A total wipeout of your financial data, assets, and records and those of many millions of other people. If you’re like most people, you think, “There’s no way that could happen here. Surely the financial system is completely safe.” But think about it….

If you have $100,000 in the bank, what do you really have?

These days, it’s not a claim to hard assets like gold or silver. And it’s certainly not real cash in a bank. Many local banks don’t even keep that much cash on hand! Just try asking your bank for $25,000 in cash. The teller will say, “We can’t give you that much money.” If you keep your life savings in a bank or brokerage account, what you have are electronic entries that hackers can easily and quickly delete. All the money you’ve earned...the hard work, the sweat, the sacrifice...the nest egg you’ve built to provide for your family, GONE. In an instant.

Cyberterrorists have already broken into the world’s most secure digital systems....

For example…..

➢ In May, hackers stole information on 300,000 private tax returns from the Internal Revenue Service (IRS). They used the information to claim tens of millions of dollars in fraudulent tax refunds.

➢ In April, hackers gained access to President Obama’s email. They gathered details on Obama’s personal schedule as well as private conversations with foreign officials.

➢ And earlier this year, we learned that a group of hackers infiltrated some of America’s largest and most sophisticated financial firms. The victims include JPMorgan Chase, E*Trade, and Scottrade. The hackers stole the personal data of more than 100 million customers. They even manipulated stock prices.

A large scale cyber attack could cripple the financial system….

E.B. Tucker, editor of The Casey Report, explains: In today’s high tech world, the lifeblood of our economy is a complex system of digital payments, digital book entries, and digital money. Billions of dollars are electronically transferred every day. We bank online, shop on our computers, and pay for lunch with credit and debit cards. Even the stock exchanges are now 100% electronic. The money in your savings, brokerage, and credit card accounts are just bits and bytes. A skilled hacker could steal it or make it vanish completely.

Enemy foreign governments are likely to attack the U.S.’s financial system.…

Here’s E.B....The U.S. has enemies all over the world: Russia, China, Iran, Syria, Iraq, and Saudi Arabia come to mind. There are millions of people out there who want to see the West burn. And it’s only a matter of time before they strike us at one of our most vulnerable points: Our digital financial system. As cybersecurity expert, Mary Galligan, recently told Bloomberg News, state sponsored cyberterrorism is “the FBI’s worst nightmare.”

The fallout from a cyberattack could be catastrophic….

E.B. explains…Just imagine, what if all of the accounts at a major bank like Wells Fargo were suddenly erased? What if businesses couldn’t process digital payments? What if your brokerage told you its records had been destroyed and all evidence of your stock portfolio had disappeared? What if a cyberattack shut down our electrical grid? I’ll tell you what would happen: An explosion of chaos. Society would break down. When people are wiped out financially, they’re often wiped out mentally and morally, too…they’ll do anything to survive, including resort to violence.

The government and central banks cannot protect you from cyberterrorists….

They don’t want people talking about this massive threat. They want to keep it quiet. You see, the U.S. dollar isn’t backed by gold like it was in the past. Our monetary system is built on confidence, and confidence alone. If lots of people questioned the safety of the system and pulled their money out, it could trigger a nationwide run on the banks, a stock market collapse, and a currency crisis. It could literally lead to rioting in the streets.

If you keep most of your money in digital form….

You must take steps to protect yourself and your family before an attack happens. The first step is to store a sizable amount of cash in a safe place you can easily access. We recommend at least three months’ worth of living expenses. Six months’ worth is even better.

You can store the cash in a safe, in a public storage container, or bury it in a waterproof container in your backyard. This might sound extreme, but think about it…if the financial system is compromised and your debit and credit cards become useless, you’ll need enough cash on hand to pay for groceries, gasoline, and other daily necessities.

Otherwise, you’re in a vulnerable position. Having no cash on hand means you could struggle to feed your family in an emergency. Because we believe most Americans are overlooking this huge threat, we put together a new special report titled “How to Protect Yourself from a Financial Terrorist Attack.” We talked with top cybersecurity experts and put hundreds of hours of research into this report. It explains seven specific steps you can take now to protect your money from financial terrorism. Click here to learn more.

Switching gears, the Dow Jones U.S. Trucking Index is headed for its worst year ever….

Yesterday, it closed down 17% on the year. It’s dropped 7.1% in December alone. The Dow Trucking Index tracks the performance of major U.S. trucking stocks. It’s only had three down years since 2001. Over that period, it’s averaged annual returns of 12%. The chart below shows trucking stocks have been in a clear downtrend all year.

E.B. Tucker says investors should watch this trend even if they don’t own trucking stocks. Trucks carry inventory to stores. They carry parts to the assembly plant. Then they carry assembled products to buyers. When sales are rising, it tends to show up in trucking companies before retailers. Trucking companies also feel the pinch first when sales are falling. This is why trucking stocks often give clues about where the market’s going long before other industries.

E.B. also says the collapse in trucking stocks is an early warning sign for the rest of the market. Transport stocks have given investors early warning signs for the past 100 years. Right now, the Dow Trucking Index is telling us business is not great. The trucks aren’t full. This is a dire sign. It’s saying we’re in for some negative surprises in 2016.

The U.S. stock market looks fragile….

From March 2009 through December 2014, the S&P 500 gained 204%. But the bull market has stalled this year. The S&P 500 is down 1% since January. If this trend continues, 2015 will the S&P’s first down year since 2008. On its own, this isn’t a huge concern. However, Dispatch readers know there are many other signs U.S. stocks have already topped out

For one, the current bull market in stocks is now 81 months old. It’s run 31 months longer than the average bull market since World War II. Of course, bull markets don’t die of old age. But they all die eventually. On top of that, U.S. stocks are expensive. The S&P 500 is now 57% more expensive than its historical average. Again, bull markets don’t end just because stocks are expensive. But expensive stocks can fall much harder during a big selloff.

We recommend investing with caution right now. You should own a significant amount of cash and physical gold...and you should sell any overpriced stocks that are vulnerable to an economic downturn.

Chart of the Day

Oil tanker rates are at their highest level in seven years. Today’s chart shows the daily shipping rates for very large crude carriers (VLCC), the second largest type of oil tanker. Each VLCC can carry 2 million barrels of oil. From 2011 through 2014, VLCC shipping rates averaged $20,000/day. This year, rates have soared 79%. Earlier this month, VLCC daily rates reached $112,775, their highest level since 2008.

Meanwhile, the price of oil has plunged 32% this year. Earlier this month, oil fell to its lowest level since 2009. Oil tanker rates can go up when oil prices go down…because ship operators charge based on how much oil they move. Their rates are not directly tied to the price of oil.

Dispatch readers know the world has a huge surplus of oil right now. All this oil needs to go somewhere, and oil tankers get paid to move it. As you can see in the chart, it’s a great time to be an oil tanker company.

The article By Far the Biggest Threat to Your Wealth in 2016 was originally published at caseyresearch.com.

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