Easy Exposure to Multinational Companies
- Nilus Mattive introduces “Liberty Vouchers”
- Income from foreign-owned companies made easy (and safe)
- Homebuilding stocks need a pick-me-up
- Jim Rickards: What every seasoned gold investor should know
- Gold-seasoned chicken wings (really)
- A reader responds to three hot topics: Does The 5 bad-mouth Trump?
“‘Liberty Vouchers’ are one of my favorite ways to enjoy a steady, safe stream of income,” says Nilus Mattive.
Nilus, who heads up our Rich Life project at Agora Financial, explains this smart hedge against the dollar, created almost a century ago.
Take a look…
Not a stock, bond or certificate of deposit
“It’s a little-known voucher, issued by a bank,” Nilus continues. “One that allows ordinary Americans to claim a share of ‘liberated’ foreign income that’s brought back to U.S. shores.”
And if you’ve ever wanted to diversify your portfolio by investing in companies overseas, it’s one of the easiest ways to do so.
While most investors know they shouldn’t put all their money in a single stock — dangerous, right? — Nilus points out the danger of investing in a single country… .
(Even if it does have the largest economy on Earth.)
Granted, the U.S. gross domestic product (GDP) accounts for almost a quarter of the world’s economy.
“That’s a big portion, sure,” says Nilus, “but it means someone who only invests in U.S.-based assets could be missing out on the vast majority of the world’s opportunities!
“Just look at China,” for example. “It represents another 15% of the world. So simply getting a stake in a couple Chinese investments makes a lot of sense.”
While we’re on the subject of diversification: “Consider the fact that not every country experiences the same type of economic conditions at the same time,” Nilus says.
“They all have unique demographics, monetary policies and business climates.”
Just look at a sample of countries’ annual GDP growth in 2016:
- United States… 1.5%
- United Kingdom… 1.8%
- New Zealand… 3.1%
- Ireland… 5.1%
- India… 7.1%.
“As an investor,” says Nilus, “it’s nice to benefit from other parts of the world that might be experiencing those kinds of spurts.”
The need for a diversified portfolio is “especially true if (or when) a calamity strikes home.”
Lest we forget: “During the Great Recession, the U.S. was hit hard and so were most other developed countries.
“However, there were still bright spots.”
“Just one example? Poland, which posted growth during the first quarter of 2009 as most other nations were struggling,” says Nilus.
“It’s worth noting Poland has its own currency, the zloty, which was one of the things that helped it weather the storm better than many of its European neighbors.”
Nilus continues: “I bring this up because currency diversification is arguably the biggest advantage of ‘Liberty Voucher’ programs.”
You might be thinking you can still benefit from global trends through your U.S.-based multinational companies and ETFs.
“You’re right,” Nilus concedes.
“However, you’re still investing with U.S. dollars… Your dividends are paid in U.S. dollars.
“The U.S. dollar is subject to large swings just like anything else.
“So it actually makes sense to have some of your wealth tied to some of the world’s other currencies — gold, yen, pounds, etc.” Zloty?
“Liberty Vouchers” help you do just that.
The best part? “There’s no need to hold physical paper currencies or trade in your dollars,” Nilus says. “You invest U.S. dollars but they are automatically converted into a foreign country’s currency.”
So what are “Liberty Vouchers”… and why did Warren Buffett double his stake in one of them?
Before Nilus reveals their real name, he wanted to spell out the benefits of what he calls “Liberty Vouchers.”
“But they’re more commonly called American depositary receipts (ADRs) or American depositary shares (ADSs),” he says.
“The shares are the actual stake in the foreign investment. They represent a certain percentage ownership in the overseas company just like regular U.S. shares do for domestic firms.
“There are now more than 2,000 different programs available spanning 70-plus countries, many of them available through major banks like J.P. Morgan Chase and the Bank of New York Mellon,” says Nilus.
“Most ADRs trade on the New York Stock Exchange or the Nasdaq.” And you can use a regular brokerage account to buy and sell.
Here’s the thing: Wall Street insiders have traded ADRs since the 1920s.
Just this morning, Business Insider reports Warren Buffett’s Berkshire Hathaway more than doubled its ADRs in an ailing Israeli pharmaceutical company.
“Berkshire said it owned about 40.5 million Teva American depositary receipts (ADRs) worth about $693 million as of March 31,” the article says, “up from 18.9 million ADRs three months earlier.”
Warren Buffett must be a fan of ADRs… just like Nilus.
Nilus’ takeaway? “There’s no complicated paperwork. No legal work. And yet ‘Liberty Vouchers’ are a source of great income from unique opportunities outside of traditional U.S. investments… And they’re one of my favorite ways to take one more step toward the Rich Life you deserve.”
[Ed. Note: Over $626 billion will be paid out to Americans who own these little-known certificates… will you be one of them?
There’s no age requirement. No income requirement. And they’re not difficult to navigate.
The major U.S. stock indexes are stabilizing after yesterday’s spill.
As we write the S&P 500 is up a quarter percent at 2,719. For perspective that’s 5.4% below the record high of Jan. 26. Among the big movers is Macy’s — up 7% after a big earnings “beat.” Gold, still smarting from yesterday’s big sell-off, is flat at $1,289. (More about gold from Jim Rickards shortly.)
Among the day’s big economic numbers — industrial production, up 0.7% in April. And for once, the “internals” of this number show manufacturing is pulling its weight, up 0.5%.
“I’m still bullish on homebuilders in the long run. But we don’t want to own these stocks as the market turns against them,” says chart-watcher Greg Guenthner.
The Commerce Department is out this morning with the numbers on housing starts. Overall, they disappointed… but the year-over-year growth remains solid, and permits for single-family homes jumped 0.9% from March to April.
“Homebuilders still need to ramp up production to meet consumer demand after sitting on their hands for the better part of the last decade,” says Greg. “As millennials continue to grow up and jump into the housing market, homebuilders are struggling to keep up with demand.”
But Greg sees the homebuilder shares breaking down, judging by the performance of ITB, the big homebuilder ETF…
“Investors are fixated on the 10-year yield jumping above 3% and whether home sales will take a hit due to rising rates,” says Greg. “We have to respect that and get out of the way for now.”
Oh, no — the “longest, most boring financial crisis in history” is looking to stage a comeback.
That was how our fearless leader Addison Wiggin described the troubles in Europe from roughly 2011–15. Remember the debt issues in the so-called “PIIGS” countries?
Well, here we go again: In Italy, it appears the left-populist Five Star Movement will form a coalition government with a right-populist party called The League. According to a leaked draft of their coalition agreement, the parties plan to demand that the European Central Bank cancel a $295 billion debt owed by the Italian government to the ECB.
Europe’s establishment is beside itself. The Financial Times has a story headlined, “Rome Opens Its Gates to the Modern Barbarians.”
Maybe this next round of the crisis won’t be so boring after all?
“Seasoned gold investors know that one of the main drivers of the dollar price of gold is the real rate of interest on U.S. dollar investments,” Jim Rickards says.
To calculate the real rate, subtract the rate of inflation from the nominal rate.
“The nominal rate is the amount that a security actually pays,” says Jim. “It’s what you see on a trading screen or quote screen.
“So if the nominal rate on 10-year U.S. Treasury notes is 3% and inflation is 2%, then the real rate on 10-year Treasury notes is 1% (3 – 2 = 1).”
There are many different measures of nominal and inflation rates, however; Jim concedes: “The concept of ‘real’ rates can be a bit slippery. It’s critical for analysts to choose the most meaningful measures for their purposes and to be transparent about which ones they are using.”
For nominal rate, Jim uses “the yield-to-maturity on the 10-year U.S. Treasury note because that’s a good proxy for long-term investment decision-making.
“The 10-year Treasury note is a benchmark for mortgages and corporate bonds used to finance a lot of the economic growth and capital expenditures in the economy,” he says.
“For an inflation proxy, I use the PCE core deflator on a year-over-year basis.”
The Fed uses this measure to determine interest-rate policy. Because of that, Jim believes core PCE has “stronger predictive value than most other measures because it syncs up with the central bank target policy rate.”
Keep in mind, real rates can — and do — go below zero. “That condition was very positive for gold and helped to get the new bull market in gold rolling in December 2015,” Jim says.
“Real rates have been going up sharply. Right now, real interest rates… are approximately 1%,” says Jim. “That may not sound like much, but it’s a huge increase from the negative real rates that prevailed for most of the past five years.
“The big question for gold investors is whether U.S. real rates get higher still or whether a reversal is in the cards.”
Because economic growth is weak while real rates rise, Jim sees this as a “recipe for a recession.”
“A recession will bring calls for a weaker dollar and lower interest rates to boost the economy.
“That will result in much higher gold prices,” Jim says.
“An alternative scenario is that the Fed gets the message in time and decides to back off from their interest rate tightening policies before a recession hits.”
Either way, Jim sees the price of gold getting a boost. Whatever move the Fed makes in coming months, Jim believes: “Gold wins.”
Speaking of gold: “We wanted to create something over-the-top that’s never been done before, and you’ve never seen or tasted anything like it before.”
So says Brian Mazza, owner of The Ainsworth, a restaurant with locations across the country.
At two of its NYC locations, the eatery is offering “Foodgod 24K Gold Wings,” which are described on The Ainsworth’s menu as “gold-dusted, 24-hour brined, gold coconut butter-chipotle honey, gourmet bleu cheese.”
Source: New York Daily News; The Ainsworth
The precious-metal wings are the brainchild of chef and reality TV star Jonathan Cheban, aka “Foodgod.” (Heh… sounds like a humble, down-to-Earth guy.)
In case you want to place an order: “The wings are available in 10-piece, 20-piece and 50-piece orders for $45, $90 and a cool $1,000, respectively.
“The 50-piece comes with a gold bottle of Ace of Spades champagne.”
For that price? You could almost buy an ounce of gold.
“Three thoughts today,” a reader writes after yesterday’s mailbag. “First, on the subject of supporters and critics of the president scratching their heads over this one…
“I think this gets back to Donald Trump’s relationship with the MSM — and the idea that we should take him seriously if not literally.
“His ZTE gambit seems to fit the same pattern he has been using with other foreign policy issues: He uses the media to bash, bluster and rant as needed to get his target’s attention; then he evaluates the response and plays his next hand.
“Second, on the subject of home solar installations: I’m curious if California is specifically mandating that new homes are built with solar panels rather than solar technology? There’s a big difference!
“In addition to ‘active’ solar devices like panels or piezoelectric systems, there are time-proven ‘passive’ design methods where buildings can be heated with solar energy (using surfaces that store and release heat in the winter and block it in the summer). If the former are being required, I would be suspicious of cronyism and kickbacks between politicians and the solar technology industry.
“Third, on the subject of the number of people who recognize our economic fix is beyond repair: That is refreshing. Don’t underestimate the effect you and your team are having here, as well as with other critical issues. The 5 is probably doing more to improve people’s signal-to-noise ratio than any other medium. God knows we need the clarion call! The nonsense we’re being peppered with through other channels is maddening.”
The 5: Yes, it is panels. “Where solar is not suitable,” says an article at Vox, “homeowners must have access to a community solar project or receive efficiency upgrades that compensate.”
The 5 Min. Forecast
P.S. Nilus explains — soup to nuts — how to invest in “Liberty Vouchers.”
“The biggest benefit,” he says, “beyond the raw income, is the exposure you’ll get to businesses — and entire economies — that exist beyond U.S. borders.”
Not only do these vouchers allow you to pull in another predictable income stream, but they’re also an incredibly effective hedge against the U.S. dollar.
Best part? There are very few barriers to entry. No age or income requirements. And they’re incredibly easy to start up… Learn how here.