This Sector Is Set to Deliver 20-to-1 Returns… and That’s Just From the “Bad” Companies

This Sector Is Set to Deliver 20-to-1 Returns… and That’s Just From the “Bad” Companies By Nick Giambruno “It was the single most important financial event of my career.” That’s what my friend Rick Rule of Sprott Global recently told me of his experience in the uranium market. Rick was referring to Paladin Energy, a uranium company that leaped from one penny to $10 per share during uranium’s last bull market. That’s a 1,000-fold increase. In other words, a $1,000 investment could have exploded into $1 million. Even the worst-performing companies in the uranium sector delivered 20-to-1 returns. Uranium can deliver these almost unbelievable returns because of unique supply-and-demand quirks that create colossal bull and bear markets. Here’s a quick rundown… and a closer look at how uranium’s coming bull market could hand you these kinds of life-altering profits. The 1950s Uranium Bull Market Uranium cycled through its first bull market in the 1950s. This bull was mainly driven by the nuclear arms race between the US and the Soviet Union. Back then, the only practical way an investor could get exposure was through uranium exploration companies trading on small regional stock exchanges, like the one in Salt Lake City (which closed in 1986). Those who did made a bundle. The Late 1970s Uranium Bull Market The uranium price increased more than tenfold during this bull market… from $3 to $43. Some uranium stocks shot up by a factor of 100. Greater nuclear power use was the main driver. It … Continue reading

Trump and a New Gold-Backed Dollar

Trump and a New Gold-Backed Dollar By Nick Giambruno On August 15, 1971, President Nixon killed the last remnants of the gold standard. Since then, the dollar has been a pure fiat currency, allowing the Fed to print as many dollars as it pleases. Removing the US dollar’s last link to gold eliminated the main motivation for foreign countries to store large dollar reserves and to use the dollar for international trade. At this point, demand for dollars was set to fall… along with the dollar’s purchasing power. So the US government concocted a new arrangement to give foreign countries another compelling reason to hold and use the dollar. The new arrangement, called the petrodollar system, preserved the dollar’s special status as the world’s reserve currency. In short, the US government made a series of agreements with Saudi Arabia between 1972 and 1974, which created the petrodollar. The Saudis would use their dominant position in OPEC to ensure that all oil transactions would only happen in US dollars. And the US would guarantee the House of Saud’s survival. It worked… for a while. The petrodollar filled the void after the US severed the dollar’s last link to gold as the main prop to the dollar’s status as the world’ premier reserve currency. So far, the petrodollar has lasted over 40 years. However, the glue is losing its stick. I think we’re on the cusp of another paradigm shift in the international financial system, a change at least as fundamental as what … Continue reading

Doug Casey on the Coming Collapse of the World’s Biggest Economy

Doug Casey on the Coming Collapse of the World’s Biggest Economy By Nick Giambruno Nick Giambruno: The entire European Union is looking shakier by the day. Donald Trump’s victory—which shocked Europe’s political and media elite—gives Eurosceptic parties, the Continent’s populists, even more political rocket fuel. What’s your take? Doug Casey: The Social Democratic, Christian Democratic, Socialist, Communist, and similar parties have ruled Europe since the end of World War 2. They’re all pretty similar in that they promote massive welfare benefits, strong labor unions, large state bureaucracies, very high taxes, strict regulations, and an atmosphere of Cultural Marxism. Then, every few generations, the voters react and install a “fascist” regime. These keep most of the socialist characteristics, but tend to be supported by, and friendly to, Big Business. That, and they add on nationalism, xenophobia, and militarism. The last time this happened was in the 1930s. In those days it was spurred by the Great Depression. This time it will be spurred by the Greater Depression, plus massive waves of Muslim migrants from the Near East and Africa. So I expect to see more neo-fascist political parties everywhere. Oddly, the Europeans can’t seem to imagine a libertarian alternative of private charities, limited government, minimal taxes, an unregulated economy, and intellectual/psychological freedom. It’s another reason the Continent is a sinking ship. Incidentally, people think of these countries—Italy, France, Germany, and so on—as though they are fixtures in the cosmos. But they aren’t. In their current forms, they’re all newcomers on the stage … Continue reading

Where to Buy Property Without Paying Property Tax

Where to Buy Property Without Paying Property Tax By Nick Giambruno Do you really own something if the government forces you to make never-ending payments on it? I think the answer is “no.” You possess such an item, but you don’t own it outright. It’s an important distinction. A ridiculous threat to property rights has infected most of the world like a virus. Most people unquestioningly accept it as a normal part of life—like gravity or the sun setting in the west. The threat I’m talking about is property tax: that annual tax you pay whether or not your property generates any income. Instead, the government bases the tax on the underlying value of real estate you supposedly own. There is no way to pay off this obligation in one fell swoop. It hangs over your head as long as you hold title to the property. For practical purposes, you don’t really own anything you have to pay an annual property tax to keep. You are merely renting from the government. Suppose you bought a sofa set and coffee table for your living room for $5,000 cash and then had to pay a $100 tax each year for as long as you “owned” the furniture. Then suppose, for whatever reason, you’re unable or unwilling to pay the furniture tax. It wouldn’t take long for the government to swoop in and confiscate your furniture. In this case, you “own” the furniture as long as you pay the never-ending annual fee—stop paying and you’ll find out who really … Continue reading

Foreign Real Estate Is the New Swiss Bank Account

Foreign Real Estate Is the New Swiss Bank Account By Nick Giambruno Financial privacy is dead. You should assume that, sooner or later, all the details of your financial life will land in a government computer—if they haven’t already—and plan accordingly. A record of pretty much every penny you earn, save and spend is permanently stored somewhere. And the government could retrieve that information if it wanted to. It’s not a comfortable or happy thought. Knowing you’re financially naked and exposed to an insolvent government hungry for revenue might make you feel like you just ate rat poison for lunch. But don’t try to illegally hide your income or skirt reporting requirements. It’s a fool’s errand. The draconian penalties make the cost/benefit analysis easy…don’t even think about it. An Inescapable Global Dragnet The U.S. can access information about any account virtually anywhere. The Foreign Account Tax Compliance Act (FATCA) is a wildly unpopular U.S. law that forces every financial institution in the world to report information about its American clients to the U.S. government. The law imposes huge costs on foreign financial institutions and, in effect, forces every foreign bank to become an unpaid agent of the IRS. The U.S. can enforce FATCA in foreign countries because it controls the world’s reserve currency and has threatened to effectively cut off access to the U.S. financial system for countries that don’t comply. This is why a country like Mexico could never impose its own version of FATCA on the world. Few … Continue reading

More Unofficial Capital Controls: PFIC Rules

More Unofficial Capital Controls: PFIC Rules By Nick Giambruno It ranks at the very top of potential tax nightmares, especially if you invest internationally. This nightmare could become a reality if you happen to invest in what the IRS deems a Passive Foreign Investment Company (PFIC), which are taxed at exorbitant rates and have highly complex reporting rules. Most foreign mutual funds are PFICs, as are certain foreign stocks. It’s not illegal to invest in a PFIC, but practically speaking, the costs of doing it are so incredibly onerous that it’s prohibitively expensive in the vast majority of cases. PFIC rules amount to unofficial restrictions on investing in certain foreign assets and are yet another indicator of the disturbing trend of creeping capital controls in the US. Capital controls are used by many countries and come in all sorts of shapes, sizes, and labels. The purpose, however, is always the same: to restrict and control the free flow of money into and out of a country so that the politicians have more wealth at their disposal to plunder. What Is a PFIC Investment? As always, it’s important to first define our terms. As far as the IRS is concerned, passive income includes income from interest, dividends, annuities, and certain rents and royalties. If a foreign corporation or investment vehicle meets either of the two conditions below, it will be deemed to be a PFIC. 1) If passive income accounts for 75% or more of gross income, or 2) 50% or … Continue reading