subject: World's best, brightest and richest investors are bullish about gold [print this page] The world's best, brightest and richest investors are unequivocallybullish about gold, and you should be to. Because even though the price of gold has consistently risen over the last decade and has shot up 70% since 2007, the real bull market hasn't even started yet. Like the Dow in the early 1980s, gold is breaking into an era of permanent four digit pricing and analysts are predicting $1500/ounce within the next two years. With sub-1000 gold prices becoming a thing of the past, billionaires, big money managers and Wall Streeters are only jumping in now, making today's prescient gold investors filthy rich.
As usual though, a few intellectually-myopic grumblers are warning about how anyone buying gold has missed the party and will only be around to deal with the mess. This isn't the case, and what these people don't understand is that gold is no longer a commodity; it's the world's best performing currency, and it isn't in a bubble at all.
The world's governments and central banks have inadequately dealt with the financial crisis, sowing the seeds for further financial havoc in the future. By borrowing massively to stimulate economies, governments have devalued their currencies and made their bonds riskier, raising the demand for gold as a hedge against monetary foolishness. As a result, financial assets like gold, which don't rely on someone else's obligation to pay you back, will become increasingly attractive in the post-financial crisis world. It gets even better. China and India have extended their national rivalries to the gold marketwith China now poised to surpass India as the largest global consumer of gold, and India's Central Bank beating China to the punch on its purchases from the IMF. Whenever the consumers of the two largest countries in the world are competing for a scarce asset, it's an asset worth owning.
And when in doubt, just follow the smartest money on the planet. Gold's most prominent and intellectual investor is probably 47-year-old New York City billionaire and commodities magnate Thomas Kaplan. As the founder, CEO and Chairman of Tigris, an investment and asset management firm, Kaplan's financial empire is largely devoted to gold. His fund has invested $2 billion in gold assets and owns an 18 percent stake in the Canadian mining company Gabriel Resources which is currently mining a European gold deposit housing an estimated 10 million ounces worth more than $12 billion at today's prices.
John Paulson, founder and president of a $31 billion hedge fund that made a whopping $20 billion shorting the subprime mortgage market (getting Goldman sued by the SEC in the process) is also piling into gold. Paulson bought 31.5 million shares of SPDR Gold Shares, an exchange-traded fund that tracks the price of bullion; his investment is now valued at $3,43 billion. Eric Mindich, the former Goldman Sachs Group Inc. partner who runs a $13 billion hedge fund Eton Park Capital Management LP, followed John Paulson in making gold his biggest investment, buying 6.58 million shares of SPDR (equal to about 20 tons of gold) in the second quarter of this year. His investment was valued at $800.3 million as of July and is the hedge fund's biggest holding.
Moreover, in March of this year, Paulson partnered with one of the world's most successful and legendary investors, George Soros, Chairman of the $25 billion Soros Fund Management LLCto invest in Vancouver based NovaGold Resources, despite $352 million in losses over the three years. Who's NovaGold's biggest investor? Thomas Kaplan.
And what's really interesting is that even Michael Burry, the acclaimed and reclusive fund manager who made hundreds of millions for his investors by shorting the mortgage market before anyone else, is coming out about his gold investments, claiming Paulson's bullion holdings are extremely interesting' and fit with his perception as the direction the world is taking'. The last time Burry and Paulson aligned their interest was shorting the credit markets for pennies when everyone was still buying.
When Michael Burry, George Soros, John Paulson and Thomas Kaplan all invest in unison, you should too. And just in case that's not enough, here's some hard data: Financial analysts have raised their 2011 forecasts for gold higher than any other precious metal and are predicting a 10th annual advance. The most widely held option on gold futures traded in New York is for $1,500 an ounce by December, or 18 percent higher than the record $1,266.50 reached on June 21 of this year. According to a Bloomberg survey of 29 analysts, traders and investors gold may rise as high as $1,500 by next year.
World's best, brightest and richest investors are bullish about gold
