When it comes to financial advice, would you rather get the help of a small time investor, or billionaires?
I know what I would choose. Nobody knows more about preserving wealth for the long term than billionaires.
Of course, the most powerful global financial players can be secretive about their holdings and where they think the financial markets are going in the future.
But if you scour the financial press as much as we do, these elite investors drop plenty of clues.
WHAT DO BILLIONAIRES BUY?
Five well-known investors have broken the code of silence and gone public about the need to diversify away from traditional paper markets and fiat currencies.
As an alternative, each has made sizable investments in gold.
Jacob Rothschild, chairman of London-based investment trust RIT Capital Partners Plc, recently announced bold changes to the RIT Capital Partners’ investment strategy. He disclosed that the trust had increased its exposure to gold and silver to 8% of its total portfolio.
David Einhorn, president of Manhattan-based hedge fund firm Greenlight Capital, recently mentioned on an earnings call that he was keeping gold as a top position. Greenlight documents also refer regularly to the hedge fund’s interests in gold. In a partners’ letter dated April 25, 2017, Einhorn wrote, “Gold remains a long-term position with a thesis that global fiscal and monetary policies remain very risky.”
Ray Dalio, chairman and CIO of hedge fund firm Bridgewater Associates, recently stated that it is prudent for any investor to maintain a well-diversified portfolio that includes 5-10% in gold.
Stanley Druckenmiller’s powerful hedge fund, Duquesne Family Office, has reported between $200 million and $400 million in gold holdings.
John Paulson is a legendary hedge fund investor. His fund, Paulson & Company, now holds an exposure to gold that totals an impressive $500 million.
GOLDMAN SACHS TURNS BULLISH ON GOLD
Earlier this summer, the Goldman Sachs commodity team issued a statement forecasting strong resiliency for gold at current price levels for the rest of the year.
With that foundation as the backdrop, Goldman analysts named three factors that could propel gold much higher, much faster:
Lower returns from U.S. stocks could send investors into more defensive assets like gold and silver
Emerging markets are seeing GDP expansion, which should add purchasing power for emerging market economies where there is already high propensities toward consuming gold
Gold mine supply is likely to peak in 2017, making the precious metal more scarce in the face of generally rising demand among central banks and individual investors.
SOVEREIGN WEALTH FUNDS SOUND THE ALARM
Another way to get a sense of where the smart money is going by following the activities of the sovereign wealth funds. These highly influential investment pools are sponsored by wealthy nations to invest country reserves from trade or natural resources in stocks, bonds, private equity and hedge funds.
Sovereign wealth fund managers have superior information networks to almost any other type of investor, including company forecasts and early warnings of pending financial trouble. No CEO would dare turn down the opportunity to speak with a sovereign wealth manager when they call for their perspective.
Among sovereign wealth funds, the Government of Singapore Investment Corp. (GIC) is one of the largest, with over $354 billion in assets. GIC CEO Lim Chow is not optimistic about the road ahead for the U.S. stock market. He warns that valuations are stretched, policy uncertainty is high and investors are being way too complacent.
Mohamed A. El-Erian, former deputy director of the International Monetary Fund, also raises serious doubts about the sustainability of the bull market in stocks. He believes that reduced monetary liquidity is taking the steam right out the economy around the world. This is the result of recent simultaneous policy tightening by the Fed, European Central Bank (ECB) and the Bank of England.
John Ing, CEO of one of Canada’s oldest and most successful investment dealers, believes that the 2008 collapse was just a dress rehearsal compared to the financial collapse that is coming. This time we have governments which are even more highly leveraged than the private sector was. According to Ing, the next meltdown will be on a scale that is many magnitudes worse than what the world experienced in 2008.
IN A COMPLEX WORLD, TAKE A SIMPLE PATH TO SECURITY
As the world gets harder to understand every day, it makes sense to look to successful global financial elites for some direction on where the global markets and economy is heading. It is important to pay attention to the strategies of those who have the most to lose during turbulent economic times.
Today, more than ever before, investors need to act like savvy billionaire investors and consider diversifying their holdings into gold. It is a time-tested physical asset that can provide peace of mind in times of crisis.
With stock prices at unsustainable levels and the U.S. reeling from scandals and permanent gridlock, gold and silver deserve a prominent place in your portfolio.
