How to Own Your Own Gold Mine

By James Rickards

This post How to Own Your Own Gold Mine appeared first on Daily Reckoning.

Public equity markets are in many ways a sophisticated game of pump-and-dump. Your stocks soared in 1996-1999, then crashed in 2000. They soared again in 2002-2007, then crashed in 2008. They’re soaring again now.

Guess what comes next?

For the most part, wealth managers are more interested in their wealth than yours. All kinds of fees and commissions are designed to separate you from your money. When markets turn with a vengeance, you’re the one left holding the bag.

Think passive investing and indexing are the answer?

Guess again. Active managers do difficult work in research, asset allocation, capital commitment, and price discovery. Active investors are a beast of burden like an elephant.

Passive investors, including ETFs, are like parasites on the back of the elephant. A few parasites do just fine, and the elephant doesn’t notice at first. Eventually there are so many parasites that the elephant dies, and the parasites die too.

Today, passive investors make up more than 50% of total assets under management. The parasites are winning. When markets correct, passive investors are like deer in the headlights — they can’t short or go to cash. They have to ride the index down.

When investors call for redemptions to salvage what’s left, the passive funds will have to sell into weakness to raise cash. There won’t be many active capital committers around to take the other side of the trade. Markets will go “no bid” with no bottom in sight. The resulting bloodbath for investors will make 1929 and 1987 look like hiccups.

So, if public equity markets are a roach motel, what do the very rich do with their money? How do the rich get richer?

The answer is private deals.

Major investment banks like Goldman Sachs have always run private pools for partners only to invest in the best deals they see. Major private equity funds like KKR take a proprietary stake in their best deals and organize “co-invest” funds for family and friends to invest side-by-side in those deals.

Private deals are offered on the 19th hole at the country club, in table talk at charity galas, and on tennis courts in the Hamptons. You won’t hear about them from your broker. And you won’t see them on CNBC.

I should mention that private equity investments are how I’ve personally built my wealth.

And it’s my mission to level the playing field and show you some of the best private deals available from my extensive network of entrepreneurs, technologists, billionaires, Washington elites, and other plugged-in insiders.

I see quite a few opportunities right now, but only a few make the cut. Those few are the best of the best, or what I call, “the best deal in the books.”

And lately, I’ve come across one of the best. I have only one word to describe it — amazing.

This new deal involves gold. If you’re familiar with my work, that probably comes as no surprise to you. I write and speak extensively …read more

Source:: Daily Reckoning feed

The post How to Own Your Own Gold Mine appeared first on Junior Mining Analyst.