The owner of ZPR Investment Management is Max Zavanelli, one of the most successful portfolio managers on the planet. He's beaten the markets for many years and is very highly ranked in Barron's. Just to get into his funds... the minimum investment is $250K.
Max had some very interesting observations about gold that I wanted to share with you...
The first was that he is recommending in his August newsletter that investors hold 25% of their investments in physical gold only!
At Lear Capital we are often asked, How much gold is enough? Essentially our message is first to diversify with any amount - just get some gold! And then continue to learn as much as you can about the economy so you can determine your own comfort level as to how you divide your investments amongst various asset classes.
For some people, 5% in physical gold will be sufficient. For others 20%. Here's Max's reasoning for his own recommendation.
He says... and I quote, The U.S. Stock market has had a high of 60 trillion and a low of 40 trillion in the last 2 years. That exceeds the value of all the gold ever mined by a factor of 9. Gold held for investments is only 16% of the total gold or 26,400 tons in gold bars, bullion and coins. At $1230 per ounce, this is $1 trillion worldwide. This is an insignificant amount relative to stocks, bonds, real estate and currencies. It has enormous potential to become a significant asset class. As people distrust their currencies and their governments, the investment demand for gold will greatly increase. As governments continue to over tax, over spend, and lie about it, there will be an ever increasing demand for gold.
During the past couple of years, gold miners began ending their huge hedging programs. (Selling large amounts of future production in the current market at fixed prices)
Without those forward sales, actual supply will fall significantly. In Feb, the biggest hedger and gold producer Barrick ended its hedging. With the end of Barrick hedging, the true production/demand gap goes up and could reach 55% without demand increasing. This would imply a 25% increase in the average price of gold.
There is a temporary downside of maybe 10% and a 60% upside over the next 5 years. When gold reaches $2000... sell half. Speculative action will carry it further - sell the rest when it does.
Prior to 2009, the favorable demand/supply situation for gold as a commodity was there. Now gold as money is absolutely clear. To protect your wealth, you have no choice but to own substantial amounts of gold.
For more information on gold, the markets and the economy, visit www.learcapital.com/.
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