The Most Urgent Time in the past 5,000 years

Written by Nick Hodge
Posted August 21, 2019

This is one of the most urgent times in the past 5,000 years of investing.

As global markets teeter, the richest people in the world are pushing their money into gold as a safe haven.

John Paulson made $5 billion betting on gold in 2009. He also made millions shorting the subprime mortgage crisis during the Great Recession. He has a $1.3 billion stake in the SPDR Gold Trust. 

George Soros, the man who made $10 billion shorting the pound, recently increased his stake in the same gold trust by 49%.

Carlos Slim, once the richest man in the world, recently purchased three quarters of a billion dollars in gold and silver mines.

Those are only a few.

Ray Dalio, billionaire and founder of the largest hedge fund in the world, says he always has an “exposure to gold” in his portfolio. In fact, he claims to have 5-10% of his holdings in gold. He claims “gold should always be a part of your portfolio.”

Sam Zell, a man worth $5.5 billion, is doing the same. He says “supply is shrinking, and that is going to have a positive impact on price.” And he didn’t stop there. He said “for the first time in my life, I bought gold.”

So, supply is tanking. Billionaires are buying it. And central banks are scrambling to get their hands on gold. 

And I’ve invited a friend of mine... a near-billionaire... to give us his perspective on gold.

His name is Mario Garnero.

Mario’s a Brazilian banker and trailblazer. He’s been called the “Father of the Ethanol Car.” During the 1979 petroleum crisis in Brazil, Mario challenged the top four automotive companies in the country to produce one million cars that run on ethanol. Three years later, 90% of Brazilian cars ran on ethanol thanks to him.

He’s a personal friend of the Rockefeller and Rothschild families. As well as U.S. presidents including President George W. Bush and President Clinton.

Currently, he’s the chairman and largest shareholder of Brasilinvest, the largest merchant bank in Brazil.

Brazil is famous for its mid-century gold rushes, which ultimately produced the largest gold mines in South America.

Mario’s had a front-row seat to watch gold opportunities expand in Brazil and beyond.

Let me welcome Mario Garnero.

Thanks for taking the time, Mario. I know you’re a very busy man.

MARIO: 

Very good, thank you for your time too, Nick.

I am just following up on your success after our last talk about four years ago... a nice conversation at the Carlyle Hotel in New York.

So this time I am in Brazil, you are in the states, but I am entirely at your disposal for talking about gold.

NICK: 

It’s funny you mention the Carlyle hotel. The backdrop of that meeting was Michel Temer was giving a talk at a law school at New York University, and you and I met at the Carlyle.

You told me some history about time spent there in the 60s and 70s with people such as the Kennedy family. That just shows the longevity you have in the markets, and connections to powerful politicians and people.

So tell me, from that seat you have, what do you see happening in gold in the next 12-24 months?

MARIO: 

I am very bullish on the future of gold. And if I may tell you Nick, this is not my only position.

I have been with a good friend, Lord Rothschild, we have been with Naguib Sawiris from Egypt and several others that have the same idea that gold is undervalued for the time being and would be perhaps due to recoup very quickly their position.

So my position today is very favorable. To create reserves and as Russia's making, as China's making, as India's making... 

And if I could give you just one example, Nick, Lincoln when he launched the dollars, the dollar was backed to gold. And if you take today's value, gold represents 70% more than the value of the dollar at that time.

Fortunately, Nixon erased this, otherwise the State's would be 70% more in debt than it is in dollars.

So I continue to believe that gold is strength. Keeps the value. And would be something that the government would be having as a safe haven for a long time.

NICK: 

You’re talking about very smart and very wealthy individuals. People with billions of dollars managing large amounts of capital.

What about the regular investor? They might not be looking at gold? Should they?

MARIO: 

I think they should be.

When you take the big asset managers, they are always around 10% of the portfolio invested in gold.

But when you talk of the middle class, where are they investing? They are investing in India for instance in jewelry, in China in jewelry. Jewelry based upon gold.

So there is an indirect buying of gold or buying of reserves without knowing exactly that they are buying gold for investments.

They are buying gold because they think the jewelry they are buying will be keeping the value down the road.

So I think it’s just a question of time when the investors will move back to the gold.

You will recall around 1985, 83… gold at $900, the big jump was at $220 and went to $900 within six months. I do not imagine that would be going from today's value to $1,500 or $1,600 at once.

But I think that inexorably it will come to at least 30% level over today's price, within the next two years.

NICK: 

If we think gold is a great place to invest, what’s a good way to invest in gold?

MARIO: 

I would not buy one bar of gold, I'd rather go and buy one bar in weight equivalent in gold mine shares.

NICK: 

So you think that’s the best way to capitalize on gold prices rising?

MARIO: 

The amount of gold that we have is undervalued and as long as the perception, the public perception, is that gold is moving up or inflation is moving up quicker, you'd be having an alternative.

Okay I buy a bar of gold and leave it at the bank or buy a company that would be expanding, creating value, adding value, and having a backlog of gold as gold miner has.

NICK: 

I think it’s a smart way to invest, Mario. I appreciate you taking the time sharing what you and your peers are investing in.

Plus, your insight into the gold markets. We covered a lot in a few minutes.

But I have to ask before you go, since I have a gentlemen of your caliber on the line for our audience..

Is there anything else you would like to tell us before we let you go, Mario?

MARIO: 

First of all, thank you very much Nick, you have been very precise, very clever in all your comments, and very independent.

So I appreciate the time while talking to you. Not only last time but here today also.

And I think that if we could make a date that in two years we will have lunch together at Carlyle with a beer to see if my forecasts were appropriate. So if not, I'll pay you at least a good pizza.

NICK: 

It’s a fair deal Mario, I’ll put it on my calendar.


See the full interview with Mario Garnero here, where he reveals how high he thinks gold could go. We also talk about if he sees a 2008-like crisis coming and what investors can do about it. 

Plus, I go in-depth on his #1 gold pick — one that he personally owns shares in. 

It’s all in the presentation here. 

Call it like you see it,

Nick Hodge Signature

Nick Hodge

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Nick is the founder and president of the Outsider Club, and the investment director of the thousands-strong stock advisories, Early Advantage and Wall Street's Underground Profits. He also heads Nick’s Notebook, a private placement and alert service that has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world. For more on Nick, take a look at his editor's page.

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