"If you don't own gold, you don't know history..."
Those words were uttered recently by Ray Dalio, the billionaire founder of Bridgewater Associates, the single-largest hedge fund on the planet, with a whopping $170 billion in assets.
Dalio has produced almost 15% annually for over two decades, and now he's warning anyone paying attention that it's time to own some gold. He believes there's just too much risk in not owning gold today.
Let's take that concern for risk and turn it into our profit. Here's how...
Dalio delivered his view on gold in a recent interview at the Council on Foreign Relations. Essentially, he said that throughout history gold has been a currency, and even today, "...we have dollars, we have euros, we have yen, and we have gold."
He went on to explain that it can be viewed as a financial barometer and as an alternative to cash. Also, Dalio sees gold as an important hedge to other parts of a portfolio - that is, the investor's traditional financial assets.
His target for a gold allocation is about 10%, and when prompted as to whether he owns any gold, he replied, "Oh yeah, I do."
And Dalio's not alone...
Another highly successful hedge fund manager is Paul Singer. He runs the $24 billion Elliott Management Fund, which has averaged 14% annually from the late 1970s through 2012.
Like Dalio, Singer is concerned about the precarious state of the world's financial system. He's researched the debt levels taken on by numerous countries, and he knows many will never be able to repay that debt without seriously debasing their currencies. As a result, Singer, like Dalio, strongly recommends that investors hold some gold as a protection against the next crisis.
Another hedge fund guru who is singing the praises of gold is John Paulson, the founder and president of Paulson & Co., an investment management firm with $18 billion in assets under management. Paulson made his way into the financial history books thanks to what many now call the "greatest trade ever."
By shorting the subprime mortgage market before the housing crisis, Paulson & Co. Inc. generated a $15 billion gain. Then, in 2009 and 2010, Paulson went big - into gold.
"As an investor, I became very concerned about having my assets denominated in U.S. dollars, Paulson said. "So I looked for another currency in which to denominate my assets in. I feel that gold is the best currency.
Just recently Paulson & Co. upped its holdings of the SPDR Gold Trust (ETF) (NYSE Arca: GLD) to 21.8 million shares, worth some $2.5 billion. That one holding represents a significant 13.88% of the firm's assets under management.
Of course, any discussion of highly successful investors, and gold, would be incomplete without mentioning Warren Buffett.
Buffett likes to disparage gold, calling it a useless and unproductive asset. He prefers instead businesses that produce the things and services that people need and want. Fair enough. But Buffett ignores that gold is, simply stated, insurance. And there are periods when that insurance becomes extremely valuable, often when nearly everything else is tanking.
Oh, and for the record, Dalio thinks Buffett's wrong too. When Dalio was asked recently on CNBC's Squawk Box, "Warren Buffett won't touch gold, do you think he's wrong?" he replied, "I think he's making a big mistake."
Yet a millennia of history has proven gold to be both money and a great hedge in times of crisis, as I've frequently written for both here and directly to our constantly updating "Headline News" at moneymorning.com.
And I do expect further crises ahead.
So, in case you have any doubt, I'm with Dalio, Singer, and Paulson on this one. Could these exceedingly well-informed, connected, and über-successful fund managers know something we don't? Probably. But that doesn't mean we can't learn from them, and better yet, mimic their moves.
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Other than investing in gold itself, another great way to play this space is by holding a top-quality major gold producer. Now here's where you get to invest like Dalio himself.
His All Weather Portfolio is invested 7.5% in gold. But Bridgewater also owns shares in top-notch gold producer Goldcorp Inc. USA (NYSE: GG). At current prices, Goldcorp is an astounding bargain. The last time it traded at current levels was a whole decade ago, in August 2005, when gold was $435. That's nearly two-thirds less than today's $1,200.
Goldcorp is extremely well-managed, shunning the typical debt binge so many of its competitors indulged in to finance new projects as gold was rising. Its debt currently represents a modest 25% of its market cap. It is a precious metals miner with operations spanning North and South America. It has operations in Canada, Mexico, Guatemala, the Dominican Republic, and Argentina.
Goldcorp has steadily grown its production, achieving 2.4 million ounces in 2012, 2.7 million in 2013, 2.87 million in 2014, and a projected 3.3 to 3.6 million ounces this year. The company has recently acquired Probe Mines, whose main asset is near an existing GG mine, in exchange for shares and just $15 million. Perhaps the most impressive aspect of the firm is the discipline and project quality that allows it to boast some of the lowest all-in production costs. In Q1 2015, all-in sustaining costs (AISC) amounted to an enviable $885 per ounce, ranking Goldcorp as one of the lowest-cost producers anywhere.
And two of its largest development projects, Eleonore (Canada) and Cerro Negro (Argentina), set to boost production this year, will help push the company's overall AISC even lower, possibly down to $750 per ounce over the next 12 months.
When it comes to senior gold miners, Goldcorp is one of the highest-quality names around. Its combination of strong growth, low cost production, low debt, growth through acquisitions, and organic development in stable jurisdictions make for a best-in-class gold mining company. Now's your chance to make the same move as some of Wall Street's biggest and best managers.
Today you can buy Goldcorp, a top gold miner with nearly 50 million ounces in mineable reserves, at 2005 prices. All while gold is trading at triple the price.
Editor's Note: Peter today gives you a great tool to fortify your holdings. America's #1 Option Trader, Tom Gentile, regularly gives his readers ways to fortify and multiply their profits through his straight-forward, no-cost e-letter, Power Profit Trades. To get his latest wealth-building tip and all of his research, click here.
