Get the world's biggest, most successful investors together for a cocktail party, and of course you'll have a room packed with power, money, big ideas, and, for better or worse, uncommon decisiveness.
But… because of the huge variety of investing styles – value, macro, momentum, growth, you name it – among the assembled company, you'll also have friction. The world's top investing minds just don't agree on much very often, if ever.
But right now, more and more, these giants are sounding a common note. And they're achieving consensus on one of the most contentious assets on Earth: gold.
The consensus is: Buy early, buy often, and buy in massive quantities.
With the gold shares I'm about to show you, we'll be getting rich in some very good company…
The Smart Money Is Buying
Now, it's true that one or two legendary investors, like Warren Buffett, who are always down on gold, won't be along for the rocket ride we're all about to take. Then again, Buffett has plenty of money already, more than enough to compensate for any wrong or late calls.
No one else can afford to ignore this trend. There's so much smart, early money pouring into this, we're likely at the start of a secular gold bull of historic proportions.
Most of the investors involved in this are "investment agnostic," which is to say they'll take a hard look at any asset class or sector if the thesis supports it.
Since 2015, these Wall Street whales with their disparate investing styles have gravitated toward gold and gold stocks, clearing room for the yellow stuff – and other precious metals.
Let's have a look at exactly what they're buying.
Who's Going Big on Gold Now
Stanley Druckenmiller may not be a household name, but his track record commands the attention of serious investors.
The billionaire hedge fund manager worked with George Soros at Quantum Fund. Eventually he struck out on his own. Between 1986 and 2010, his hedge fund produced average annual returns of 30%… without ever having a down year.
When Druckenmiller identifies a compelling trade, he says he likes to go big. He's not kidding…
In the third quarter of 2015, Druckenmiller reduced his exposure to U.S. stocks by a whopping 40%, arguing that we'd entered a bear market in July. Then in 2016, second-quarter regulatory filings show that he'd brought over $323 million of his family office money into gold.
Here's what Druckenmiller had to say about gold recently: "Some regard it as a metal; we regard it as a currency and it remains our largest currency allocation."
And Druckenmiller's old boss – the man who broke the Bank of England – is making big gold bets again.
For about 40 years starting in 1969, George Soros generated average annual returns of 20%, handily doubling the S&P 500. Today, Soros Fund Management oversees about $10 billion.
More than 10% of his portfolio has been allocated to the gold sector.
Just recently, Soros disclosed that his fund had bought call options on the SPDR Gold Trust ETF (NYSE Arca: GLD) worth $124 million at the end of March. That's a very shrewd move.
Interestingly, Soros also took a really big stake in Barrick Gold Corp. USA (NYSE: ABX). Barrick is the world's largest gold producer, and Soros bought $264 million worth of its stock, making it his largest position.
And Soros didn't stop at gold. He also took a big stake in Silver Wheaton Corp. USA (NYSE: SLW), one of the largest silver companies around, adding a million shares to his fund.
Not Owning Gold Could Cost You
When it comes to fund management, Bridgewater Associates' Ray Dalio is easily one of the most successful names. This year – a year when hedge funds have eked out less than 2% on average – he overtook George Soros as the winning-est manager in history. His Pure Alpha Fund has achieved an absolute return of $45 billion since 1975, and last year he earned his clients $15 billion, with $170 billion under management.
Dalio thinks not owning gold is risky. In a recent interview at the Council on Foreign Relations, 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.
Dalio also said, "If you don't own gold, you don't know history…"
Bullish Sentiment Is Breaking Out
Peter Singer is another highly successful investor. He runs $24 billion Elliott Management Fund, which averaged 14% annually between the late 1970s and 2012.
Singer's done in-depth research on sovereign debt levels, concluding the only way they can repay those debts is through massive debasement of their currencies.
Singer concluded that "It makes a great deal of sense to own gold." He thinks the massive run-up in gold during the first quarter this year is likely just the beginning of a renewed bull market.
Hedge fund guru David Einhorn, who manages the $8 billion Greenlight Capital, also likes gold. The precious metal was a top five holding in his fund in the first quarter. His letter to investors highlighted gold's approximate 20% gain, saying, "We believe the increasingly adventurous monetary policy is bullish for gold."
And Eton Park, the $9 billion hedge fund run by Eric Mindich, has set up a whopping $422 million position in the SPDR Gold ETF.
But it's not just hedge fund managers talking up gold…
Harley Bassman, a chief economist at the world's largest bond fund manager PIMCO, is bullish, too.
In PIMCO's April newsletter, Bassman wrote, "So in the context of today's paralyzed political-fiscal landscape and a hyperventilated election process, how silly is it to suggest the Fed emulate a past success by making a public offer to purchase a significantly large quantity of gold bullion at a substantially greater price than today's free-market level, perhaps $5,000 an ounce?"
Even Kenneth Rogoff, former IMF chief economist and current professor at Harvard, has proposed that emerging economies ought to buy sufficient gold so to reach a 10% allocation of their reserves. His reasoning is that the sovereign bonds they currently own have very limited upside, since interest rates have practically no lower to go. By contrast, Rogoff says, gold has no upper price limit.
So here's what you can do…
The Best Way to Get Gold Exposure
It's true that gold prices have pulled back somewhat since recently approaching $1,300. But even after its recent retreat, gold is still up nearly 17% since bottoming at $1,050 in December.
The current gold correction may have a bit further to run, but as these investing legends have explained, you need some exposure.
Here are a couple of options for you.
For a simple way to gain gold exposure, have a look at the Sprott Physical Gold Trust (NYSE Arca: PHYS). It holds gold bullion that is fully allocated and stored at a secure third-party location in Canada, subject to periodic inspections and audits.
What's more, U.S. investors holding for at least 12 months can benefit from a 15% capital gains tax versus the 28% rate with most precious metals ETFs.
And as a simple "one stop" for gold equities, consider the Sprott Gold Miners ETF (NYSE Arca: SGDM). SGDM is performance-related, tracking the Sprott Zacks Gold Miners Index, which is rules-based and operates on a quarterly rebalance.
SGDM looks for the healthiest companies in the sector, holding about 25 of the top names, whose revenue growth and balance sheet offer the best relative quality.
In both cases, look for bottoming action in the gold price as it works its way through the current correction.
But be ready; this pullback is looking like a great opportunity – perhaps your last – to buy gold and gold stocks at reasonable prices.
There's a very good reason all these investors are piling into gold… The Fed is about to make U.S. corporations' "hidden" debt much more expensive, sending shockwaves across the entire stock market. Michael's going to show you how you can make a lot of money when these stocks turn "toxic." He's been playing these stocks for big profits for 25 years. Click here to download his Toxic Stocks Playbook free of charge, and you'll get his twice-weekly Sure Money investor briefings, too.
About the Author
Peter Krauth is the Resource Specialist for Money Map Press and has contributed some of the most popular and highly regarded investing articles on Money Morning. Peter is headquartered in resource-rich Canada, but he travels around the world to dig up the very best profit opportunity, whether it's in gold, silver, oil, coal, or even potash.