Bob Irish Reporting: Delray Beach, FL.
All Eyes Should Be on Texas
The big gold news yesterday was India’s $6.7 billion purchase from the IMF. But it’s a much smaller number – $250 million – that’s making waves.
India’s gold purchase was no big deal. We’ve known for a while that central banks are buying more gold than usual.
But what a pension fund from Texas is doing with $250 million of its money is new. The Teacher Retirement System of Texas decided to create its own gold fund. And it’s stocking that fund with precious metals, mining stocks, and exchange-traded funds (ETFs).
Teacher Retirement’s management simply wanted some protection for its $95 billion in assets. They realized that last year’s near-collapse of the financial system could have put the fund into bankruptcy. (It didn’t only because the government intervened.) Back to the Future
Gold and other precious metals used to be a standard part of every investment portfolio. IDE’s Rusty McDougal reminds us that a mere 25 or 30 years ago, professionals recommended that every investor should have 5-15% of their money in precious metals.
When the dollar was taken off the gold standard, gold lost its popularity. Now funds and individuals are beginning to rediscover gold.
Shayne McGuire of the Teachers Retirement System says, “I think the largest institutions like our own are realizing that we barely own any. The same thing applies to most of the pension funds which manage trillions of dollars in world wealth.”
As pension funds increase their gold holdings, they will push prices higher.
Gold’s Comeback Is Just Beginning
Gold’s comeback is just beginning. Banks, funds, insurance companies, governments, and individuals all over the world hold $200 trillion worth of financial assets. Less than half-a-percent of that is in gold. For investors to increase that to just 1%, they would have to buy $800 billion worth more.
Three Steps and You’re Golden
Guess what? You need financial insurance as much as the pension funds do. And you can get it through gold just like they’re doing. It’s not hard to create your own gold fund. Here’s how to get started ...
1. Set aside 15% of your net worth for your gold fund, and put 10% in physical gold to hold long term. This is not an investment. It is the bedrock of your savings.
2. Put another 4% in global companies that mine for gold, as well as the ETFs that track gold or gold mining companies.
3. Put your final 1% into small gold-exploration companies.
Why only 1% into the small exploration companies? This is the most speculative part of your gold fund. You can make a great deal of money with these companies, but it’s tough to single out the ones that will be successful at such an early stage.
China’s Ghost Malls
Around 500 new malls have been built in China over the last five years. You’d think with a population of 1.3 billion these malls would be teeming with people. Think again.
Many are still waiting for the crowds of shoppers to arrive.
For example, the New South China Mall opened in 2005 and is 99% empty. Fewer than a dozen stores are open in its 9.6 million square feet of floor space.
The U.S. isn’t the only country where questionable lending and borrowing has led to disaster...which is all the more reason to be careful when investing in China. But one fund has come up with a stunningly successful formula...
The Secret Behind the World’s Most Successful China Fund
The most successful China fund in the world has beaten 99% of its peers over the past five years. Its strategy is not investing in Chinese companies. Whoa! Say again?
Only half the fund is invested in Chinese stocks. The other half is invested in multinational companies that get at least a third of their profits from selling to China. This has allowed the fund to benefit from the Chinese boom while minimizing the country risk. You can employ a similar strategy.
Invest Safely,
Bob Irish
Investment Director
China Govt's Secret New Gold investment could pay 500% over next 2 Years
Bob Irish
Investment Director
China Govt's Secret New Gold investment could pay 500% over next 2 Years
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