More About the Smart Money
Want to Know More? Hint: They are Gold Buyers!
Although we wrote about the “smart money” buying gold almost two weeks ago, we would like to loop back around to it again because of the importance of the subject for our friends and clients.
It started when we reported that newsletter writer Fred Hickey had tweeted this message:
“All the smart money: Dalio, Druckenmiller, Tudor Jones, Zell, Gundlach, Singer, Klarman, Einhorn, Mobius (and some who I know are loading up but are doing it quietly) are long gold and understand the simple concept Hugh Hendry explains here. Question is: What are YOU waiting for?”
It is a good observation. We’ve been reporting to you all along as this crew of smart money began moving to gold.
For example in January 2019 we reported on Sam Zell this way:
“For the first time in his life Sam Zell is buying gold.
“It’s enough to make us sit up and take notice. Sam Zell is a real estate billionaire many times over. His Wikipedia entry repeatedly uses the word “largest” to describe Zell’s accomplishments.
“His company, Equity Group Investments, Wikipedia tells us, “was the genesis for three of the largest public real estate companies in history, including: Equity Residential, the largest apartment owner in the United States; Equity Office Properties Trust, the largest office owner in the country; and Equity Lifestyle, an owner/operator of manufactured home and resort communities. With their entry onto the public markets in the 1990s, Zell became recognized as a founding father of the modern real estate industry. In addition, Zell has created a number of public and private companies in various other industries.”
Those accomplishments pretty much guarantee Zell a spot on the smart money list.
About a year ago we reported on hedge fund manager and philanthropist Paul Tudor Jones when he proclaimed, “the best trade is going to be gold.”
“If I have to pick my favorite for the next 12-24 months, it probably would be gold. I think gold goes beyond $1,400… it goes to $1,700 rather quickly. It has everything going for it in a world where rates are conceivably going to zero in the United States.”
Badda-bing, badda-boom! He got all that just right!
Last year David Einhorn, the founder of Greenlight Capital said, “I hold gold, and I am never going to get rid of it. I hope that I never have to use it.”
In January we reported that Einhorn explained his position this way:
“The bipartisan consensus is that deficits don’t matter – it implies we can always print our way out of trouble. All told, we can count on aggressive fiscal and monetary policies in both good times and bad. Gold continues to be a hedge in our portfolio against adverse outcomes related to those policies.”
We also cited Ray Dalio and his attraction to gold back in January. Dalio, the founder of the world’s largest hedge fund, Bridgewater Associates, says we’re going through a paradigm shift and you need to be forward looking.
“Get out of cash,” Dalio warned. “Cash is trash.”
He has a point.
They all have a point. They’re the smart money.