When it comes to investing, several characteristics set successful millionaires and billionaires apart from ordinary investors.
By being keenly aware of international markets and global trends, they are often among the first to spot and position themselves in emerging trends.
Since most money is made on the leading edge of trades, it’s a recipe for success. By the time a trend is popular, much of the easy money has already been made, and savvy investors are looking for the next investment idea.
But for investors, these are unprecedented and treacherous times. Traditional investments have become overpriced, and global economics have become unpredictable.
In fact, in May of 2017, the Swiss bank UBS interviewed 2,842 high net worth individuals in the U.K., Italy, Switzerland, Japan, Hong Kong, Singapore and Mexico. Each individual had at least $1 million in investable assets, excluding property.
These interviews revealed that a shocking 82% of millionaires overall believe this is the most unpredictable time in history.
The exact percentage and reasons varied by country, but the consensus was clear. Wealthy investors are very, very worried.
It’s not hard to see why.
The massive Chinese economy has created a huge credit bubble, after years of debt-fueled sky-high growth. Chinese corporate debt alone is a staggering 277% of GDP, the highest in the world. Its national debt is about $23 trillion dollars.
In the United States, the unprecedented fiscal “experiment” of low interest rates and trillions of dollars in quantitative easing has led the economy into treacherous uncharted waters. The unpredictability of the Trump administration only makes things worse.
After years of gains, US stock market price/earnings valuations are at record highs. It’s long overdue for a significant correction. But with low interest rates elsewhere, for many investors it’s the only game in town.
In Europe, many central banks are offering negative interest rates to hold your money. In other words, you pay them to hold your cash, but they’ll gladly lend it to you for a fee.
Military situations involving Russia, Syria, North Korea, Iran, Iraq, the Middle East, and elsewhere have the potential to explode overnight.
We are living in uncertain times indeed. How did we get here?
Much of the blame can be traced to one cause: too much debt.
The final global consequences of this monumental debt remain to be seen, but when the smartest investors start to look elsewhere for investments, it’s always a good idea to pay attention.
And what are they doing right now?
They’re diversifying. They’re taking money out of the stock market, out of cash, and investing in solid assets with intrinsic value, especially gold.
Billionaire investors such as Stanley Druckenmiller, David Einhorn, Ray Dalio and others have recently added significant gold positions to their portfolios.
Paper money is only worth anything because the issuing government says so. It has little intrinsic value. In times of trial and inflation, it can become essentially worthless, like the German Reichsmark in World War II.
But if we took all the gold ever mined in the entire world and made it into a cube, it would only be about 20.5 meters on a side. If it were melted and poured, it would fit inside an Olympic-sized swimming pool. It can’t be made, only mined.
Because of that scarcity, gold is a finite resource and traditional store of value all over the world. It will always be worth something.
There is a reason why China, Russia, and India gold purchases are exceeding worldwide gold production levels – because they are stocking up as a hedge against global uncertainty. Smart millionaire and billionaire investors and money managers are doing the same thing.
In fact, Swiss logistics operators can’t build new vaults fast enough to keep up with investor demand. They are taking over nuclear-proof mountain bunkers from the Swiss Army, and using those for vaults.
From an investor’s point of view, gold offers many benefits. As a store of value, it’s useful for portfolio diversification and wealth preservation. It’s currently attractively priced, creating an inflation hedge and future upside. In uncertain times, it just makes sense to have exposure to gold stocks, hedged gold funds, or physical gold as a portfolio allocation.
Does this mean smart millionaire and billionaire professional investors think a financial apocalypse is coming? The sky is falling, the end is near?
Not necessarily… but these successful investors do think gold is a good investment right now. That’s something to think about.