Dear Fellow Investor,
The breakout in gold is on hold, for now at least.
But that didn’t stop one gutsy investor from making the biggest gold bet in history.
I’ll explain in a moment. But first, a quick review of the gold market....
Last week, I reported that the yellow metal was racing toward key technical resistance that, if breached, could quickly catapult the price to much higher levels.
Gold failed to break through on that run, but those key targets are still there...and gold could run right through them with only a day or two’s worth of gains.
Just for the record, the goal is to get through $1,372, which marks the post-bottom high level reached in 2016. After that, getting through $1,400 would confirm a major technical breakout and bring in a flood of buying from traders expecting the price to soar from there.
As I write, gold’s holding around $1,328 on a spot basis — well above the important $1,300 support, although about $45 from the first key target we’re looking for.
Gold seems to be waiting for the next big event — and some very smart people apparently believe that’s not too far away.
The Investor Who’s Making The Biggest Move Of All In Gold
As you’ve undoubtedly heard, a lot of very well-connected and successful entities are plowing into gold lately.
We know that central bank buying has surged this year to unprecedented levels. And famed investors like Sam Zell — who’s known for his real estate investments — are buying gold for the first time.
But I’d like to talk about one investor who’s making the biggest move of all in the yellow metal.
It’s Mark Bristow, the recently appointed president and CEO of Barrick Gold.
Bristow is the maverick mining executive who, with his launch of Randgold Resources in the 1990s, set about revolutionizing the South African mining industry.
I know, because our organization — under the brilliant leadership of Jim Blanchard — helped Mark launch Randgold back then as early investors. Randgold was a quick success, and not to Jim’s or my surprise.
You see, we saw a key ingredient in Bristow that we found in few other mining executives. He was not only immensely talented, but he had an innate understanding of gold’s role as the ultimate money.
Simply put, he was a gold bug. And he was all about profitably digging up money.
Jim passed away long before Mark really hit his stride with Randgold. But Jim wouldn’t have been surprised to see that company grow rapidly under Mark’s leadership to transform not only South African gold mining, but mining in Africa and the world at large.
Mark’s management systems and business philosophy revolved around low overhead, nimble, decentralized management, big-margin projects and returning value to shareholders.
Thus, Randgold grew to become not only a very large gold producer, but the most profitable of all the large miners.
So I wasn’t surprised to see Randgold announce a merger with Barrick last year. Bristow’s management acumen is just what stodgy Barrick needed.
However, everyone was surprised to see Mark quickly move once he got in the driver’s seat to make a run after Newmont Mining.
He announced that offer yesterday — an $18 billion all-stock merger offer for Newmont that stunned the markets.
The idea of a merger of these two mining giants isn’t new. But Newmont was in the middle of a take-over of Goldcorp, and Bristow had barely warmed up the chairman’s chair after the Barrick-Randgold amalgamation.
Bristow certainly didn’t waste any time getting acclimated.
But knowing his make-up and track record like I do, I think I know why he’s moving so quickly....
A Sense Of Urgency
Again, Mark Bristow is a gold bug. He understands gold, knows that it’s the ultimate money...and realizes that trends now in place guarantee it will become much more valuable in relation to paper currencies.
I think he understands that the Fed’s decision to halt its monetary tightening heralds a return to quantitative easing not only for the U.S. central bank but also for the central banks of every developed economy.
This is a major secular shift that has just begun, but that will soon gain momentum and drive gold prices significantly higher.
Likewise, I believe Mark understands the longer-term picture — that the mountainous sovereign debts created by decades of deficit spending, and recently accelerated by ultra-low rate policies, will inevitably result in dramatically depreciated fiat currencies.
It simply has to happen. Throughout human history, out-of-control debts have resulted in depreciation of the underlying currencies or outright default. Either way, in every instance, the value of gold has skyrocketed.
Mark Bristow, as a gold bug, understands this as well as anyone.
I think that’s why he’s moved so quickly out of the gate to acquire Newmont...because he feels if he doesn’t act now, higher gold prices will move the target out of his reach very soon.
I’m not going to take a position on the merger and recommend that you bet with Mark Bristow on Barrick.
I will say, however, that you should bet along with him on gold.
All the best,
Editor, Gold Newsletter
CEO, the New Orleans Investment Conference