GOLD IS GREAT BUT THERE IS A BIGGER OPPORTUNITY LOOMING
With the DOW sitting just under 18,000 how much more upside potential does it really have?
For centuries, people have turned to gold to safeguard their assets during economic upheaval. Gold has withstood the test of time and can still be found today within the artifacts of some of the oldest civilizations in recorded history. There is not a time in written history where gold has been worth zero. From antiquity to present day gold has played a major role in monetary systems all over the world. Less known as a financial haven during troubled times is gold’s ever-precious companion, silver. For the last century silver has been just as important as gold and in the coming times could overshadow gold. The old saying, “To know the future is to know the past,” could not be more applicable to silver today. Silver versus gold -- a historic comparison suggests silver now to be largely undervalued. If we look at the historical price of silver versus gold we will quickly come to understand why silver prices today could become one of the biggest opportunities we might have in our lifetime. In 1792 the silver-to-gold price ratio was fixed by law in the United States at 15:1. This means it would take 15 ounces of silver to buy 1 ounce of gold. In 1803, France set the silver-gold ratio at 15.5:1 -- about what it had been for time immemorial. Today, however, that precious metals ratio is completely askew. While the price of gold now hovers at about $1,270 per ounce, silver sells at $17 an ounce. That’s a silver-gold ratio of 74:1. Given the historical price difference, silver should be roughly $85 per ounce without the price of gold even moving. That is a difference in value of 500%. If gold should bounce back to its 2011 high of $1,921 per ounce that means at a 15:1 ratio silver would be sitting at $128 per ounce. This is an increase in value of over 750% from the silver price today. If the historic price difference between silver and gold is any indication of its future value, we should be looking toward a much greater spike in silver than it’s high of $49 five years ago. But there are broader trends that indicate a brighter future for silver. For the first time in history, there is more gold for investors to buy than silver. This has never happened before. More silver is being consumed than produced. That means a current worldwide shortage, with demand only expected to increase. On top of the monetary value of silver there is great industrial use for the metal. As technology continues to evolve, more silver is expected to be employed beyond its current use in cell phones, computers, lights, solar panels, batteries and more. In short, silver is the most important assets one can acquire today and there may never be a better opportunity to buy it at its current low price. For years we have been advising our clients at Regal Assets to purchase silver. I could not be more bullish on the asset. I personally own silver and continue to acquire it. Buying silver can be tricky, especially with individual investors having little or no exposure to cash. In 1998 the United States government began allowing citizens to purchase physical gold through their existing retirement account as well as silver. We at Regal Assets have been helping investors purchase gold and silver through their existing retirement accounts and are a leader in the field. Nearly every working class American has a retirement account and if you don’t have at least 5% of your wealth in gold or silver you owe it to yourself to make the move. With our expert team and years of experience we can complete a transfer from your existing retirement account into physical gold or silver in as soon as 48 business hours. The age of silver is upon us. There may be no other opportunity like this one to invest in it. I truly hope you are one of those who do.
be asked about, including Zimbabwe’s endemic corruption, economic challenges and currency dramas—it squelched hyperinflation in 2009 by switching to foreign currencies, primarily the U.S. dollar. But in the question period Tracy Washington, principal investment officer for the International Finance Corp.’s global private equity funds, lobs a personal query at Makanza, a father of four who is partial to conservative business suits and golf. With your résumé, she asks, why get involved with so risky an enterprise, “and will you stick to it?” Makanza responds that he worked in venture capital back in the 1990s and came to miss the highs and lows of investing in early-stage entrepreneurs. “I still have at least ten years to do this. … It’s a real roller-coaster lifestyle. But I enjoyed it, and I want to have more of that experience again.”
Impact investing—which aims to produce both financial and social or environmental returns—is in vogue. Big names in finance, from Blackrock to Goldman Sachs to Bank of America Merrill Lynch, have been piling in recently, seeing it as a way to appeal to the socially conscious Millennials now building and inheriting wealth.
But this alternative asset class is still small— $77 billion invested worldwide, according to a new survey from the Global Impact Investing Network. To grow, it needs experienced, handson fund managers, and those are in short supply, particularly in areas with the greatest needs, such as sub-saharan Africa.
Enter two Seattle tech guys turned socialventure capitalists: Microsoft alum Will Poole, 55, and Dave Richards, 51, a veteran of RealNetworks, Sybase and Symantec. In 2012 they launched the $23 million Unitus Seed Fund to back health, education, fintech and mobile startups serving the Indian masses. Among its investors are Gates (it was one of his first personal forays into impact investing); Silicon Valley billionaire venture capitalist Vinod Khosla; billionaire Ranjan Pai (an M.D. who made his fortune building private colleges and hospitals in his home country of India); and computer billionaire Michael Dell’s family foundation.
With that $23 million fully committed and a staff of 19 on the ground in India, Unitus Seed is now raising a second $50 million fund. (The minimum investment in Unitus II is $500,000 for individuals and $1 million for foundations, corporations and other institutional investors.)
Meanwhile, Poole and Richards dreamed up Capria last year as a way to flatten the learning curve for other first-time impact fund managers and to help fill the impact investment pipeline. They recruited a Millennial cofounder—jack Knellinger, 33, a software engineer by training who ran Microsoft’s employee donation matching program before going out on his own to promote social entrepreneurship in the U.S. and India.
Over the next three years Capria aims to usher 30 aspiring impact-fund management teams through its boot camp. Poole expects that as few as a third of those will succeed in raising their first funds of $15 million or so. But Capria also projects that over a decade, funds that successfully launch will (counting follow-up rounds) raise and deploy $500 million in capital.
The up to $500,000 in seed money Capria Accelerator provides its graduates? Some can be used for startup administrative expenses, like legal counsel. But most is intended to finance initial investments, which Capria must approve and will keep on its own balance sheet. The idea is to give the novice managers real businesses to point to when they go to raise their first funds. That should be a big help. “It is much more palpable to investors,” says Antony Bugg-levine, who oversees $350 million in impact capital as CEO of the Nonprofit Finance Fund.
Capria isn’t stopping at providing seed money. It also plans to raise a $100 million Capria Emerging Managers Fund that will invest up to $5 million apiece with the top teams it has trained, as well as in other emerging managers’ funds. (The minimum investment in Capria’s new fund of funds: $1 million.)
“Nobody else actually invests in the fund managers themselves, so for that reason we’re the only game in town,” Poole observes. It’s no surprise then that Capria received 90 applications from 45 countries for its second boot camp beginning in late summer. Applicants are expected to have at least ten years of business experience as well as intimate knowledge of the countries where they plan to invest.
That first, less publicized Capria Accelerator class held this past spring drew 66 applications from 24 nations. Makanza got wind of the boot camp from a Dutch investor. He praises the Capria founders for being open-minded enough to look past the return address on his application to consider his business plan and background. “Most people would say, ‘Zimbabwe? We’re not going there,’ ” says Makanza. “We are so used to bad press.”
Tyler Gallagher CEO of Regal Assets has successfully helped investors move hundreds of millions into physical precious metals through existing retirement accounts, tax free without any penalties.