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?

Forbes - - PRO­MO­TION - BY TYLER GAL­LAGHER

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.

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