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How to Own Your Own Gold Mine

by Jim Rickards, DailyReckoning:

Public equity markets are in many ways a sophisticated game of pump-and-dump. Your stocks soared in 1996-1999, then crashed in 2000. They soared again in 2002-2007, then crashed in 2008. They’re soaring again now.

Guess what comes next?

For the most part, wealth managers are more interested in their wealth than yours. All kinds of fees and commissions are designed to separate you from your money. When markets turn with a vengeance, you’re the one left holding the bag.

Think passive investing and indexing are the answer?

Guess again. Active managers do difficult work in research, asset allocation, capital commitment, and price discovery. Active investors are a beast of burden like an elephant.

Passive investors, including ETFs, are like parasites on the back of the elephant. A few parasites do just fine, and the elephant doesn’t notice at first. Eventually there are so many parasites that the elephant dies, and the parasites die too.

Today, passive investors make up more than 50% of total assets under management. The parasites are winning. When markets correct, passive investors are like deer in the headlights — they can’t short or go to cash. They have to ride the index down.

When investors call for redemptions to salvage what’s left, the passive funds will have to sell into weakness to raise cash. There won’t be many active capital committers around to take the other side of the trade. Markets will go “no bid” with no bottom in sight. The resulting bloodbath for investors will make 1929 and 1987 look like hiccups.

So, if public equity markets are a roach motel, what do the very rich do with their money? How do the rich get richer?

The answer is private deals.

Major investment banks like Goldman Sachs have always run private pools for partners only to invest in the best deals they see. Major private equity funds like KKR take a proprietary stake in their best deals and organize “co-invest” funds for family and friends to invest side-by-side in those deals.

Private deals are offered on the 19th hole at the country club, in table talk at charity galas, and on tennis courts in the Hamptons. You won’t hear about them from your broker. And you won’t see them on CNBC.

I should mention that private equity investments are how I’ve personally built my wealth.

And it’s my mission to level the playing field and show you some of the best private deals available from my extensive network of entrepreneurs, technologists, billionaires, Washington elites, and other plugged-in insiders.

I see quite a few opportunities right now, but only a few make the cut. Those few are the best of the best, or what I call, “the best deal in the books.”

And lately, I’ve come across one of the best. I have only one word to describe it — amazing.

This new deal involves gold. If you’re familiar with my work, that probably comes as no surprise to you. I write and speak extensively about gold in articles, books, in person, and on television. My book, The New Case for Gold, was a national bestseller.

That book details the economic and mathematical basis for the forecast that gold will reach $10,000 per ounce or higher in the not-distant future as part of a collapse of confidence in the U.S. dollar and other reserve currencies.

To date, investors have had only three ways to play gold — physical bullion, paper gold such as ETFs, and gold mining companies. This new deal offers investors an entirely new way to invest in gold.

It’s a chance to own your own gold mine.

And I believe it could return up to 30 times your money… or more.

Now before I continue, you need to realize that you need to be an accredited investor to invest in this, or any private deal opportunities. To be an accredited investor, you must have net worth of over $1 million — either individually or with your spouse — or an annual income of at least $200,000 — $300,000 including your spouse’s income — for the last two years.

Now, about the deal…

We have connected with a seasoned operating team in control of gold mining properties in Quebec’s Val d’Or region, one of the best established and most productive gold mining regions in the world.

Unlike most gold mining investments, this opportunity does not involve a public company and does not consist of a passive royalty stream. Investors have the opportunity to invest directly in a gold mine side-by-side with the operating company in a completely private deal.

Here’s how it works…

The operating company has taken its prime gold mining property and put it into a private special purpose company. Investors will be given the opportunity to invest directly in private shares of this company.

The operator will retain a majority interest in order to manage and control the development. After all, you won’t mind owning your own gold mine, but don’t want to show up with a pick and shovel to do the work yourself!

That’s about it. Other than the operator’s retained interest, this deal is being offered exclusively to a select number of investors at this time. If it becomes necessary to raise additional capital to expand the project in the future, investors will be offered the chance to participate on equal terms in order to maintain their proportional interest.

When the deal settles, investors and the operating company will own 100% of their own gold mine.

This opportunity is a true trifecta. You get the operating leverage of any gold miner, the upside of a strong market for physical gold, and you eliminate the distraction and dilution that comes from investing in a public gold-mining company. It avoids the risks of “paper gold” where contracts can be torn-up at will by issuers if the market gets “disorderly” to the upside.

Read More @ DailyReckoning.com

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