Why does a billionaire investment expert believe gold will do fine if the world does well or not?
'' 'I've reached a point where I feel the only asset I have confidence in is gold,' Mr. Kaplan said in an interview at Tigris's midtown Manhattan headquarters.
Mr. Kaplan's views are shaped by a concern, shared by many investors, that heavy government spending hasn't contained the woes facing the financial system. Gold hit an exchange record of $1,242.70 a troy ounce at the Comex division of the New York Mercantile Exchange on May 12, days after euro-zone leaders announced a nearly $1 trillion bailout for ailing member states.
He has experience with how supply and demand can drive the price of raw materials. His doctoral thesis studied Britain's involvement after World War II in Malaya, home to prized rubber and tin. That taught him how far people and governments will go to secure natural resources.
Wanting to apply his insights, he went to Israel to advise hedge funds. His nose for finding valuable resources was developed at firms he started that explored for silver and natural gas, which helped him make his fortune.
Gold miners are struggling to make major discoveries and it takes years to bring new finds into production. If people want to stock up on gold in a hurry, it will be hard to ramp up production enough to satisfy them, Mr. Kaplan believes.
'You've got a perfect storm with no apparent solution,' he said. 'If the world does well, gold will be fine. If the world doesn't do well, gold will also do fine . . . but a lot of other things could collapse.' ''
''Gold prices are up 7.4% this year, after rising 24% last year, which was the ninth straight up year for bullion. Mr. Kaplan thinks that greater gains are coming. 'I wouldn't even say we're in a bull market yet,' he said.''