The grave dancer is dancing again

Have you heard Sam Zell? I bet not many of you have heard him but you should if you are really interested in investment. He has got a scary nickname: The Grave Dancer. Let me first share with you a small story about him (a smart Jewish): While attending Hebrew school in Chicago one day, the young Zell discovered Playboy magazines for sale at a train station newsstand. He bought them for 50 cents each, then sold them to his friends in the suburbs for $3 apiece. That’s a 500% return. This is likely his first lesson about making money based on the uneven supply and demand equation! And that experience must have shaped up his life long investment philosophy!!

So who is Zell?  Here is the brief introduction who Zell is:

Zell is a real estate mogul and self-made billionaire. He made a fortune buying property for pennies on the dollar during recessions in the 1970s and 1990s. This earned him the nickname “The Grave Dancer.”

Zell was also one of the only real estate gurus to spot the last property bubble and get out before it popped. In February 2007, he sold $23 billion worth of office buildings. U.S. commercial property prices peaked nine months later and went on to plunge 42%.

So what did you get from the above intro on him? A very smart and successful investor and seemingly a very lucky guy as well, right? You see, he can always spot almost the exact bottom and top too during his life. Don’t just take it as a jest for fun about his nickname but try to really understand why he has got such a dreadful name. Basically it means he can pick up something everyone else would consider as dead and buried in the grave already, but he can see the value in it and buy at extreme discount. This is kind of person you really should follow, not FOMO by chasing the herd on the daily basis for what everyone is buying. So whenever I hear Zell is buying, my ears perk up. I just learned Zell is buying something now, which happens to be what I have been buying for some time. “For the first time in my life, I bought gold because it is a good hedge,” Sam Zell, the founder of Equity Group Investments, said in a Bloomberg TV interview. “The amount of capital being put into new gold mines is almost nonexistent. All of the money is being used to buy up rivals. Go back to supply and demand… Supplyis shrinking, and that’s going to have a positive impact on the price.”  

Yes, it is gold! For anyone following my for some time, they must know I’m a gold bug with strong belief in this shining metal. I started to buy gold about 50% below the current level many years ago. Although you can say it is painful to see it dropped by more than half from its peak, I have never lost my faith in it. I really don’t care even if it goes down further from here as gold is an insurance for me and I don’t need to rely on it for profit. But if the worst indeed comes, gold can save me well for sure. The beauty of holding gold is that it has never lost its buying power regardless how its nominal price fluctuates.  As such, it is a real money no one can create it from the thin air like all the fiat currencies.  I think right now is a great time to buy gold for several reasons. For one, after 5 years or so downtrend, gold has likely found its bottom by now. It is basically dead for many years with very few people interested in it, something in the grave. That’s why the grave dancer, Zell, starts to dance again in grabbing it now. Then gold is a great hedge for grave risks worldwide, especially geopolitical risks. As we all know, our world is in a full mess all around regardless where you are looking at. While there is no way to know exactly when and what will hit us hard, the likelihood is high that we may see some major global crisis natural or human-made popping up at any time. Just like a house insurance that can help to protect unexpected disasters, gold has a similar function for wealth protection. Last but not least, as I alluded to yesterday, gold can also offer protection for major financial crisis that in my opinion will come to hit us for sure in the future. In addition to the financial crisis that is doomed to come at some point of time due to the extremely inflated debt bubble all over the world, the dreadful trend of extreme leftism more and more likely taking over and dominating the US politics will inevitably push the country down to the path of Venezuela. The most scary part of this trend is that extreme socialism policies are just like additive pills, which taste great but virtually impossible to be removed when already swallowed. It will eventually destroy the whole body just as what we have witnessed in Venezuela. If that happens, gold will be one of very few only real assets that can firmly stand to save us.

The best part? I can be totally wrong and none of the above grave scenarios will ever happen. But gold will still keep its value for another thousand years to come.  Before I finish, let me just share with you a quote from Billionaire Bill Bonner about gold:

Gold is a hedge against falling stock prices. And falling bond prices. And falling bitcoin prices. And falling real estate prices. And a falling dollar. And falling hopes, illusions, and myths of all sorts.

There is a time for everything under heaven. A time to believe. And a time to restrain from embracing crackpot ideas. In short, we believe we have entered an Era of Busted Dreams. Gold is a hedge against all of them.