I recently discovered that two of North America’s most predominant gold investors are heavily invested in a junior gold exploration company.
The company is Brazil Resources Inc. (TSXV: BRI & OTCQX: BRIZF).
The world famous experts are Doug Casey and Rick Rule: men whose success in gold has been the envy of investors worldwide.
Today, Doug and Rick, along with their partner Marin Katusa, hold a significant position in Brazil Resources Inc. Their KCR Fund has publicly disclosed that it owns 11.4% of BRI.
And, they made a portion of this investment during gold’s recent price pull back. It was an across-the-board price dip that affected most gold stocks no matter the quality of the company.
We at Future Money Trends, believe that slide could quickly reverse because, at this moment, economic conditions in the U.S., combined with the predicted end of the global gold bear market, could be enough to send the entire gold sector soaring in the coming year.
Because of that, we think that it’s important that you learn more about Brazil Resources Inc., BRI
It certainly grabbed my attention. My family and I own shares, and are long, on BRI.
Running for cover is the fastest way to lose ground in a bear market. It takes both courage and experience to survive and to thrive. That’s doubly true for leaders of micro-cap natural resource companies during what turned out to be one of the worst bear markets in decades. But, as you’re about to see, we think Amir Adnani, Chairman of Brazil Resources Inc. (TSXV: BRI & OTCQX: BRIZF), is one of the rare breed of brilliantly courageous corporate leaders.[su_quote]In fact, Amir’s winning ways in the natural resources sector are so notable that he was named as one Fortune’s 40 under 40: Ones to Watch.[/su_quote]
In the past 12 months, he swam against the fearful tide to make two major acquisitions. These are stunning achievements that we think have the potential to generate significant rewards for people who are aware of Amir’s decisive actions.
First, Amir led BRI to acquire a gold exploration property from Luna Gold Corp. That property has a reported NI 43-101 compliant resource of 786,737 ounces (17.4 Mt at 1.40 g/t gold) of indicated gold and 563,200 ounces (15.6 Mt at 1.12 g/t gold) of inferred gold. Known as the Cachoeira project, the deal was virtually unnoticed on Wall Street because of gold’s brutal bear market.
This deal was a combination of cash and Brazil Resources shares priced at $1.40. At the time BRI traded for around $1….
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Title: Founder and CEO
Company: Uranium Energy Corp.
The 35-year-old runs one of only a dozen uranium-producing companies in the world, and his South Texas operation is the first to go into production in the U.S. in over 7 years. (Barriers to producing uranium—used for nuclear energy—are notoriously high.) Still a junior uranium miner, the NYSE-listed company generated almost $14 million in 2012 revenues, up 62%, and has topped a market cap of $200 million. Blackrock and Vanguard are major shareholders. The spunky entrepreneur has also founded Brazil Resources Inc., a small cap gold producing company in Brazil.[/su_note] [/su_column][/su_row]
Amir’s second move came as the great gold bear market of the past 14 months continued to run off so many nearsighted players.
Amir’s unique vision led Brazil Resources to an agreement to pay 13 cents a share for Brazil Gold. That’s a stunning 50% discount from the 27-cents a share a Hong Kong-based bank conditionally offered last spring.
This is the style of stellar business acumen for which Amir has rapidly come to be known.
It’s what created the opportunity for people who invested in Amir’s first natural resources startup company to turn $10,000 into more than $342,000 in 23 months.
That company, Uranium Energy Corp. (NYSE MKT: UEC), soared from a low of 19 cents in December 2008 to a high of $6.70 in November 2010.
It’s that kind of significant success that likely led Casey, Rule and Katusa’s KCR Fund to make a major move into Brazil Resources.
Along with its superb leadership, and Amir’s winning way, BRI is even more intriguing today when you consider that the bear in gold has pressed BRI’s shares down to around 65 cents.
As we have previously written you, because each day that passes offers more evidence that America’s economic mess could be set to spike a hyperinflationary period that we believe could savage the bond market, drive the value of the dollar down and ignite gold on another run toward $2,000 an ounce, or higher.
After all, we think all signs now point to the formation of a perfect storm that blows gold higher and higher.
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- Congress reversed its responsible conservative course and now has agreed to drive the U.S. deeper into debt…
- The incoming Federal Reserve chief, Janet Yellen, will continue breaking American’s backs, driving us deeper in debt by purchasing $85 billion worth of U.S. treasuries each month…
- Foreign countries now own about 35 percent of the U.S.’s $17 trillion debt.
But, each step along the path is laid with mines that when exploded could kill the value of the U.S. dollar.
You see, America’s folding money – the dollar – is a fiat currency because it is not backed by a solid asset such as gold, silver, or any other hard asset.
When Fiat Currencies Come to Grief the Unprepared Suffer Mightily
As many people know, sooner than later, all fiat currencies, like the dollar, come to grief… when that happens to the U.S. dollar it will revert to its true value, which is simply the price of paper on which it’s printed.
This is because there’s nothing to guarantee the dollar’s solvency… no hard asset backing its worth… because of that I forecast the same fate for the dollar as has met 100 percent of paper currencies throughout history… the dollar’s value is destined to fall to zero.
The pre-war German mark, the French livre, the U.S. “continentals,” Argentine pesos, Brazilian reais, Russian rubles, Turkish lira… all went belly up.
And every time such currencies fail, they unleash massive inflation… but gold survives.
Gold Holds Fast In A Monetary Crisis
The failure of a national currency is a death spiral… the final stage of the monetary disease is hyperinflation… which is the ultimate devaluation of a currency as if written in a script by the devil himself.
So they demand more in wages, driving prices higher, as a hedge against the next devaluation.
But during hyperinflation, only gold earns everyone’s full trust… that’s because it cannot be inflated government policy… its solid value is set in the free market.
Moreover, the only way to increase supply is to mine gold.
Countries Don’t Put All Their Trust in Paper!
By the way, if you wonder whether you should be in gold, take a look at what governments are doing to protect themselves.
They are buying and storing gold.
It seems that they don’t trust the paper currencies of other countries, either.
The Financial Times reported the Bank for International Settlements bought between four and six tons of gold in one week. The BIS is a clearinghouse for other central bank buyers.
This is an ongoing trend. Last year, central banks bought more gold than they had in 40 years. Russia, Mexico and South Korea were anxious to unload their worrisome vault-loads of dollars and replace them with something they could rely on no matter what.
Forty years? Four decades? That’s significant.
Banks are buying the most gold since the U.S. dollar dropped its gold backing and the whole world adopted the fiat dollar as its major reserve currency.
Shockingly, the United States and Germany both hold about 70 percent of their foreign currency reserves in gold.Yet statistics show that the Main Street investor, no matter how wealthy, is woefully under-invested in gold.
Why Owning Gold Is Wise Today
Gold has several attractions that make it worth any serious investor’s interest.
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- Gold is a hedge against inflation.
- Gold adds another asset class to the investor’s portfolio that helps stabilize returns and reduce overall risk.
- Gold has no counter-party risk. You don’t have to worry about your bank, broker or Savings and Loan closing its doors.
So, the dollar is doomed, but you don’t have to be.
The question is how do you position yourself for success?
One of the widely accepted ways to hedge against the dollar’s coming collapse is to own physical gold… bars and coins. In fact, you’ve probably seen numerous commercials and mailers encouraging you to purchase physical gold.
And while I agree that a physical asset’s value will always be more “real” than our fiat dollar, the truth is that investing directly in gold coins and bars may actually cost more than it is worth.
Here are some of the reasons why planting a large portion of your investment portfolio in physical gold may not be the way to go:
Where will you put it?
If you buy physical gold, you have to store it someplace. Of course, you can keep in your home (hopefully in some sort of secure fire safe), but this also brings into play worries about your personal safety… what if bad guys know you store gold in your home? A bank safety deposit box might be a better way to go. But that costs money. Sometimes, expensive insurance is better than a vault. Then there will be costs incurred when you go to sell, because you are required to have your gold re-assayed before the transaction. If you aren’t interested in storing the gold yourself, you can make use of segregated storage vaults, with your gold allotment denoted. Costs for that begin around $500 a year…
Premium for Physical Gold
Buying physical gold will cost you a premium that can be five percent – or more – of the spot (market) price. If you buy gold at $1,300 an ounce you will have to sell it at around $1,350 just to break even on your initial investment… and, to completely break even, you’ll have to sell at closer to $1,800 if you’ve paid for a couple year’s storage and the re-assaying. In short, the spread on physical gold can heavily hinder your gains.
The IRS considers physical gold a collectible. So instead of being subject to the caps on the capital gains tax, gains made from selling gold coins or bars can be taxed at a higher rate, which is up to 28%.
So, between the costs of storage, premiums and taxes, you can see how returns from an investment in physical gold can be eroded fairly easily.
It is still possible, though, to invest in gold without having to mess with physically owning it.
Owning the Source—Investing in Gold Miners
On the sensible side of the scale, there are the “majors.” Newmont is a major… safe, solid, and it pays a nice dividend.
On the thrilling side, are the “minors,” also known as “juniors.”
As you saw back up at the top of this letter, Doug Casey told investors in Toronto that gold is ready for a SUPER BUBBLE.
That Doug Casey is indirectly invested in Brazil Resources Inc. (TSXV: BRI & OTCQX: BRIZF) should now be reason enough why serious natural resource investors speak with their advisors and take a comprehensive look at Brazil Resources Inc., today, including reviewing all of BRI’s public disclosure, including its NI 43-101 Technical Report titled “Technical Report and Resource Estimate on the Cachoeira Property, Pará State, Brazil” prepared by Gregory Z. Mosher, P.Geo. of Tetra Tech, Inc., dated April 17, 2013 as amended on October 2, 2013.
Good luck and happy investing!
Editor in Chief, FutureMoneyTrends.com
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