How To Mimic China’s Profitable Gold Strategy

When you have a fortune at your disposal (like Li Ka-Shing or Bill Gates) buying up physical commodities is completely unrealistic. They might be able to buy a few pallets of gold, but then what? With the next commodity boom, the smart money is going to flood into the businesses that own these assets; it will go into those that own minerals in the ground by the ton.

The dollar has rallied greatly as of late, but that’s not because anything has improved with the U.S. In fact, it’s just the opposite; the national debt for the U.S. is nearing $20 trillion! What has benefited the U.S. dollar is global uncertainty. Essentially, the dollar is the tallest midget in the room when it comes to paper money. This is why I see hard assets like gold, silver, oil, uranium, and copper soaring against the dollar one day.

crisis-creates-opportunities

Gold Is Rallying Worldwide, Even to All-Time Highs

What has gone largely unnoticed, is a big rally in most major currencies. Also, with the strength in the dollar, several other currencies have suffered largely, resulting in much higher gold prices in those currencies. Take for instance the following trends since last summer:

  • The Russian ruble collapsed, and gold soared.
  • At the same time the euro was almost in a free fall earlier this year, gold rallied big!
  • And when the Swiss central bank decided to devalue their currency with negative rates, gold spiked in francs.
  • Another great example is Brazil which has seen gold in its local currency rally to near all-time highs.

Gold is the only true hedge against these central bankers, and it is responding to the fiat currency war.

Gold tends to have a direct response for central banks who give their local citizens discomfort in the value of their currency, but

  • What happens when the central bank is managing the currency of choice for the entire world?
  • What happens when the entire world wants to exchange their U.S. dollars for gold?

It could be either because of an action the Federal Reserve takes or because the U.S. debt passes a key psychological number with the markets, like $20 trillion which is likely to happen in 2017. China and Russia are piling up gold for several years now. China, by the way, is both the world’s largest gold producer and biggest importer, so not only are they accumulating gold by the truck load, not one ounce produced is leaving their shore.

It is clear that China is preparing for something big in the currency markets. Last year, China partnered with Brazil, Russia, and South Africa to form a competing bank to the World Bank, which is controlled by the west. Since 2008, half a trillion has been agreed to in currency swaps with nearly 30 countries. The world has an unease about the dollar system, with Russian President Vladimir Putin going as far as saying the dollar monopoly is damaging to the Russian economy. President Hu, of China, said last year that the “dollar is a product of the past.”

China’s Secular Gold Accumulation Strategy

For 7,000 years, man has mined gold deposits, making it possibly one of the oldest and most reliable businesses in human history. And it’s one of the smartest, because unlike accumulating gold in the retail market, owning a gold mine allows you to keep producing the gold after your return of investment.

All the gold that was ever mined fits into one large cube with an edge of just 70 feet! Think about it… for all of human history, gold is so precious and so rare that if you took all the Egyptians mined, the Romans, and everything since, we would only have 3 Olympic-sized swimming pools full of gold.

The headlines for gold these past few years have all focused on physical gold accumulation by China, Russia, and eastern central banks, but what they have missed is a 7,000-year-old strategy that China is doubling down on. According to data compiled by Bloomberg, in 2013, asset purchasers by Hong Kong and mainland miners increased to a record $2.2 billion! China is buying gold mines at a record pace, something completely missed by both the mainstream investor and even the gold analysts who tend to only focus on the bullion sales.

With $2.2 billion invested, China knows it could spark an event in the physical gold market if it was reporting this to the IMF, which is why it’s not and it doesn’t have to. China is only revealing physical bullion purchases, but very little is reported or said about its gold land and mine acquisitions. And who knows how much gold is behind this $2.2 billion, because unlike bullion purchased at a retail price, a gold deposit can be purchased for a lot less than gold out of the ground.

Mimicing China’s Gold Strategy

This strategy that China has taken can also be implemented by individual investors, by focusing on specific gold companies who – in the midst of a commodities bear market and global currency war – are out acquiring already-established gold assets.

  • It’s a plan for low-risk growth through acquisition, setting the stage for millions of ounces of gold, purchased for less than a nickel on the dollar…
  • In some cases, millions of dollars have been spent in exploration; but today, distressed sellers are looking for a buyer, oftentimes at fire-sale prices.

Supercharge Your Portfolio With Ounces in the Ground

FutureMoneyTrends.com is about to reveal all the details on a tiny gold stock that has a huge upside potential. The last time an opportunity like this presented itself for this tiny gold stock’s founder, investors saw gains of 2,800%, turning a $10,000 investment into over a quarter million dollars in about 2 years. Even investors who bought his last stock with just a thousand dollars could have potentially cashed out for $28,000!

Going from zero to 4 million ounces of gold in the ground, with what are potentially 3 elephant-sized gold projects, according to Marin Katusa, and even a potential uranium spinoff project that they picked up while acquiring an entire company for pennies on the dollar at the end of 2013. It’s a project that according to Casey Research’s top energy expert and New York Times best-selling author, Marin Katusa, has a real value that justifies the entire market cap of this tiny gold stock, without any consideration of their other properties.

Last year, legendary investor Rick Rule stood before an audience of high-net worth investors, introducing them to this very company. A company that he not only had a stake in, but through a private fund he manages with his own dollars, is the single largest shareholder of this gold stock.

Growth Through Acquisition

With a $50 million market cap, Brazil Resources Inc. (TSXV: BRI & OTCQX BRIZF) is a gold accumulator! Since its start in the spring of 2011, BRI has acquired four projects with NI 43-101 resource estimates. Management owns 25% of the company, with institutional support at approximately 30%. But what I think every BRI shareholder can appreciate is that the 2nd largest single shareholder in BRI is the Founder and Chairman, Amir Adnani. In my opinion, this shows a strong alignment with management and shareholders, specifically at the highest level in the company.

The top holders of BRI are Rick Rule and Doug Casey, through their fund, Casey Capital Strategies. Rick Rule is legendary for these private funds, taking one such fund in the early 2000s from $15 million to $445 million.

Marin Katusa is also part of the management of this fund, and is a rising star in the resource sector, with more than a dozen 1,000%+ returns for his stock recommendations – recommendations of which he owns.

Focusing primarily in South America, Brazil Resources has one of the most influential people in Brazil on their board of directors. Mario Garnero may not be a household name here in the U.S., but in Brazil, his name is like hearing Gates, Jobs or Buffet. He is a successful entrepreneur who has delivered billions of dollars into his country while becoming influential in Brazilian politics and close friends with many U.S. leaders, like President Bush and Clinton. Currently, he is the chairman of Brasilinvest, the oldest merchant bank in Brazil, who is also one of BRI’s top shareholders.

BRI’s political influence doesn’t stop with Mr. Garnero. Former Canadian Minister of Natural Resources, Herb Dhaliwal, is also a director in the company. Amir Adnani, BRI’s chairman and founder, has been featured in Fortune magazine, is #2 on Casey’s NexTen list, and has already proven to the industry that he can deliver, by taking his first public company from conception to production in 5 years!

In both of BRI’s last two financings, they received strong demand, with an oversubscription, even at the height of the bear market in gold from 2013 to the end of 2014. A time where many companies were trying to raise money to keep the lights on, Brazil Resources raised $11 million.

No Hype – Just the Facts

BRI has acquired four projects with NI 43-101 compliant gold resources in Brazil.

  • Sao Jorge
  • Boa Vista
  • Cachoeira
  • Surubim

Sao Jorge and Cachoeira make up the bulk of these assets, with both being acquired by BRI at significant discounts from the previous owners. Cachoeira was purchased in 2012 from Luna Gold Corp. Luna Gold took BRI shares valued at $1.40 for this transaction. At the time, shares of BRI were trading for less than $1, so this speaks volumes about Amir Adnani and his team’s ability to deliver real value for shareholders with the capturing of equity in assets purchased at severe discounts.

Sao Jorge was acquired in late 2013 when Brazil Resources Inc. took over Brazilian Gold Corp. This transaction doubled BRI’s gold resources. BRI’s management closed this deal at an 88% discount from where J.P. Morgan management acquired shares and at a 50% discount from what another group out of Hong Kong (released in a letter of intent) had offered to buy the same company.

Serendipity for Brazil Resource Investors

What has been referred to as a potential lottery ticket by Marin Katusa is BRI’s hidden project. It’s not a secret, but unknown to even many of Brazil Resources’ own shareholders. It’s a joint venture with a billion-dollar mining giant, where this tiny little gold stock is the majority owner, split between 75% Brazil Resources and 25% Areva. The Rea project is less known since BRI is viewed as a gold company by most investors, but its uranium project is in the Athabasca Basin, an area that is responsible for 25% of all uranium production.

Here’s the kicker: Amir Adnani had taken a small junior mining stock from idea to production in 5 years, a company that put him quickly in the 10-bagger club for many investors? Well, that company was a uranium play!

So not only did BRI in one fell swoop acquire over a million ounces of gold resources when they took over Brazilian Gold Corp., but they also gained ownership in a uranium property, surrounded by the majors, monster discoveries, and with an already-established joint venture with a major.

With only 6 U.S. publicly listed uranium producers, BRI shareholders now have 1 of these uranium producing CEOs in charge of advancing the Rea project.

Strategic Partnership

Just as China and others are accumulating hard assets through resource companies, individual investors have the same opportunity. Whether we have inflation or not, gold boom or gold bust, the people at Brazil Resources are doing their best to deliver real value to shareholders, by backing each share with physical assets – resources in the ground that one day can be exploited for profits.

Shares for BRI currently trade for less than a buck, but each share represents ownership in the assets mentioned above.

The recent market downturn in commodities has created an environment where Amir Adnani is thriving, and he’s using BRI to do it. When it comes to investing, a truly diversified portfolio of hard assets must include a growth strategy. Which is why it is an excellent opportunity to research Brazil Resources.

To learn more about BRI or read their technical reports, visit BrazilResources.com.

Before taking any decision, always speak with a licensed professional.

Reprinted with permission from FutureMoneyTrends.

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